[Federal Register Volume 78, Number 176 (Wednesday, September 11, 2013)]
[Proposed Rules]
[Pages 55664-55671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-21996]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 730, 740, 744, 756, 758, and 762
[Docket No. 120524116-2116-01]
RIN 0694-AF70
Revisions to the Export Administration Regulations (EAR):
Unverified List (UVL)
AGENCY: Bureau of Industry and Security, Commerce.
ACTION: Proposed rule.
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SUMMARY: The Bureau of Industry and Security (BIS) proposes to amend
the Export Administration Regulations (EAR) by: requiring exporters to
file an Automated Export System (AES) record for all exports subject to
the EAR involving a party or parties to the transaction who are listed
on the Unverified List (the ``Unverified List'' or UVL); suspending the
availability of license exceptions for exports,
[[Page 55665]]
reexports, and transfers (in-country) involving a party or parties to
the transaction who are listed on the UVL; requiring exporters,
reexporters, and transferors to obtain a UVL statement from a party or
parties to the transaction who are listed on the UVL before proceeding
with exports, reexports, and transfers (in-country) involving items
subject to the EAR, but where the item does not require a license,
i.e., No License Required (NLR); publishing the UVL in the EAR; and
adding to the EAR the procedures to request removal or modification of
a UVL entry.
These proposed changes to the UVL enhance the U.S. Government's
ability to verify the bona fides of parties to exports, reexports, or
transfers (in-country) of items subject to the EAR and provide the U.S.
Government increased visibility into such exports, reexports, and
transfers involving persons whose bona fides could not be verified.
DATES: Comments must be received by BIS no later than October 11, 2013.
ADDRESSES: Comments on this rule may be submitted to the Federal
rulemaking portal (www.regulations.gov). The regulations.gov Docket ID
for this rule is: BIS-2012-0017. Comments may also be submitted via
email to [email protected] or on paper to Regulatory Policy
Division, Bureau of Industry and Security, Room 2099B, U.S. Department
of Commerce, 14th St. and Pennsylvania Ave. NW., Washington, DC 20230.
Please refer to RIN 0694-AF70 in all comments and in the subject line
of email comments.
FOR FURTHER INFORMATION CONTACT: Kevin Kurland, Director, Office of
Enforcement Analysis, Bureau of Industry and Security, Department of
Commerce, Phone: (202) 482-2385 or by email at
[email protected].
SUPPLEMENTARY INFORMATION:
Background
On June 14, 2002, the Bureau of Industry and Security (``BIS'')
published a notice in the Federal Register (67 FR 40910) establishing a
list of persons in foreign countries who were parties to past export
transactions with respect to which pre-license checks or post-shipment
verifications could not be conducted for reasons outside the control of
the U.S. Government, including lack of cooperation by the host
government authority, the end user, or the ultimate consignee (the
``Unverified List'' or ``UVL''). That Federal Register notice also
indicated that BIS may add to the UVL names of persons that BIS
discovers are affiliated with a person on the UVL by virtue of
ownership, control, position of responsibility, or other affiliation or
connection in the conduct of trade or business. Since that time, BIS
has issued subsequent notices that added to or removed persons from the
UVL, as circumstances have warranted. Currently, the UVL is published
in the Federal Register in its entirety and updated as foreign persons
are added to or removed from that list. The UVL is also available on
the BIS Web site at http://www.bis.doc.gov/enforcement/unverifiedlist/unverified_parties.html.
The participation of a person listed on the UVL in any proposed
transaction raises a ``red flag'' for purposes of the ``Know Your
Customer'' guidance set forth in Supplement No. 3 to Part 732 of the
EAR. See 67 FR 40910 (June 14, 2002) and 69 FR 42562 (July 16, 2004).
Under that guidance, whenever there is a ``red flag,'' exporters have
an affirmative duty to inquire, verify, or otherwise satisfy themselves
that the transaction does not involve a proliferation activity
prohibited by Part 744 and does not violate other provisions of the
EAR.
On July 16, 2004 (69 FR 42652), BIS expanded the criteria for
adding persons to the UVL to include situations in which BIS is not
able to verify the existence or authenticity of the end user,
intermediate consignee, ultimate consignee, or other party to an export
transaction.
On August 21, 2008 (73 FR 49311), BIS expanded the scope of reasons
to add persons to the Entity List. That rule amended Section 744.11 of
the EAR to provide illustrative examples of the types of conduct that
the U.S. Government could determine are contrary to U.S. national
security or foreign policy interests for purposes of changes to the
Entity List. One example listed in that section is, ``[p]reventing
accomplishment of an end use check conducted by or on behalf of BIS or
the Directorate of Defense Trade Controls of the Department of State
by: precluding access to; refusing to provide information about; or
providing false or misleading information about parties to the
transaction or the item to be checked.'' That notice also included a
discussion of the apparent overlap in criteria for adding foreign
persons to the Entity List and the Unverified List based on a lack of
cooperation with an end-use check.
