Weapons of Mass Destruction Trade Control Regulations: Implementation of Executive Order 13094

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 539

Weapons of Mass Destruction Trade Control Regulations:

Implementation of Executive Order 13094

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Foreign Assets Control is issuing the Weapons of

Mass Destruction Trade Control Regulations to implement additional

import measures with respect to the proliferation of nuclear,

biological, and chemical weapons of mass destruction and of the means

of delivering such weapons.

EFFECTIVE DATE: February 23, 1999.

FOR FURTHER INFORMATION CONTACT: John T. Roth, Chief, Policy Planning

and Program Management, tel.: 202/622-2500, Dennis P. Wood, Chief of

Compliance Programs, tel.: 202/622-2490, or William B. Hoffman, Chief

Counsel, tel.: 202/622-2410, Office of Foreign Assets Control,

Department of the Treasury, Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Electronic Availability

This document is available as an electronic file on The Federal

Bulletin Board the day of publication in the Federal Register. By

modem, dial 202/512-1387 and type ``/GO FAC,'' or call 202/512-1530 for

disk or paper copies. This file is available for downloading without

charge in ASCII and Adobe AcrobatR readable (*.PDF) formats.

For Internet access, the address for use with the World Wide Web (Home

Page), Telnet, or FTP protocol is: fedbbs.access.gpo.gov. The document

is also accessible for downloading in ASCII format without charge from

Treasury's Electronic Library (``TEL'') in the ``Research Mall'' of the

FedWorld bulletin board. By modem, dial 703/321-3339, and select self-

expanding file ``T11FR00.EXE'' in TEL. For Internet access, use one of

the following protocols: Telnet = fedworld.gov (192.239.93.3); World

Wide Web (Home Page) = http://www.fedworld.gov; FTP = ftp.fedworld.gov

(192.239.92.205). Additional information concerning the programs of the

Office of Foreign Assets Control is available for downloading from the

Office's Internet Home Page: http://www.treas.gov/ofac, or in fax form

through the Office's 24-hour fax-on-demand service: call 202/622-0077

using a fax machine, fax modem, or (within the United States) a touch-

tone telephone.

Background

In Executive Order 12938 of November 14, 1994 (59 FR 59099, 3 CFR,

1994 Comp., p. 950), President Clinton declared a national emergency

with respect to the proliferation of nuclear, biological, and chemical

weapons (``weapons of mass destruction'') and of the means of

delivering such weapons, invoking the authority, inter alia, of the

International Emergency Economic Powers Act, 50 U.S.C. 1701-1706

(``IEEPA''), and the Arms Export Control Act, as amended, 22 U.S.C.

2751-2799aa-2. Executive Order 12938 provided, among other things, that

the Secretary of State and the Secretary of Commerce were to use their

respective authorities to control certain exports if either Secretary

determined that the export would assist a country in acquiring the

capability to develop, produce, stockpile, deliver, or use weapons of

mass destruction or their means of delivery. Executive Order 12938 also

authorized the imposition of measures on a foreign person with respect

to chemical and biological weapons proliferation if the Secretary of

State determined that the foreign person, on or after November 16,

1990, knowingly and materially contributed to the efforts of any

foreign country, project, or entity to use, develop, produce,

stockpile, or otherwise acquire chemical or biological weapons. These

measures could include a prohibition on the procurement by the United

States Government of goods or services from any such foreign person and

a prohibition on the importation into the United States of products

produced by that foreign person. Finally, the Secretary of State was

authorized to impose certain measures against foreign countries found

to have used or made substantial preparations to use chemical or

biological weapons in violation of international law, or developed,

produced, stockpiled, or otherwise acquired chemical or biological

weapons in violation of international law.

In Executive Order 13094 of July 28, 1998 (63 FR 40803, July 30,

1998), the President has taken additional steps with respect to the

national emergency declared in Executive Order 12938. Section 4 of

Executive Order 12938 is amended to authorize the imposition of certain

measures upon a determination by the Secretary of State that a foreign

person has materially contributed or attempted to contribute materially

to the efforts of any foreign country, project, or entity of

proliferation concern to use,

[[Page 8716]]

acquire, design, develop, produce, or stockpile weapons of mass

destruction or missiles capable of delivering such weapons. Executive

Order 13094 provides that a procurement ban, assistance ban, and import

ban are to be imposed on such a foreign person to the extent determined

by the Secretary of State in consultation with the implementing agency

and other relevant agencies. Section 1(a) of Executive Order 13094 also

amends Executive Order 12938 to authorize the Secretary of the Treasury

to prohibit the importation into the United States of goods,

technology, or services, other than information or informational

materials within the meaning of section 203(b)(3) of IEEPA, which have

been produced or provided by a foreign person determined to be subject

to the import ban (a ``designated foreign person''). In implementation

of the import ban contained in section 1(a) of Executive Order 13094,

the Office of Foreign Assets Control of the U.S. Department of the

Treasury is promulgating the Weapons of Mass Destruction Trade Control

Regulations (the ``Regulations'').

