8 January 1999
Source: http://www.access.gpo.gov/su_docs/aces/aaces002.html

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[Federal Register: January 8, 1999 (Volume 64, Number 5)]
[Rules and Regulations]
[Page 1120-1122]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ja99-10]

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DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 744 and 772

[Docket No. 981013256-8256-01]
RIN 0694-AB63


Revisions to the Export Administration Regulations; Exports and
Reexports to Specially Designated Terrorists and Foreign Terrorist
Organizations

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Interim rule.

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SUMMARY: This interim rule amends the end-user and end-use control
policy of the Export Administration Regulations (EAR) to impose new
foreign policy controls on exports and certain reexports to persons
identified as Specially Designated Terrorists or Foreign Terrorist
Organizations and listed in the Appendices to 31 CFR Chapter V
published by the Department of the Treasury, Office of Foreign Assets
Control (OFAC). (The term ``person'' includes individuals as well as
entities or other organizations.)
    Specifically, this rule creates a new Sec. 744.10 and Sec. 744.11
that set forth the license requirements for exports and certain
reexports of items subject to the EAR to these persons. To avoid
duplication, the Bureau of Export Administration (BXA) will not require
a separate license when the Office of Foreign Assets Control has
authorized an export or reexport to a Specially Designated Terrorist.

DATES: Effective Date: This rule is effective January 8, 1999. Comment
Date: Comments on this rule must be received on or before February 8,
1999.

ADDRESSES: Written comments (six copies) should be sent to Denis
Kerner, Office of Export Enforcement, Bureau of Export Administration,
Room 4616, 14th Street and Constitution Ave., N.W., Washington, DC
20230.

FOR FURTHER INFORMATION CONTACT: Joan Roberts, Office of Strategic
Trade and Foreign Policy Controls, Bureau of Export Administration,
Department of Commerce, Telephone: (202) 482-0171.

SUPPLEMENTARY INFORMATION:

Background

    This rule amends part 744 of the EAR by imposing new foreign policy
controls on exports and certain reexports of items subject to the EAR
to persons identified as Specially Designated Terrorists or Foreign
Terrorist Organizations. Numerous persons have been determined pursuant
to Executive Order 12947 of January 23, 1995 (3 CFR, 1995 Comp., p.
319, as amended by Executive Order 13099 of August 20, 1998 (63 FR
45167, August 25, 1998)) to be disrupting the Middle East Peace
Process. These persons have been identified as Specially Designated
Terrorists, are subject to OFAC's Terrorism Sanctions Regulations (31
CFR part 595) and are listed in Appendices to 31 CFR Chapter V followed
by the bracketed suffix initials [SDT].
    In addition, certain organizations have been designated by the
Secretary of State as Foreign Terrorist Organizations pursuant to 8
U.S.C. 1189 and are listed in Appendices to 31 CFR Chapter V followed
by the bracketed suffix initials [FTO] and identified by State and
Treasury Department notices. Funds of these organizations are subject
to blocking pursuant to OFACs Foreign Terrorist Organizations Sanctions
Regulations (31 CFR part 597). Criminal sanctions may also be imposed
against any person subject to the jurisdiction of the United States who
provides material support or resources to an FTO pursuant to 18 U.S.C.
2339. BXA is revising the EAR to further U.S. counterterrorism
objectives. This rule revises part 744 of the Export Administration
Regulations (EAR) by describing the license requirements for exports
and certain reexports to SDTs and FTOs of items subject to the EAR.
    (a) For SDTs, a license is required for:

    (1) All exports and reexports by a U.S. person of any item
subject to the EAR; and
    (2) All exports and reexports by any person of any item subject
to the EAR on the Commerce Control List (CCL).

To avoid duplication, exporters are not required to seek separate
authorizations from BXA and from OFAC for an export or reexport subject
both to the EAR and to OFAC's Terrorism Sanctions Regulations. OFAC
regulations apply to transactions by U.S. persons with SDTs. Therefore,
if OFAC authorizes a transaction involving an export or reexport by a
U.S. person to a designated SDT, no separate authorization from BXA is
necessary. An authorization issued by OFAC constitutes authorization
under the EAR. Transactions not covered under OFAC regulations (e.g.,
reexports by non-U.S. persons to SDTs of items subject to the EAR on
the CCL) will require a license from BXA under this rule.
    (b) For FTOs, a license is required for:

    (1) All exports and reexports by a U.S. person of any item
subject to the EAR; and
    (2) All exports and reexports by any person of any item subject
to the EAR on the CCL.

[[Page 1121]]

    Exporters are required to seek authorization from BXA for exports
and certain reexports to FTOs. Applications for exports and reexports
of all items to FTOs identified by paragraphs (1) and (2) above will
generally be denied, to the extent they constitute material support or
resources, as defined in 18 U.S.C. 2339A(b).
    Although the Export Administration Act (EAA) expired on August 20,
1994, the President invoked the International Emergency Economic Powers
Act and continued in effect the Export Administration Regulations and,
to the extent permitted by law, the provisions of the EAA in Executive
Order 12924 of August 19, 1994, as extended by the President's notices
of August 15, 1995 (60 FR 42767), August 14, 1996 (61 FR 42527), August
13, 1997 (62 FR 43629) and August 13, 1998 (63 FR 44121).
    Under a policy of conforming actions under the Executive Order to
those under the EAA, insofar as appropriate, the Department of Commerce
notified the Congress of this imposition of foreign policy controls on
December 15, 1998.