End-use checks sometimes cannot be completed for reasons unrelated
to the cooperation of the foreign party subject to the end-use check.
In such situations, BIS has added parties to the UVL where BIS or
federal officials acting on BIS's behalf have been unable to verify a
foreign person's bona fides (i.e., legitimacy and reliability relating
to the end use and end user of items subject to the EAR), where an end-
use check, such as a pre-license check (PLC) or a post-shipment
verification (PSV), cannot be completed satisfactorily for such
purposes for reasons outside the U.S. Government's control. For
example, BIS sometimes initiates end-use checks and cannot find a
foreign party at the address indicated on export documents, and cannot
locate the party by telephone or email. Additionally, BIS sometimes is
unable to conduct end-use checks when host government agencies do not
respond to requests to conduct end-use checks or refuse to schedule
them in a timely manner. Under these circumstances, there may not be a
basis to add the foreign persons at issue to the Entity List,
particularly if there is no nexus between the foreign person's conduct
and the failure to produce a complete, accurate and useful check (see
Sec. 744.11(b)(4) of the EAR (Criteria for revising the Entity List)).
Furthermore, BIS sometimes conducts end-use checks but cannot
verify the bona fides of a foreign party. For example, BIS may be
unable to verify bona fides if during the conduct of an end-use check a
recipient of items subject to the EAR is unable to produce those items
for visual inspection or provide sufficient documentation to confirm
the disposition of those items. The inability of foreign persons
subject to end-use checks to demonstrate their bona fides raises
concerns about the suitability of such persons as participants in
future exports, reexports, or transfers (in-country) and indicates a
risk that items subject to the EAR may be diverted to prohibited end
uses and/or end users. However, BIS may have insufficient information
to establish that such persons are involved in activities described in
Section 744.11 of the EAR, preventing the placement of the persons on
the Entity List. In such circumstances, those foreign persons may be
added to the Unverified List.
Reasons for This Rule
This rule proposes to eliminate ambiguity for listing foreign
persons on the UVL and the Entity List by removing lack of cooperation
by a foreign party as a basis for revising the UVL. Where the U.S.
Government determines that the foreign party's lack of cooperation
prevented the accomplishment of an end-use check, BIS may add such
parties to the Entity List on the basis of Sec. 744.11(b)(4) of the
EAR.
Specifically, BIS is amending the EAR to include the criteria for
listing persons in the UVL, including examples of actions that could
result in a person
[[Page 55666]]
being listed on the UVL. These amendments, consistent with past
practice, will apply to foreign persons who are parties to an export,
reexport, and transfer (in-country) subject to the EAR if BIS, or
federal officials acting on BIS's behalf, cannot verify the bona fides
of such persons because an end-use check, such as a PLC or a PSV,
cannot be completed satisfactorily for reasons outside of the U.S.
Government's control. Examples of actions that could result in a person
being listed on the UVL include: The subject of the check is unable to
demonstrate the disposition of items during an end-use check; the
existence or authenticity of the subject of an end-use check cannot be
verified because, inter alia, the subject of the check cannot be
located or contacted; or lack of cooperation by the host government
authority.
In addition, BIS is no longer considering affiliation with a person
on the UVL as a basis for adding foreign persons without further
substantiation (e.g., conduct of an end-use check at the affiliate). A
determination to list a particular person on the UVL is premised on
BIS's inability to evaluate the bona fides of that person by conducting
an end-use check. The fact that another, separate person is affiliated
with a person on the UVL will no longer be considered a criterion for
listing the affiliate. If BIS discovers a foreign person may be
affiliated with a person listed on the UVL, BIS will initiate an end-
use check on an export, reexport, or transfer (in-country) to which
that person was a party. That person may be listed on the UVL if BIS is
unable to verify that person's bona fides through an end-use check in
accordance with the criteria described above.
BIS is proposing these changes to the UVL to address concerns
raised by the public in the past about how to address a ``red flag''
identified by the U.S. Government. Accordingly, the proposed changes to
the regulation provide guidance on how exporters can conduct business
with a UVL person. Any license requirements for exports, reexports, or
transfers (in-country) of items subject to the EAR continue to apply.