Section 539.201 of the Regulations prohibits the importation of

goods, technology, or services produced or provided by a designated

foreign person, other than information or informational materials.

Section 539.202 prohibits related transactions, including brokering,

financing or other participation in the importation into the United

States of any goods, technology, or services produced or provided by a

designated foreign person. Section 539.203 prohibits any transaction by

any United States person or within the United States that evades or

avoids, or attempts to violate, these prohibitions, or any conspiracy

to violate these prohibitions. Since the Regulations involve a foreign

affairs function, the provisions of Executive Order 12866 and the

Administrative Procedure Act (5 U.S.C. 553) (the ``APA'') requiring

notice of proposed rulemaking, opportunity for public participation,

and delay in effective date, are inapplicable. Because no notice of

proposed rulemaking is required for this rule, the Regulatory

Flexibility Act (5 U.S.C. 601-612) does not apply.

Paperwork Reduction Act

As authorized in the APA, the Regulations are being issued without

prior notice and public comment. The collections of information related

to the Regulations are contained in 31 CFR part 501 (the ``Reporting

and Procedures Regulations''). Pursuant to the Paperwork Reduction Act

of 1995 (44 U.S.C. 3507), those collections of information have been

approved by the Office of Management and Budget (``OMB'') under control

number 1505-0164. An adjustment to the approved burden hours to reflect

the additional burden imposed in administering the Regulations has been

filed with OMB. An agency may not conduct or sponsor, and a person is

not required to respond to, a collection of information unless the

collection of information displays a valid control number.

List of Subjects in 31 CFR Part 539

Arms and munitions, Imports, Penalties, Reporting and recordkeeping

requirements, Weapons of mass destruction.

For the reasons set forth in the preamble, 31 CFR part 539 is added

to read as follows:

PART 539--WEAPONS OF MASS DESTRUCTION TRADE CONTROL REGULATIONS

Subpart A--Relation of This Part to Other Laws and Regulations

Sec.

539.101 Relation of this part to other laws and regulations.

Subpart B--Prohibitions

539.201 Prohibited importation of goods, technology, or services.

539.202 Prohibition on import-related transactions.

539.203 Evasions; attempts; conspiracies.

539.204 Exempt transactions.

Subpart C--General Definitions

539.301 Designated foreign person.

539.302 Effective date.

539.303 Entity.

539.304 Entity owned or controlled by a person listed in appendix I

to this part.

539.305 General license.

539.306 Goods, technology, or services produced or provided by a

designated foreign person.

539.307 Importation into the United States.

539.308 Information or informational materials.

539.309 License.

539.310 Person.

539.311 Specific license.

539.312 United States.

539.313 United States person; U.S. person.

Subpart D--Interpretations

539.401 Reference to amended sections.

539.402 Effect of amendment.

539.403 Transactions incidental to a licensed transaction.

539.404 Transshipments through the United States prohibited.

539.405 Importation of goods or technology from third countries.

539.406 Importation into and release from a bonded warehouse or

foreign trade zone.

Subpart E--Licenses, Authorizations and Statements of Licensing Policy

539.501 General and specific licensing procedures.

539.502 Effect of license.

539.503 Exclusion from licenses.

539.504 Departments and agencies of the United States Government.

Subpart F--Reports

539.601 Records and reports.

Subpart G--Penalties

539.701 Penalties.

539.702 Prepenalty notice.

539.703 Response to prepenalty notice; informal settlement.

539.704 Penalty imposition or withdrawal.

539.705 Administrative collection; referral to United States

Department of Justice.

Subpart H--Procedures

539.801 Procedures.

539.802 Delegation by the Secretary of the Treasury.

Subpart I--Paperwork Reduction Act

539.901 Paperwork Reduction Act notice.

Appendix I to Part 539--Designated Foreign Persons

Authority: 3 U.S.C. 301; 22 U.S.C. 2751-2799aa-2; 31 U.S.C.

321(b); 50 U.S.C. 1601-1651, 1701-1706; E.O. 12938, 59 FR 59099, 3

CFR, 1994 Comp., p. 950; E.O. 13094, 63 FR 40803, July 30, 1998.