Rulemaking Requirements

    1. This final rule has been determined to be significant for the
purposes of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is
required to respond to nor may be subject to a penalty for failure to
comply with a collection of information subject to the requirements of
the Paperwork Reduction Act unless that collection of information
displays a current valid OMB Control Number. This rule involves a
collection of information subject to the Paperwork Reduction Act of
1980 (44 U.S.C. 3501, et seq.). This collection has been approved by
the Office of Management and Budget under control number 0694-0088.
    3. This rule does not contain policies with Federalism implications
sufficient to warrant preparation of a Federalism assessment under
Executive Order 12612.
    4. Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule by the
Administrative Procedure Act (5 U.S.C. 553) or by any other law, under
section 3(a) of the Regulatory Flexibility Act (5 U.S.C. 603(a) and
604(a)) no initial or final Regulatory Flexibility Analysis has to be
or will be prepared.
    5. 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 foreign and military affairs
function of the United States. No other law requires that a notice of
proposed rulemaking and an opportunity for public comment be given for
this rule.
    However, because of the importance of the issues raised by these
regulations, this rule is being issued in interim form and comments
will be considered in the development of final regulations.
Accordingly, the Department encourages interested persons who wish to
comment to do so at the earliest possible time to permit the fullest
consideration of their views.
    The period for submission of comments will close February 8, 1999.
The Department will consider all comments received before the close of
the comment period in developing final regulations. Comments received
after the end of the comment period will be considered if possible, but
their consideration cannot be assured. The Department 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. The Department will return such
comments and materials to the person submitting the comments and will
not consider them in the development of final regulations. All public
comments on these regulations will be a matter of public record and
will be available for public inspection and copying. In the interest of
accuracy and completeness, the Department requires comments in written
form.
    Oral comments must be followed by written memoranda, which will
also be a matter of public record and will be available for public
review and copying. Communications from agencies of the United States
Government or foreign governments will not be made available for public
inspection.
    The public record concerning these regulations will be maintained
in the Bureau of Export Administration Freedom of Information Records
Inspection Facility, Room 4525, Department of Commerce, 14th Street and
Pennsylvania Avenue, N.W., Washington, DC 20230. Records in this
facility, including written public comments and memoranda summarizing
the substance of oral communications, may be inspected and copied in
accordance with regulations published in Part 4 of Title 15 of the Code
of Federal Regulations. Information about the inspection and copying of
records at the facility may be obtained from Margaret Cornejo, Bureau
of Export Administration Freedom of Information Officer, at the above
address or by calling (202) 482-2593.

List of Subjects

15 CFR Part 744

    Exports, Foreign trade, Reporting and recordkeeping requirements.

15 CFR Part 772

    Exports, Foreign trade.

    Accordingly, parts 744 and 772 of the Export Administration
Regulations (15 CFR Parts 730-774) are amended as follows:

PART 744--[AMENDED]

    1. The authority citation for 15 CFR part 744 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. 3201 et seq.; 42 U.S.C. 2139a; 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. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O.
12938, 3 CFR, 1994 Comp., p. 950; E.O. 13026, 3 CFR, 1996 Comp., p.
228; Notice of August 13, 1997 (62 FR 43629, August 15, 1997);
Notice of August 13, 1998 (63 FR 44121).

    2. The authority citation for 15 CFR part 772 is revised to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 3
CFR, 1994 Comp., p. 950; E.O. 13026, 3 CFR, 1996 Comp., p. 228;
Notice of August 13, 1997 (62 FR 43629, August 15, 1997); Notice of
August 13, 1998 (63 FR 44121, August 17, 1998).

    3. A new Sec. 744.13 is added to read as follows:

Sec. 744.13  Restrictions on exports and certain reexports to specially
designated terrorists.

    Consistent with the purpose of Executive Order 12947 of January 23,
1995, BXA maintains restrictions on exports and certain reexports to
Specially Designated Terrorists. Executive Order 12947 prohibits
transactions by U.S. persons with terrorists who threaten to disrupt
the Middle East peace process. Pursuant to the Executive Order, the
Department of the Treasury, Office of Foreign Assets Control (OFAC),
maintains 31 CFR part 595, the Terrorism Sanctions Regulations. In the
Appendices to 31 CFR Chapter V, pursuant to 31 CFR part 595, these
Specially Designated Terrorists are identified by the bracketed suffix
initials [SDT]. The requirements set forth below further the objectives
of Executive Order 12947.
    (a) License requirement(s). (1) All exports and reexports to an SDT
by a U.S. person of any item subject to the EAR; and

[[Page 1122]]