For items not subject to a license requirement, the exporter,
reexporter, or transferer (in-country) must receive from the UVL-listed
person a UVL statement prior to the export, reexport, or transfer (in-
country), in which the UVL-listed party certifies the end use, end
user, and country of ultimate destination of items subject to the EAR
and consents to an end-use check by the U.S. Government. The end-use
check may include checks to any transaction to which that person was a
party for items subject to the EAR exported, reexported, or transferred
(in country) in the last five years, to enable the U.S. Government to
satisfy earlier concerns with the UVL-listed party as well as its
concerns with the current transaction.
Proposed Changes to the EAR
BIS proposes to amend the EAR by: (1) Requiring exporters to file
an AES record for all exports subject to the EAR involving persons
listed on the UVL; (2) suspending the availability of license
exceptions for exports, reexports, and transfers (in-country) involving
persons listed on the UVL; (3) requiring exporters, reexporters and
transferors (in-country) to obtain a UVL statement from UVL-listed
persons before proceeding with exports, reexports, and transfers (in-
country) that are not otherwise subject to a license requirement under
the EAR involving such persons; (4) adding the UVL to Supplement No. 6
to Part 744; and (5) adding to the EAR procedures to request removal or
modification of a UVL entry.
The first of these changes, requiring the filing of an AES record
for all exports to which a person listed on the UVL is a party, is
described in Sec. 748.5(d)-(f) of the EAR, and would increase U.S.
Government awareness of transactions involving U.S.-origin items to
such persons. Under current regulations, an AES filing is only required
if an export license is also required or if the transaction is above a
certain value. This rule proposes an exception to require an AES filing
regardless of value or destination if a person involved in the
transaction as described above is listed on the UVL.
Secondly, this rule's proposed suspension of license exceptions for
exports, reexports, and transfers (in-country) of U.S.-origin items to
persons listed on the UVL would increase U.S. Government insight into
certain transactions involving such persons of items on the Commerce
Control List (set forth in Supplement No. 1 to Part 774 of the EAR) by
requiring a license for those transactions. This suspension is also
consistent with Sec. 740.2(b) of the EAR, which states, ``all License
Exceptions are subject to revision, suspension, or revocation, in whole
or in part, without notice.''
Third, BIS proposes to require exporters to obtain a signed UVL
statement from UVL-listed persons before proceeding with any export,
reexport, or transfer (in-country) involving such persons, when such
persons are parties to a transaction as described in Sec. 748.5 of the
EAR, and when the item at issue is subject to the EAR but does not
require a license under the EAR. The rule would require that the
statement certify the end use, end user, and country of ultimate
destination of the items, and set forth the person's consent to an end-
use check by the U.S. Government. To facilitate any future end-use
checks by the U.S. Government, the UVL-listed person would also include
its complete contact information in the UVL statement, including its
physical address. Such a statement would, in effect, establish that the
UVL-listed party knows that it is required to comply with the EAR and
agrees to an end-use check. The statement would also provide the U.S.
Government with some assurance that the U.S.-origin item would be
delivered to an identified end user and end use and that the
transaction will comply with the EAR. In the absence of such
compliance, the UVL statement would assist the U.S. Government's
ability to take enforcement action.
BIS believes the proposed suspension of license exceptions, which
would allow pre-shipment review by the U.S. Government of exports,
reexports, and transfers (in-country) of certain controlled items
involving persons listed on the UVL, coupled with the proposed
requirement for exporters to obtain a UVL statement for exports,
reexports, and transfers (in-country) involving such persons of items
not subject to a license requirement, provides greater guidance on what
steps are necessary in order to undertake an export, reexport, or
transfer (in-country) of items subject to the EAR involving a party to
the transaction who is listed on the UVL
Specifically, when an export, reexport, or transfer (in-country) is
otherwise eligible for a license exception, if a party to the
transaction as described in Sec. 748.5 of the EAR is listed on the
UVL, the use of license exceptions is not authorized. Under these
circumstances, an exporter must apply to BIS for a license. If an
export, reexport, or transfer (in-country) involving a person listed on
the UVL is not subject to a license requirement under the EAR, the
possible availability of a license exception does not arise. In such a
case, an exporter may proceed with the export, reexport, or transfer
(in-country) once the exporter obtains the signed UVL statement
proposed herein and files an AES record in accordance with Sec. 758.1
of the EAR, as amended. The signed UVL statement is not needed for
transactions in which a license is required because BIS oversight of
the transaction resulting from the grant of
[[Page 55667]]
the license renders a UVL statement unnecessary.
