BIS Proposes to Add License Requirements for Exports, Reexports to Entities Acting Contrary to U.S. Interests, Etc.

This proposed rule would expand the scope of the reasons for which BIS may add parties to the Entity List established by the Export Administration Regulations (15 CFR Part 744, Supplement No. 4).

This proposed rule would also amend the EAR to state explicitly that a party listed on the Entity List has a right to request that its listing be removed or modified and would set procedures for addressing such requests.

BIS states that this proposed rule would simplify the EAR by reducing the need to issue general orders to impose license requirements on specific parties. License requirements currently imposed on specific entities through general orders would, under this rule, be imposed by adding such entities to the Entity List.

(The Entity List provides notice to the public that certain exports and reexports to parties identified on the list require a license from BIS and that availability of License Exceptions in such transactions is limited.)

Comments on the proposed rule must be received no later than August 6, 2007.

BIS Proposes New Types of Conduct Contrary to National Security, Etc.

The following are highlights of BIS' proposed rule:

Proposed types of conduct contrary to national security. This proposed rule would add 15 CFR 744.11 to, among other things, list five types of conduct, in addition to the grounds set forth in 15 CFR 744.2, 744.3, 744.4, 744.6 or 744.20, that BIS could determine are contrary to U.S. national security or foreign policy interests. BIS states that this proposed rule would not require that such activities involve items or activities that are subject to the EAR. These five types of conduct are:

(i) Supporting persons engaged in acts of terror;

(ii) Actions that could enhance the military capability of, or the ability to support terrorism of governments that have been designated by the Secretary of State as having repeatedly provided support for acts of international terrorism;

(iii) Transferring, developing, servicing, repairing, or producing conventional weapons in a manner that is contrary to U.S. national security or foreign policy interests or enabling such transfer, development, service, repair or production by supplying parts, components, technology, or financing for such activity;

(iv) Deliberately failing or refusing to comply with an end use check conducted by or on behalf of BIS or the Department of State, Directorate of Defense Trade Controls by denying access, by refusing to provide information about parties to a transaction, or by providing information about such parties that is false or that cannot be verified or authenticated; and

(v) Engaging in conduct that poses a risk of violating the EAR and raises sufficient concern that prior review of exports or reexports involving the party and the possible imposition of license conditions or license denial enhances BIS's ability to prevent violations of the EAR.

Under this proposed rule, license exceptions are not available for any entity added to the Entity List pursuant to this rule unless specifically authorized in the entry for the entity.

Proposed BIS authorization to modify license requirements, etc. Proposed 15 CFR 744.11 would also authorize BIS to modify the license requirements, license exception availability or license application review policy that applies to any entity placed on the Entity List pursuant to this rule.

Proposed procedures for Entity List removal requests, etc. Proposed 15 CFR 744.16 would also explicitly set forth the ability of a party who is listed on the Entity List to request that its listing be removed or modified.

Such requests, including reasons therefor, would have to be made in writing, and BIS would be required to provide a written response that would be the final agency decision on the request. Such requests would be reviewed by the Departments of Commerce, State, Defense, and Energy¹ and, if appropriate in a particular case, the Treasury. The interagency decision, as communicated to the requesting entity by BIS, would be the final agency action on such a request.

Proposed conforming change to definition of U.S. person. This proposed rule would make a conforming change to the definition of U.S. person in 15 CFR 772.1 by adding 15 CFR 744.11 to the list of sections to which that definition applies. (BIS notes that this proposed rule would not authorize placing U.S. persons on the Entity List.)

(BIS states that this proposed rule would not be used to add a party to the Entity List to which exports or reexports require a license pursuant to 15 CFR 744.12, 744.13, 744.14 or 744.18, which impose license requirements because of the presence of certain parties on the List of Specially Designated Nationals and Blocked Persons published by the U.S. Department of the Treasury, Office of Foreign Assets Control.)

¹This new interagency advisory committee would be referred to as the End User Review Committee.

(See ITT's Online Archives or 03/08/07 news, 07030820, for most recent BP summary of BIS adding entities to the Entity List.)

- Comments due by August 6, 2007

BIS Contact- Mike Rithmire (202) 482-6105

BIS proposed rule (D/N 0612243150-63150-01, FR Pub 06/05/07) available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-10788.pdf