Subpart A-- Relation of This Part to Other Laws and Regulations

Sec. 539.101 Relation of this part to other laws and regulations.

(a) This part is separate from, and independent of, the other parts

of this chapter, with the exception of part 501 of this chapter, the

provisions of which apply to this part. Actions taken pursuant to part

501 of this chapter with respect to the prohibitions contained in this

part are considered actions taken pursuant to this part. Differing

foreign policy and national security contexts may result in differing

interpretations of similar language among the parts of this chapter. No

license or authorization contained in or issued pursuant to those other

parts authorizes any transaction prohibited by this part. No license or

authorization contained in or issued pursuant to any other provision of

law or regulation authorizes any transaction prohibited by this part.

(b) No license contained in or issued pursuant to this part

relieves the involved parties from complying with any other applicable

laws or regulations.

Subpart B--Prohibitions

Sec. 539.201 Prohibited importation of goods, technology, or services.

Except as otherwise authorized, the importation into the United

States, on or

[[Page 8717]]

after the effective date, directly or indirectly, of any goods,

technology, or services produced or provided by a designated foreign

person, other than information or informational materials, is

prohibited.

Sec. 539.202 Prohibition on import-related transactions.

Except as otherwise authorized, no United States person may

finance, act as broker for, transfer, transport, or otherwise

participate in the importation into the United States on or after the

effective date of any goods, technology, or services produced or

provided by a designated foreign person, other than information or

informational materials.

Sec. 539.203 Evasions; attempts; conspiracies.

Any transaction by any United States person or within the United

States on or after the effective date that evades or avoids, has the

purpose of evading or avoiding, or attempts to violate any of the

prohibitions set forth in this part is prohibited. Any conspiracy

formed for the purpose of engaging in a transaction prohibited by this

part is prohibited.

Sec. 539.204 Exempt transactions.

(a) Personal communications. The prohibitions contained in this

part do not apply to any postal, telegraphic, telephonic, or other

personal communication, which does not involve the transfer of anything

of value.

(b) Information or informational materials. (1) The prohibitions

contained in this part do not apply to the importation from any

country, or to the exportation to any country, whether commercial or

otherwise, regardless of format or medium of transmission, of any

information or informational materials as defined in Sec. 539.308, or

any transaction directly incident to such importation or exportation.

(2) Paragraph (b)(1) of this section does not exempt from

regulation or authorize transactions related to information or

informational materials not fully created and in existence at the date

of the transaction, or to the substantive or artistic alteration or

enhancement of information or informational materials, or to the

provision of marketing and business consulting services. Examples of

prohibited transactions include, but are not limited to, payment of

advances for information or informational materials not yet created and

completed (with the exception of prepaid subscriptions for mass-market

magazines and other periodical publications that are widely-

circulated); importation into the United States of services to market,

produce or co-produce, create, or assist in the creation of information

or informational materials; and payment of royalties to a designated

foreign person with respect to income received for enhancements or

alterations made by U.S. persons to informational or informational

materials imported from a designated foreign person.

(3) Paragraph (b)(1) of this section does not exempt from

regulation or authorize the importation into the United States of or

transactions incident to the importation into the United States or

leasing of telecommunications transmission facilities (such as

satellite links or dedicated lines) for use in the transmission of any

data.

(c) Travel. The prohibitions contained in this part do not apply to

transactions ordinarily incident to travel to or from any country,

including importation of accompanied baggage for personal use,

maintenance within any country including payment of living expenses and

acquisition of goods or services for personal use, and arrangement or

facilitation of such travel including nonscheduled air, sea, or land

voyages.

Subpart C--General Definitions

Sec. 539.301 Designated foreign person.

The term designated foreign person means any person determined by

the Secretary of State pursuant to section 4(a) of Executive Order

12938 of November 14, 1994 (59 FR 59099, 3 CFR, 1994 Comp., p. 950), as

amended by section 1(a) of Executive Order 13094 of July 28, 1998 (63

FR 40803, July 30, 1998), to be subject to import measures. Designated

foreign persons are any persons listed in appendix I to this part and

any entities owned or controlled by any person listed in appendix I to

this part unless otherwise indicated in appendix I to this part.

Sec. 539.302 Effective date.

The term effective date means the ``effective date'' specified in

the relevant Federal Register notice issued by the Department of State

identifying a designated foreign person. This date is listed after the

name of each designated foreign person in appendix I to this part.

Sec. 539.303 Entity.

The term entity means a partnership, association, trust, joint

venture, corporation, or other organization.

Sec. 539.304 Entity owned or controlled by a person listed in appendix

I to this part.