Fourth, BIS proposes to add the UVL to the EAR in Supplement No. 6
to Part 744. When adding a person to the UVL, BIS would list the
person's name and address, and the date on which the person was added
to the UVL by publication in the Federal Register. Updates to the UVL
would continue to be published in the Federal Register, and would
remain available on the BIS Web site. The UVL also would continue to be
included in the Consolidated Screening List, available at
www.export.gov.
Once published in the EAR, the UVL shall contain the names and
addresses of foreign persons who are or have been parties to a
transaction, as that term is described in Sec. 748.5 of the EAR,
involving the export, reexport, or transfer (in-country) of items
subject to the EAR, and whose bona fides BIS has been unable to verify
through an end-use check. Any changes to the UVL would be published in
the Federal Register as an amendment to the UVL.
In addition to adding the UVL to Supplement No. 6 to Part 744, BIS
proposes adding to the regulations an overview of the UVL, the
conditions it imposes with respect to exports, reexports, and transfers
(in-country) to listed persons, the criteria for revising the UVL, and
the procedures for requesting removal or modification of a UVL entry.
BIS adds a person to the UVL under certain circumstances. For
example, in some instances, BIS may not be able to conduct an end-use
check, such as a PLC or a PSV, at all because, among other potential
reasons, BIS was unable to locate or contact the subject of the check
or the host government declined to schedule the check in a timely
manner. Alternatively, BIS may not be able to complete a satisfactory
end-use check because, inter alia, the foreign party is unable to
demonstrate its bona fides or the disposition of the items in question
during the end-use check. In either circumstance, BIS may determine to
add the foreign person to the UVL.
BIS removes a person listed on the UVL using certain procedures.
The successful completion of an end-use check, or, in the limited
circumstance where such a check cannot be completed due to lack of host
government cooperation, a suitable alternative process to verify the
bona fides of the foreign party at issue would be a prerequisite for
removing persons from the UVL. One illustrative example of alternative
authentication could involve the U.S. exporter or license applicant
visiting the foreign person subject to the end-use check, at that
person's request, and providing sufficient information to the U.S.
Government to verify the foreign person's bona fides and satisfy
questions relating to the end use and end user of the items in
question. Procedures for requesting an alternative process to verify
the bona fides of a foreign person in this circumstance are identical
to the procedures for requesting removal of a UVL listing, set forth in
Section 744.15 of the EAR.
If BIS confirms the bona fides of the listed person, any subsequent
determination to remove the foreign person from the UVL would be
published in the Federal Register. Once a foreign person is removed
from the UVL, the provisions in the EAR regarding persons listed on the
Unverified List will no longer apply to that person, though other
provisions in the EAR will continue to apply as appropriate. BIS is
reviewing the entries of those parties who are currently on the UVL and
will publish its determination of which, if any, of the current UVL-
listed parties will be removed from the UVL at the time that this rule
is published in final form. Until such time, any parties listed on the
UVL will remain on the UVL unless separately removed through a Federal
Register notice. BIS will subsequently regularly review the UVL for the
purpose of identifying and implementing any needed corrections and
updates.
Lastly, this rule proposes to modify the procedures for requesting
removal of a person listed on the UVL by adding decisions on requests
to remove or modify a UVL entry to the list of administrative actions
that are not subject to Part 756 appeals. This would be accomplished
through the proposed addition of Sec. 744.15(d) of the EAR. Decisions
regarding the removal or modification of UVL listings would now be made
by the Deputy Assistant Secretary for Export Enforcement, based on a
demonstration by the listed person of its bona fides.
Proposed Amendment to Supplement No. 1 to part 730
Due to changes to Sec. 744.15 of the EAR, which are described
below, BIS proposes amending Supplement No. 1 to Part 730 of the EAR to
include references to the two additional information collections
associated with this proposed rule: (1) The UVL statement and (2)
requests to remove or modify listings on the UVL. The collection and
retention of the UVL statement by private parties in connection with
the export, reexport, or transfer (in-country) to a person listed on
the UVL of items not subject to a license requirement under the EAR
shall be made under Office of Management and Budget (OMB) control
number 0694-0122 (``Licensing Responsibilities and Enforcement''). The
submission of information to BIS by persons listed on the UVL in
support of an appeal for removal a UVL listing will be made under OMB
control number 0694-0134. Accordingly, BIS proposes to amend Supplement
No. 1 to Part 730 of the EAR by adding a reference to proposed Sec.
744.15 in connection with existing collection number 0694-0122, and by
changing the title of existing collection number 0694-0134 to
``Procedure for parties on the Entity List or Unverified List to
Request Removal or Modification of their Listing'' and adding a
reference to proposed Sec. 744.15 in connection with that collection
number.
