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

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