The term entity owned or controlled by a person listed in appendix

I to this part includes any subsidiaries and branches, wherever

located, of entities listed in appendix I to this part, any successors

to such entities, and any persons acting or purporting to act for or on

behalf of any of the foregoing.

Sec. 539.305 General license.

The term general license means any license the terms of which are

set forth in this part.

Sec. 539.306 Goods, technology, or services produced or provided by a

designated foreign person.

With respect to the prohibitions in Secs. 539.201 and 539.202, the

term goods, technology, or services produced or provided by a

designated foreign person includes but is not limited to the following:

(a) Goods grown, manufactured, extracted, or processed by a

designated foreign person;

(b) Technology developed, owned, licensed, or otherwise controlled

by a designated foreign person;

(c) Services performed by or on behalf of a designated foreign

person, or by a third party under contract, directly or indirectly, to

a designated foreign person, regardless of location.

Sec. 539.307 Importation into the United States.

The term importation into the United States means:

(a) With respect to goods or technology, the bringing of any goods

or technology into the United States, except that in the case of goods

or technology being transported by vessel, importation into the United

States means the bringing of any goods or technology into the United

States with the intent to unlade. See also Sec. 539.404.

(b) With respect to services, the receipt in the United States of

services or of the benefit of services wherever such services may be

performed. The benefit of services is received in the United States if

the services are:

(1) Performed on behalf of or for the benefit of a person located

in the United States;

(2) Received by a person located in the United States;

(3) Received by a person located outside the United States on

behalf of or for the benefit of an entity organized in the United

States; or

(4) Received by an individual temporarily located outside the

United States for the purpose of obtaining such services for use in the

United States.

(c) The following example illustrates the provisions of paragraph

(b) of this section:

Example: An employee of an entity organized in the United States

may not, without specific authorization from the Office of Foreign

Assets Control, receive from

[[Page 8718]]

a designated foreign person consulting services for use in the

United States.

Sec. 539.308 Information or informational materials.

(a) For purposes of this part, the term information or

informational materials includes, but is not limited to, publications,

films, posters, phonograph records, photographs, microfilms,

microfiche, tapes, compact disks, CD ROMs, artworks, and news wire

feeds.

(b) To be considered information or informational materials,

artworks must be classified under chapter heading 9701, 9702, or 9703

of the Harmonized Tariff Schedule of the United States.

Sec. 539.309 License.

Except as otherwise specified, the term license means any license

or authorization contained in or issued pursuant to this part.

Sec. 539.310 Person.

The term person means an individual or entity.

Sec. 539.311 Specific license.

The term specific license means any license not set forth in this

part but issued pursuant to this part.

Sec. 539.312 United States.

The term United States means the United States, its territories and

possessions, and all areas under the jurisdiction or authority thereof.

Sec. 539.313 United States person; U.S. person.

The term United States person or U.S. person means any United

States citizen, permanent resident alien, entity organized under the

laws of the United States (including foreign branches), or any person

in the United States.

Subpart D--Interpretations

Sec. 539.401 Reference to amended sections.

Except as otherwise specified, reference to any provision in or

appendix to this part or chapter or to any regulation, ruling, order,

instruction, direction, or license issued pursuant to this part refers

to the same as currently amended.

Sec. 539.402 Effect of amendment.

Unless otherwise specifically provided, any amendment,

modification, or revocation of any provision in or appendix to this

part or chapter or of any order, regulation, ruling, instruction, or

license issued by or under the direction of the Director of the Office

of Foreign Assets Control does not affect any act done or omitted, or

any civil or criminal suit or proceeding commenced or pending prior to

such amendment, modification, or revocation. All penalties,

forfeitures, and liabilities under any such order, regulation, ruling,

instruction, or license continue and may be enforced as if such

amendment, modification, or revocation had not been made.

Sec. 539.403 Transactions incidental to a licensed transaction.

Any transaction ordinarily incident to a licensed transaction and

necessary to give effect to the licensed transaction is also authorized

by the license. Except as specifically authorized by the terms of the

license, prohibited transactions involving designated foreign persons

not named in the license are not considered incidental to a licensed

transaction and therefore remain prohibited.

Sec. 539.404 Transshipments through the United States prohibited.

(a) The prohibitions in Secs. 539.201 and 539.202 apply to the

importation into the United States, for transshipment or transit, of

goods, technology, or services produced or provided by a designated

foreign person that are intended or destined for third countries.

(b) In the case of goods or technology transported by vessel, the

prohibitions in Secs. 539.201 and 539.202 apply to the unlading in the

United States and the intent to unlade in the United States of goods or

technology produced or provided by a designated foreign person that is

intended or destined for third countries.