Proposed Amendments to Sec. 740.2
BIS proposes adding a new paragraph (a)(17) to the Sec. 740.2
``Restrictions on all License Exceptions.'' This paragraph would state
that license exceptions may not be used where a party to the
transaction as described in Sec. 748.5 of the EAR is listed on the
Unverified List.
Proposed New Sec. 744.15 and Amendment to Sec. 756.1
BIS proposes adding a new section to Part 744 to set forth the new
provisions pertaining to persons listed on the UVL. New section Sec.
744.15 would provide an overview of the UVL, the conditions it imposes
with respect to exports, reexports, and transfers (in-country) to
listed persons, and the criteria for revising the UVL. This new section
would also include the procedures for requesting removal or
modification of a person on the UVL.
BIS also proposes to exclude appeals for removal of Unverified List
entries from the provisions of Part 756 of the EAR. Requests for
removal instead will be made according to the procedures set forth in
proposed Sec. 744.15 of the EAR. Accordingly, paragraph (a)(3) of
Sec. 756.1 of the EAR would be amended by adding a reference to
decisions on requests to remove UVL entries made pursuant to proposed
Sec. 744.15 of the EAR.
Proposed New Supplement No. 6 to Part 744
The UVL would be added to the EAR in Supplement No. 6 to Part 744.
Each listing would be grouped by country, and would be accompanied by
the person's address(es) as well as the Federal Register citation and
date the person was added to the UVL. In addition, the UVL would
include a
[[Page 55668]]
citation to Sec. 744.15, indicating that exports, reexports, and
transfers (in-country) where parties to the transactions are listed on
the Unverified List are subject to the provisions of Sec. 744.15.
Proposed Amendment to Sec. 758.1
BIS proposes adding a new paragraph (b)(8) of Sec. 758.1 of the
EAR, which would state that filing an AES record is required for all
exports of items subject to the EAR where a party to the transaction as
described in Sec. 748.5(d)-(f) is listed on the Unverified List,
regardless of value or destination.
Proposed Amendment to Sec. 762.2
Paragraph (b) in Sec. 762.2 of the EAR contains references to
parts, sections, and supplements of the EAR which require the retention
of records or contain recordkeeping provisions. Proposed Sec. 744.15
of the EAR contains a recordkeeping requirement related to the
retention of UVL statements. Section 762.2(b)(13) of the EAR is
currently reserved. BIS proposes to modify that paragraph to reference
the UVL statement recordkeeping requirement in proposed Sec. 744.15 of
the EAR.
Export Administration Act
Since August 21, 2001, the Export Administration Act of 1979, as
amended, has been in lapse. However, 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 FR 49107
(August 12, 2013) has continued the EAR in effect under the
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.).
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 not been designated a ``significant
regulatory action,'' under section 3(f) of Executive Order 12866.
2. Notwithstanding any other provision of law, no person is
required to respond to, nor is 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 the following control
numbers: 0694-0088, 0694-0122, 0694-0134, and 0694-0137. Specifically,
BIS would be requesting a revision and extension of existing collection
OMB 0694-0134 (Procedure for parties on the Entity List to Request
Removal or Modification of their Listing) and non-substantive changes
to OMB Control Numbers 0694-0088 (Simplified Network Application
Processing and Multipurpose Application Form), 0694-0122 (Licensing
Responsibilities and Enforcement), and 0694-0137 (License Exemptions
and Exclusions).
This proposed rule, if published in final form, would slightly
increase public burden in a collection of information approved by OMB
under control number 0694-0088, which authorizes, among other things,
export license applications. The removal of license exceptions for
listed parties on the Unverified List would result in increased license
applications being submitted to BIS by exporters. Total burden hours
associated with the Paperwork Reduction Act and OMB control number
0694-0088 are expected to increase minimally, as the suspension of
license exceptions will only affect transactions involving parties
listed on the Unverified List and not all export transactions. If
license exceptions are restricted from use, this rule will decrease
public burden in a collection of information approved by OMB under
control number 0694-0137 minimally, as this will only affect a very
small number of individual listed parties. The increased burden under
0694-0088 would be reciprocal to the decrease of burden under 0694-
0137, which would result in no change of burden to the public. This
proposed rule would also increase public burden in a collection of
information under OMB control number 0694-0122, as a result of the
exchange of UVL statements between private parties, and under OMB
control number 0694-0134 as a result of appeals from persons listed on
the UVL for removal of their listing. The total increase in burden
hours associated with both of these collections is expected to be
minimal, as they involve a limited number of persons listed on the UVL.
3. This proposed rule does not contain policies with Federalism
implications as that term is defined in Executive Order 13132.