    (2) A license requirement applies to all exports and reexports to
an SDT of any item subject to the EAR on the Commerce Control List
(CCL).
    (3) To avoid duplication, U.S. persons are not required to seek
separate authorization for an export or reexport subject both to the
EAR and to OFAC's Terrorism Sanctions Regulations. Therefore, if OFAC
authorizes an export or reexport by a U.S. person to a SDT, no separate
authorization from BXA is necessary.
    (4) Any export or reexport by a U.S. person of any item subject to
both the EAR and OFAC's Terrorism Sanctions Regulations and not
authorized by OFAC is a violation of the EAR. Any export from abroad or
reexport by a non-U.S. person of items requiring a license pursuant to
this section and not authorized by BXA is a violation of the EAR.
    (5) These licensing requirements supplement any other requirements
set forth elsewhere in the EAR.
    (b) Exceptions. No License Exceptions or other BXA authorization
for items described by paragraph (a) of this section are available for
exports or reexports to SDTs.
    (c) Licensing policy. Applications for licenses required by
paragraph (a) of this section generally will be denied. You should
consult with OFAC concerning transactions subject to OFAC licensing
requirements.
    (d) Contract sanctity. Contract sanctity provisions are not
available for license applications reviewed under this section.
    4. A new section 744.14 is added to read as follows:

Sec. 744.14  Restrictions on exports and certain reexports to
designated foreign terrorist organizations.

    Consistent with the objectives of sections 302 and 303 of the Anti-
Terrorism and Effective Death Penalty Act (Anti-Terrorism Act) (Pub.L.
104-132, 110 Stat. 1214-1319), BXA maintains restrictions on exports
and certain reexports to designated Foreign Terrorist Organizations.
The Secretary of State has designated certain designated Foreign
Terrorist Organizations pursuant to section 302 of the Anti-Terrorism
Act. Also pursuant to section 302 of the Anti-Terrorism Act, the
Department of the Treasury, Office of Foreign Assets Control, maintains
31 CFR part 597, the Foreign Terrorist Organizations Sanctions
Regulations, requiring U.S. financial institutions to block all
financial transactions involving assets of designated Foreign Terrorist
Organizations within the possession or control of such U.S. financial
institutions. Section 303 of the Anti-Terrorism Act prohibits persons
within the United States or subject to U.S. jurisdiction from knowingly
providing material support or resources to a designated Foreign
Terrorist Organization and makes violations punishable by criminal
penalties under title 18, United States Code. These designated Foreign
Terrorist Organizations are listed in the Appendices to 31 CFR Chapter
V and identified by the bracketed suffix initials [FTO]. The export
control requirements set forth below further the objectives of the
Anti-Terrorism Act.
    (a) License requirement(s). A license requirement applies to:
    (1) All exports and reexports to an FTO of any item subject to the
EAR on the Commerce Control List (CCL); and
    (2) All exports and reexports to an FTO by a U.S. person of any
item subject to the EAR.
    (3) Any export or reexport by a U.S. person prohibited by the EAR
and not authorized by BXA is a violation of the EAR. Any export from
abroad or reexport by a non-U.S. person of items requiring a license
pursuant to this section and not authorized by BXA is a violation of
the EAR.
    (4) These licensing requirements supplement any other requirements
set forth elsewhere in the EAR.
    (b) Exceptions. No License Exceptions or other BXA authorization
for items described by paragraph (a) of this section are available for
exports or reexports to FTOs.
    (c) Licensing policy. Applications for exports and reexports to
FTOs of all items identified by paragraphs (a)(1) and (a)(2) of this
section will generally be denied, to the extent they constitute
material support or resources, as defined in 18 U.S.C. 2339A(b).
    (d) Contract sanctity. Contract sanctity provisions are not
available for license applications reviewed under this section.

    Note to Sec. 744.14. This section does not implement, construe,
or limit the scope of any criminal statute, including (but not
limited to) 18 U.S.C. 2339B(a)(1) and 2339A, and does not excuse any
person from complying with any criminal statute, including (but not
limited to) 18 U.S.C. 2339B(a)(1) and 18 U.S.C. 2339A.

PART 772--[AMENDED]

    5. Part 772 is amended:
    a. By adding a definition for foreign terrorist organization;
    b. By revising the heading for the definition of Specially
Designated Terrorist; and
    c. By revising the introductory text of paragraph (a) for the
definition of ``U.S. person'' to read as follows:

PART 772--DEFINITIONS OF TERMS

* * * * *
    Foreign Terrorist Organizations (FTO). Any organization that is
determined by the Secretary of the Treasury to be a foreign terrorist
organization under notices or regulations issued by the Office of
Foreign Assets Control (see 31 CFR chapter V).
* * * * *
    Specially Designated Terrorist (SDT). * * *
* * * * *
    U.S. person. (a) For purposes of Secs. 744.6, 744.10, and 744.11 of
the EAR, the term U.S. person includes:
* * * * *
    Dated: December 29, 1998.
R. Roger Majak,
Assistant Secretary for Export Administration.
[FR Doc. 99-334 Filed 1-7-99; 8:45 am]
BILLING CODE 3510-33-P
