05-3465. Denied Persons and Specially Designated Nationals

AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Final rule.

SUMMARY:

This final rule removes all reference in the Export Administration Regulations (EAR) to the supplement containing the list of persons denied export privileges (“Denied Persons List” (DPL)) because no such supplement exists in the Code of Federal Regulations. In the past, such a supplement has been included only in the unofficial loose-leaf version of the EAR that is available by subscription from the U.S. Government Printing Office. In addition, the Bureau of Industry and Security provides notice to the public that it is discontinuing its practice of including in the loose-leaf version of the EAR both the DPL and the “Specially Designated Nationals and Blocked Persons” (SDN) List. Revisions to the DPL and SDN List are issued on such a frequent basis as to make the quarterly, hard-copy versions of the lists included in the loose-leaf version of the EAR inaccurate. The removal of the DPL and SDN List from the loose-leaf version of the EAR will minimize any potential that parties might rely on an outdated list of persons denied export privileges under the EAR.

DATES:

Effective Date: This rule is effective February 23, 2005.

ADDRESSES:

Although there is no official comment period, you may submit comments, identified by RIN 0694-AD43, by any of the following methods:

• E-mail: [e-mail]. Include “RIN 0694-AD43” in the subject line of the message.
• Fax: [phone].
• Mail or Hand Delivery/Courier: U.S. Department of Commerce, Bureau of Industry and Security, Regulatory Policy Division, 14th & Pennsylvania Avenue, NW., Room 2705, Washington, DC 20230, ATTN: 0694-AD43.

Send a copy of any comments that concern information collection requirements to Dave Rostker, OMB Desk Officer, New Executive Office Building, 725 17th Street, NW., Washington, DC 20503; and to the Office of Administration, Bureau of Industry and Security, Department of Commerce, 14th and Pennsylvania Avenue, NW., Room 6092, Washington, DC 20230.

FOR FURTHER INFORMATION CONTACT:

Marcus Cohen, Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security, Telephone: [phone].

SUPPLEMENTARY INFORMATION:

In the unofficial loose-leaf version of the Export Administration Regulations (EAR) that is available by subscription from the U.S. Government Printing Office, the Bureau of Industry and Security (BIS) currently publishes, on a quarterly basis, the list of persons denied export privileges pursuant to Parts 764 and 766 of the EAR (“Denied Persons List” (DPL)) and a copy of the “Specially Designated Nationals and Blocked Persons” (SDN) List, which is published by the U.S. Treasury Department, Office of Foreign Assets Control (OFAC). In the loose-leaf edition of the EAR, the DPL and the SDN List have been designated as Supplements No. 2 and 3, respectively, to Part 764. However, no such supplements exist in the Code of Federal Regulations, Title 15 Part 764.

Orders affecting export privileges under the EAR and revisions to the SDN List are issued on such a frequent basis as to make the quarterly, hard-copy versions of the DPL and the SDN List inaccurate. As such, BIS is discontinuing quarterly reprints of these lists in the loose-leaf edition of the EAR. The removal of these lists from the loose-leaf edition of the EAR will minimize any potential that parties to a transaction might rely on an outdated list of persons denied export privileges under the EAR. BIS maintains a current compilation of persons denied export privileges under the EAR on its Web site, and OFAC maintains a current list of specially designated nationals on its Web site. Export privileges are denied by written order of the Department of Commerce; such orders are published in the Federal Register. These orders are the official source of information about denied persons, and are controlling documents in accordance with their terms.

This rule removes from § 736.2(b)(4)(i) and paragraph (a)(1) of Supplement No. 1 to Part 764 language stating that BIS provides the DPL in the loose-leaf edition of the EAR. This rule also revises § 736.2(a)(3) to clarify that, with respect to the end-user, General Prohibition Four (§ 736.2(b)(4)) and Supplement No. 1 to Part 764 of the EAR should be consulted for references to persons with whom transactions may not be permitted, and General Prohibition Five (§ 736.2(b)(5)) should be consulted for references to end-users for whom an export or reexport license may be required. General Prohibition Four prohibits actions that are prohibited by a denial order issued under Part 766 of the EAR. General Prohibition Five prohibits any exports and reexports to an end-user prohibited by Part 744 of the EAR, which contains end-user and end-use based controls. Supplement No. 1 to Part 764 describes denial orders, which prohibit certain transactions with named parties involving items that are subject to the EAR. Supplement No. 1 to Part 764 also references the list of persons denied export privileges.

This rule also makes necessary conforming changes by removing references to Supplement No. 2 to Part 764 from §§ 752.11(c)(3), 752.11(c)(4), and 752.12(a). Finally, this rule revises §§ 752.9(a)(3)(ii)(G) and 752.12(a) by removing the procedural requirement of distributing and retaining copies of the DPL. Instead, each Special Comprehensive License (SCL) holder and each consignee must maintain a record of its procedures for screening transactions to prevent violations of orders denying export privileges. By making this requirement functional and results-oriented, this revision will increase the effectiveness of screening and reduce the burden on SCL holders and consignees.

Although the Export Administration Act expired on August 20, 2001, Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp., p. 783 (2002)), as extended most recently by the Notice of August 6, 2004, (69 FR 48763 (August 10, 2004)) continues the Regulations in effect under the International Emergency Economic Powers Act.