4. The Chief Counsel for Regulation of the Department of Commerce
has certified to the Chief Counsel for Advocacy of the Small Business
Administration that this proposed rule, if adopted in final form, would
not have a significant economic impact on a substantial number of small
entities.
Number of Small Entities
Currently, BIS does not collect data on the size of entities that
apply for and are issued export licenses. Although BIS is unable to
estimate the exact number of small entities that would be impacted by
this rule, it acknowledges that this rule would impact some unknown
number. This rule would affect exporters and freight forwarders, with
obligations to apply for export licenses, obtain and retain UVL
statements, and/or file AES records in connection with exports,
reexports, or transfers (in-country) in which a person listed on the
UVL is a party to the transaction. These requirements would apply to
all entities proceeding with such transactions, regardless of size.
Conclusion
BIS is unable to determine whether there are a substantial number
of small entities affected by this rule. However, this rule is not
expected to affect a disproportionate number of small entities because
it is directed at a limited number of foreign persons and will impact
all export transactions to these persons, regardless of whether the
exports are made or intended to be made by small, medium, or large
entities. BIS has administered the UVL based on listing criteria
similar to those proposed in this rule since 2002. This rule would
impact transactions involving persons listed on the UVL, which
currently has 36 persons listed. Due to the limited number of persons
expected to be maintained on the UVL, BIS estimates that the number of
transactions involving these persons represents only a small fraction
of the total number of transactions recorded in AES. BIS estimates that
regulated entities would incur minimal economic burdens on transactions
involving UVL persons as a result of this rule because there are few
transactions involving such persons and for those transactions where
they are involved, there is no monetary fee to apply for a BIS license
or file a record in AES. Moreover,
[[Page 55669]]
obtaining a signed UVL statement from UVL persons for items not subject
to a license requirement will result in minimal burden to U.S.
exporters, as the statement can simply be copied from the EAR and
forwarded to the UVL person for review and signature. The maintenance
of any such UVL statement also will have minimal burden on U.S.
exporters as the EAR already has similar recordkeeping requirements
under Section 762.2 of the EAR. As a result, the requirements proposed
by this rule would amount to very little economic burden.
For the reasons above, the Chief Counsel for Regulation certified
that this proposed rule would not have a significant economic impact on
a substantial number of small entities.
List of Subjects
15 CFR Part 730
Administrative practice and procedure, Advisory committees,
Exports, Reporting and recordkeeping requirements, Strategic and
critical materials
15 CFR Part 740
Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.
15 CFR Part 744
Exports, Reporting and recordkeeping requirements, Terrorism.
15 CFR Part 756
Appeals.
15 CFR Part 758
Export Clearance Requirements.
15 CFR Part 762
Recordkeeping.
Accordingly, 15 CFR Parts 730, 740, 744, 756, 758, and 762 of the
Export Administration Regulations are proposed to be amended as
follows:
PART 730--[AMENDED]
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1. The authority citation for 15 CFR part 730 continues to read as
follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c; 22 U.S.C. 2151
note; 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; 30 U.S.C. 185(s),
185(u); 42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 1354; 15 U.S.C.
1824a; 50 U.S.C. app. 5; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210;
E.O. 11912, 41 FR 15825, 3 CFR, 1976 Comp., p. 114; E.O. 12002, 42
FR 35623, 3 CFR, 1977 Comp., p. 133; E.O. 12058, 43 FR 20947, 3 CFR,
1978 Comp., p. 179; E.O. 12214, 45 FR 29783, 3 CFR, 1980 Comp., p.
256; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12854,
58 FR 36587, 3 CFR, 1993 Comp., p. 179; E.O. 12918, 59 FR 28205, 3
CFR, 1994 Comp., p. 899; 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.
12981, 60 FR 62981, 3 CFR, 1995 Comp., p. 419; E.O. 13020, 61 FR
54079, 3 CFR, 1996 Comp., p. 219; 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; E.O. 13338, 69 FR 26751, 3
CFR, 2004 Comp., p 168; Notice of May 9, 2012, 77 FR 27559 (May 10,
2012); Notice of August 15, 2012, 77 FR 49699 (August 16, 2012);
Notice of September 11, 2012, 77 FR 56519 (September, 12, 2012) ;
Notice of November 1, 2012, 77 FR 66513 (November 5, 2012); Notice
of January 17, 2013, 78 FR 4303 (January 22, 2013).
