BIS Expands Scope of Reasons Parties May be Added to Entity List, Etc.
The Bureau of Industry and Security has issued a final rule, effective August 21, 2008, to expand the scope of reasons for adding parties to the Entity List.
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The final rule also amends the Export Administration Regulations to state explicitly that a party listed on the Entity List has a right to request that its listing be removed or modified and sets procedures for addressing such requests.
(The Entity List (Supplement No. 4 to 15 CFR Part 744) 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.)
Five New Types of Conduct for Adding Parties to Entity List, Etc.
The final rule adds 15 CFR 744.11 to authorize BIS to impose foreign policy export and reexport license requirements, limitations on availability of license exceptions, and set license application review policy based on certain new criteria.
- CFR 744.11(b) lists five types of conduct, in addition to the grounds set forth in 15 CFR 744.2, 744.3, 744.4, 744.6, 744.10, 744.17, 744.20, and 744.21, that the End-User Review Committee1 could determine are contrary to U.S. national security or foreign policy interests as criteria for addition to the Entity List. These five types of conduct are:
(1) Supporting persons engaged in acts of terror.
(2) 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.
(3) 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.
(4) Preventing accomplishment of an end use check conducted by or on behalf of BIS or the Directorate of Defense Trade Controls of the State Department 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.
The conduct in this example includes: expressly refusing to permit a check, providing false or misleading information, or engaging in dilatory or evasive conduct that effectively prevents the check from occurring or makes the check inaccurate or useless. A nexus between the conduct of the party to be listed and the failure to produce a complete, accurate and useful check is required, even though an express refusal by the party to be listed is not required.
(This example has been revised from the proposed rule to emphasize that some conduct by the party to be listed would justify placing the entity on the Entity List although that conduct need not be an express refusal to permit the check.)
(5) Engaging in conduct that poses a risk of violating the EAR when such conduct raises sufficient concern that the End-User Review committee believes that prior review of exports or reexports involving the party and the possible imposition of license conditions or license denial enhances BIS' ability to prevent violations of the EAR.
(The final rule replaces the proposed rule phrase "that BIS believes" with the phrase "that the End-User Review Committee believes" because decisions to add, remove or modify an Entity List listing pursuant to 15 CFR 744.11 will be made by the End-User Review Committee.)
Procedures for Entity List Removal Requests
New 15 CFR 744.16 sets forth the procedure by which listed parties may request modification or removal from the Entity List, and adds a new Supplement No. 5 to 15 CFR Part 744 - Procedures for End-User Review Committee Entity List Decisions. BIS states that the End-User Review Committee is the body for all decisions to make changes to the Entity List pursuant to 15 CFR 744.11 and 744.16.
- CFR 744.16 also provides that decisions on a listed entity's request to have its listing modified or removed will be conveyed to the requester by the Deputy Assistant Secretary for Export Administration.
Certain Entities, U.S. Persons May Not be Added to Entity List
BIS notes that an entity 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 based on the List of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control) may not be added to the Entity List. The rule also does not authorize placing U.S. persons (as defined in 15 CFR 772.1) on the Entity List.
(See final rule for complete regulations, including conforming and technical changes, and a summary of public comments and BIS responses.)
1The End-User Review Committee consists of representatives of the Departments of Commerce, State, Defense, Energy and, if appropriate in a particular case, the Treasury.
(See ITT's Online Archives or 06/08/07 news, 07060825, for BP summary of the proposed rule.
See ITT's Online Archives or 07/13/07 news, 07071335, for most recent BP summary of BIS adding entities to the Entity List.)
BIS contact - Karen Nies-Vogel (202) 482-3811
BIS final rule (D/N 0612243150-8535-02, FR Pub 08/21/08) available at http://edocket.access.gpo.gov/2008/pdf/E8-19102.pdf
BIS press release (dated 08/21/08) available at http://www.bis.doc.gov/news/2008/bis_press08212008.htm