Rulemaking Requirements

1. This final rule has been determined to be not significant for purposes of E.O. 12866.

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person 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 rule involves a collection of information subject to the PRA. This collection has been approved by OMB under control number 0694-0088, “Multi-Purpose Application,” which carries a burden hour estimate of 58 minutes for a manual or electronic submission. Send comments regarding these burden estimates or any other aspect of these collections of information, including suggestions for reducing the burden, to Dave Rostker, OMB Desk Officer, New Executive Office Building, 725 17th Street, NW., Washington, DC 20503; and to the Office of Administration, Bureau of Industry and Security, Department of Commerce, 14th and Pennsylvania Avenue, NW., Room 6092, Washington, DC 20230.

3. This rule does not contain policies with Federalism implications as that term is defined under E.O. 13132.

4. The Department finds that there is good cause under 5 U.S.C. 553(b)(B) to waive the provisions of the Administrative Procedure Act requiring a notice of proposed rulemaking and the opportunity for public comment. This rule makes changes to Parts 736, 752, and 764 of the EAR that are non-substantive and do not affect the rights or obligations of the public. This rule removes references in the EAR to the DPL and notifies the public that it BIS is discontinuing its practice of including the DPL and SDN List in the loose-leaf version of the EAR. Because these revisions are not substantive changes to the EAR, it is unnecessary to provide notice and opportunity for public comment. In addition, because this is not a substantive rule, the delay in effective date pursuant to 5 U.S.C. 553(d)(3) is not applicable. 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 under the Administrative Procedure Act or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Therefore, this regulation is issued in final form.

List of Subjects

15 CFR Part 736

• Exports
• Foreign trade

15 CFR Part 752

• Administrative practice and procedure
• Exports
• Reporting and recordkeeping requirements

15 CFR Part 764

• Administrative practice and procedure
• Exports
• Law enforcement
• Penalties

Accordingly, parts 736, 752, and 764 of the Export Administration Regulations (15 CFR parts 730-799) are amended, as follows:

PART 736—[AMENDED]

1. The authority citation for 15 CFR part 736 is revised to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 2151 (note), Pub. L. 108-175; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; 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. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, May 13, 2004; Notice of August 6, 2004, 69 FR 48763 (August 10, 2004); Notice of November 4, 2004, 69 FR 64637 (November 8, 2004).

2. Section 736.2 is amended by revising paragraphs (a)(3) and (b)(4)(i), as follows:

§ 736.2

General prohibitions and determination of applicability.

(a) * * *

(3) End-user. The ultimate end user (see General Prohibition Four (paragraph (b)(4) of this section) and Supplement No. 1 to part 764 of the EAR for references to persons with whom your transaction may not be permitted; see General Prohibition Five (Paragraph (b)(5) of this section) and part 744 for references to end-users for whom you may need an export or reexport license).

* * * * *

(b) * * *

(4) * * *

(i) You may not take any action that is prohibited by a denial order issued under part 766 of the EAR, Administrative Enforcement Proceedings. These orders prohibit many actions in addition to direct exports by the person denied export privileges, including some transfers within a single country, either in the United States or abroad, by other persons. You are responsible for ensuring that any of your transactions in which a person who is denied export privileges is involved do not violate the terms of the order. Orders denying export privileges are published in the Federal Register when they are issued and are the legally controlling documents in accordance with their terms. BIS also maintains compilations of persons denied export privileges on its Web site at http://www.bis.doc.gov. BIS may, on an exceptional basis, authorize activity otherwise prohibited by a denial order. See § 764.3(a)(2) of the EAR.

* * * * *

PART 752—[AMENDED]

3. The authority citation for 15 CFR part 752 is revised to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp. p. 219; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 6, 2004, 69 FR 48763 (August 10, 2004).

4. Section 752.9 is amended by revising paragraph (a)(3)(ii)(G), as follows:

§ 752.9

Action on SCL applications.

(a) * * *

(3) * * *

(ii) * * *

(G) A copy of your procedures for screening transactions to prevent violations of orders denying export privileges under the EAR:

* * * * *

5. Section 752.11 is amended by revising paragraph (c)(3) and (c)(4), as follows:

§ 752.11

Internal Control Programs.

* * * * *

(c) * * *

(3) A system for timely distribution to consignees and verification of receipt by consignees of regulatory materials necessary to ensure compliance with the EAR;

(4) A system for screening transactions to prevent violations of orders denying export privileges under the EAR;

* * * * *

6. Section 752.12 is amended by revising paragraph (a), as follows:

§ 752.12

Recordkeeping requirements.

(a) SCL holder and consignees. In addition to the recordkeeping requirements of part 762 of the EAR, the SCL holder and each consignee must maintain copies of manuals, guidelines, policy statements, internal audit procedures, reports, and other documents making up the ICP of each party included under an SCL and all regulatory materials necessary to ensure compliance with the SCL, such as relevant changes to the EAR, product classification, additions, deletions, or other administrative changes to the SCL, transmittal letters and consignee's confirmations of receipt of these materials. Each SCL holder and each consignee must maintain a record of its procedures for screening transactions to prevent violations of orders denying export privileges.

* * * * *

PART 764—[AMENDED]

7. The authority citation for 15 CFR part 764 is revised 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 6, 2004, 69 FR 48763 (August 10, 2004).

8. Supplement No. 1 to Part 764 is amended by revising the sixth sentence of paragraph (a)(1), as follows:

Supplement No. 1 to Part 764—Standard Terms of Orders of Denying Export Privileges

(a) * * *

(1) * * * BIS provides a list of persons currently subject to denial orders on its Web site at http://www.bis.doc.gov.

* * * * *

Dated: February 14, 2005.

Matthew S. Borman,

Deputy Assistant Secretary for Export Administration.