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2. Supplement No. 1 to part 730 is amended by:
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a. Removing the phrase ``Part 758, and Sec. 748.4'' and adding in its
place ``Sec. Sec. 744.15(b) and 748.4 and Part 758'' in the
``Reference in the EAR'' column of 0694-0122 row;
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b. Removing the Title ``Procedure for parties on the Entity List to
Request Removal or Modification of their Listing'' and adding in its
place ``Procedure for parties on the Entity List or the Unverified List
to Request Removal or Modification of their Listing'' in the Title
Column of the 0694-0134 row; and
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c. Removing the reference ``Sec. 744.16'' and adding in its place
``Sec. Sec. 744.15 and 744.16'' in the Reference in the EAR column of
the 0694-0134 row.
PART 740--[AMENDED]
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3. The authority citation for 15 CFR Part 740 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. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp.,
p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice
of August 15, 2012, 77 FR 49699 (August 16, 2012).
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4. Section 740.2 is amended by adding paragraph (a)(17) to read as
follows:
Sec. 740.2 Restrictions on all License Exceptions.
(a) * * *
(17) A party to the transaction, as described in Sec. 748.5 of the
EAR, is listed on the Unverified List in Supplement No. 6 to Part 744,
see Sec. 744.15 of the EAR.
* * * * *
PART 744--[AMENDED]
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5. 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 15, 2012, 77 FR 49699
(August 16, 2012); Notice of September 11, 2012, 77 FR 56519
(September, 12, 2012) ; Notice of November 1, 2012, 77 FR 66513
(November 5, 2012); Notice of January 17, 2013, 78 FR 4303 (January
22, 2013).
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6. Part 744 is amended by adding Sec. 744.15 to read as follows:
Sec. 744.15 Restrictions on Exports, Reexports and Transfers (in-
country) to Persons Listed on the Unverified List.
(a) General requirement. In addition to the requirements set forth
elsewhere in the EAR, exports, reexports, or transfers (in-country) of
item(s) subject to the EAR involving parties to the transaction who are
listed on the Unverified List may be made only in accordance with
paragraph (b) of this section. The names and addresses of foreign
persons subject to end-user controls based on the criteria described in
paragraph (c) of this section are identified in the Unverified List
found in Supplement No. 6 to this part. Requirements found elsewhere in
the EAR also apply, including but not limited to any license
requirements, the record filing requirements pursuant to Sec.
758.1(b)(8), and the restrictions on license exceptions described in
Sec. 740.2(a)(17).
(b) UVL Statement. Before proceeding with any export, reexport, or
transfer (in-country) subject to the EAR that is not subject to a
license requirement, involving a person listed on the Unverified List
as a party described in Sec. 748.5 of the EAR, an exporter,
reexporter, or transferor (in-country) must obtain a UVL statement from
such person, according to the provisions set forth in this section. The
statement must be retained in accordance with Part 762 of the EAR.
(1) One UVL statement may be used for multiple shipments of the
same items between the same parties, so long as the party names, the
description(s) of the items and the ECCNs are correct. If one UVL
statement is used for multiple shipments, the exporter, reexporter, and
transferor (in-country) must maintain a log or other record that
identifies each shipment made pursuant to this section and the specific
UVL statement that is associated with each shipment. The log or record
must be retained in accordance with Part 762 of the EAR.
(2) The UVL statement must be in writing, signed by an individual
of
[[Page 55670]]
sufficient authority to legally bind the UVL party, and state the
following:
(i) Name of UVL party; complete physical address (simply listing a
post office is insufficient); telephone number; fax number; email
address; Web site (if available); and name of individual signing the
UVL statement.
(ii) Agrees not to use the item(s) for any use prohibited by the
United States Export Administration Regulations (EAR), 15 CFR Parts
730-772, and agrees not to reexport or transfer (in-country) the
item(s) to any destination, use or user prohibited by the EAR.
(iii) Declares that the end use, end user, and country of ultimate
destination of the item(s) subject to the EAR are as follows: [INSERT
END USE, END USER, AND COUNTRY OF ULTIMATE DESTINATION].
(iv) Agrees to cooperate with end-use checks, including a Pre-
License Check or a Post-Shipment Verification, conducted by or on
behalf of the Bureau of Industry and Security, U.S. Department of
Commerce, for any item subject to the EAR in transactions to which they
were a party in the last five years. This cooperation includes
facilitating the timely conduct of the check and providing full and
accurate information concerning the disposition of items subject to the
EAR.
(v) Agrees to provide copies of this document and all other export,
reexport or transfer (in-country) records required to be retained in
Part 762 of the EAR.
(vi) Certifies that the individual signing the UVL Statement has
sufficient authority to legally bind the party.
(c) Criteria for revising the Unverified List. (1) Foreign persons
who are parties to an export, reexport, and transfer (in-country)
subject to the EAR may be added to the Unverified List if BIS or
federal officials acting on BIS's behalf cannot verify the bona fides
(i.e., legitimacy and reliability relating to the end use and end user
of items subject to the EAR) of such persons because an end-use check,
such as a pre-license check (PLC) or a post-shipment verification
(PSV), cannot be completed satisfactorily for reasons outside of the
U.S. Government's control. The examples in paragraphs (c)(1)(i) through
(iii) of this section provide an illustrative list of those
circumstances.
(i) During the conduct of an end-use check, the subject of the
check is unable to demonstrate the disposition of items subject to the
EAR.
(ii) The existence or authenticity of the subject of an end-use
check cannot be verified (e.g., the subject of the check cannot be
located or contacted).
(iii) Lack of cooperation by the host government authority prevents
an end-use check from being conducted.
(2) BIS may remove a person from the Unverified List when BIS is
able to verify the bona fides of the listed person as an end user,
consignee, or other party to exports, reexports, or transfers (in-
country) involving items subject to the EAR by completing a PLC or PSV.
In the limited circumstance involving a PLC or PSV that cannot be
completed due to lack of host government cooperation, an alternative
bona fides verification process may be determined by BIS to be
sufficient. Such a determination is separate from those made by BIS
pursuant to Sec. 744.11(b) of the EAR, and should be requested through
paragraph (d) of this section.
(d) Procedure for requesting removal of a person on the Unverified
List. Any person listed on the Unverified List may request that its
listing be amended or removed.
(1) All such requests, including reasons therefor and information
that would verify the bona fides, i.e., legitimacy and reliability of
the person listed on the Unverified List as an end user, consignee or
other party to exports, reexports, and transfers (in-country) of items
subject to the EAR, must be in writing and sent to: Director, Office of
Enforcement Analysis, Bureau of Industry and Security, U.S. Department
of Commerce, 14th Street and Pennsylvania Avenue NW., Room 4065,
Washington, DC 20230, via fax to (202) 482-0971, or by email to [insert
email address].
(2) The Deputy Assistant Secretary for Export Enforcement will
review such requests and will convey the decision on the request to the
requester in writing based on an assessment of the listed person's bona
fides as a party to exports, reexports, and transfers (in-country)
subject to the EAR. That decision will be the final agency action on
the request.
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7. Part 744 is amended by adding Supplement No. 6 to read as follows:
Supplement No. 6 to Part 744--Unverified List
Exports, reexports, and transfers (in-country) involving parties to
the transaction who are listed in this supplement are subject to the
restrictions outlined in Sec. 744.15 of the EAR.
------------------------------------------------------------------------
Federal Register
Country Listed person and citation and date
address of publication
------------------------------------------------------------------------
Reserved........................ Reserved.......... Reserved.
------------------------------------------------------------------------
PART 756--[AMENDED]
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8. The authority citation for 15 CFR Part 756 continues to read as
follows:
Authority: 50 U.S.C. app 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
15, 2012, 77 FR 49699 (August 16, 2012).
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9. Section 756.1 is amended by revising paragraph (a)(3) to read as
follows:
Sec. 756.1 Introduction.
(a) * * *
(3) A decision on a request to remove or modify an Entity List
entry made pursuant to Sec. 744.16 of the EAR or a decision on a
request to remove an Unverified List entry made pursuant to Sec.
744.15 of the EAR.
PART 758--[AMENDED]
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10. The authority citation for 15 CFR Part 758 continues to read as
follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
15, 2012, 77 FR 49699 (August 16, 2012).
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11. Section 758.1 is amended by adding paragraph (b)(8) to read as
follows:
Sec. 758.1 The Shipper's Export Declaration (SED) or Automated Export
System (AES) record.
* * * * *
(b) * * *
(8) For all exports of items subject to the EAR where parties to
the transaction, as described in Sec. 748.5(d)-(f) of the EAR, are
listed on the Unverified List (Supplement 6 to Part 744 of the EAR),
regardless of value or destination.
PART 762--[AMENDED]
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12. The authority citation for 15 CFR Part 762 continues to read as
follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
15, 2012, 77 FR 49699 (August 16, 2012).
[[Page 55671]]
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13. Section 762.2 is amended by revising paragraph (b)(13) to read as
follows:
Sec. 762.2 Records to be retained.
* * * * *
(b) * * *
(13) Sec. 744.15(b), UVL statement as well as any logs or records
created for multiple shipments;
* * * * *
Dated: September 3, 2013.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2013-21996 Filed 9-10-13; 8:45 am]
BILLING CODE 3510-33-P