Sec. 539.405 Importation of goods or technology from third countries.

Importation into the United States from third countries of goods or

technology is prohibited if undertaken with knowledge or reason to know

that those goods contain raw materials or components produced or

provided by a designated foreign person or technology produced or

provided by a designated foreign person.

Sec. 539.406 Importation into and release from a bonded warehouse or

foreign trade zone.

The prohibitions in Secs. 539.201 and 539.202 apply to importation

into a bonded warehouse or a foreign trade zone of the United States.

Subpart E--Licenses, Authorizations and Statements of Licensing

Policy

Sec. 539.501 General and specific licensing procedures.

For provisions relating to licensing procedures, see part 501,

subpart D, of this chapter. Licensing actions taken pursuant to part

501 of this chapter with respect to the prohibitions contained in this

part are considered actions taken pursuant to this part.

Sec. 539.502 Effect of license.

(a) No license contained in this part, or otherwise issued by or

under the direction of the Director of the Office of Foreign Assets

Control pursuant to this part, authorizes or validates any transaction

effected prior to the issuance of the license, unless the prior

transaction is specifically authorized in such license.

(b) No regulation, ruling, instruction, or license authorizes any

transaction prohibited by this part unless the regulation, ruling,

instruction, or license is issued by the Office of Foreign Assets

Control and specifically refers to this part. No regulation, ruling,

instruction, or license referring to this part authorizes any

transaction prohibited by any provision of this chapter unless the

regulation, ruling, instruction, or license specifically refers to such

provision.

(c) Any regulation, ruling, instruction, or license authorizing any

transaction otherwise prohibited by this part has the effect of

removing from the transaction a prohibition or prohibitions contained

in this part, but only to the extent specifically stated by its terms.

Unless the regulation, ruling, instruction, or license otherwise

specifies, such an authorization does not create any right, duty,

obligation, claim, or interest that would not otherwise exist under

ordinary principles of law in or with respect to any property.

Sec. 539.503 Exclusion from licenses.

The Director of the Office of Foreign Assets Control reserves the

right to exclude any person, property, or transaction from the

operation of any license or from the privileges conferred by any

license. The Director of the Office of Foreign Assets Control also

reserves the right to restrict the applicability of any license to

particular persons, property, transactions, or classes thereof. Such

actions are binding upon all persons receiving actual or constructive

notice of the exclusions or restrictions.

Sec. 539.504 Departments and agencies of the United States Government.

(a) Departments and agencies of the United States Government may by

written authorization signed by the head of the Department or Agency or

his designee provide for:

(1) Procurement contracts necessary to meet U.S. operational

military requirements or requirements under defense production

agreements;

[[Page 8719]]

intelligence requirements; sole source suppliers, spare parts,

components, routine servicing and maintenance of products for the

United States Government; and medical and humanitarian items; and

(2) Performance pursuant to contracts in force as of 12:01 a.m.

EDT, July 29, 1998, under appropriate circumstances.

(b) Such written authorization shall:

(1) Include details about the goods, technology, and services which

have been approved for importation; the rationale for such approval;

and 24-hour-a-day contact information for the approving official or

designee for use by the U.S. Customs Service should questions arise

about an approved import;

(2) Be in the form of license, regulation, order, directive, or

exception;

(3) Include information about the results of prior written

consultation with the Under Secretary of State for Arms Control and

International Security Affairs (through the Office of Chemical,

Biological and Missile Nonproliferation and the Office of the Assistant

Legal Adviser for Political-Military Affairs); and

(4) Be provided to U.S. Customs Service officials upon the

importation of any goods or technology covered by an authorization

described in paragraph (a) of this section in a form which clearly

establishes that the imported goods or technology is covered by the

authorization.

Subpart F--Reports

Sec. 539.601 Records and reports.

For provisions relating to required records and reports, see part

501, subpart C, of this chapter. Recordkeeping and reporting

requirements imposed by part 501 of this chapter with respect to the

prohibitions contained in this part are considered requirements arising

pursuant to this part.

Subpart G--Penalties

Sec. 539.701 Penalties.

(a) Attention is directed to section 206 of the International

Emergency Economic Powers Act (the ``Act'') (50 U.S.C. 1705), which is

applicable to violations of the provisions of any license, ruling,

regulation, order, direction, or instruction issued by or pursuant to

the direction or authorization of the Secretary of the Treasury

pursuant to this part or otherwise under the Act. Section 206 of the

Act, as adjusted by the Federal Civil Penalties Inflation Adjustment

Act of 1990 (Public Law 101-410, as amended, 28 U.S.C. 2461 note),

provides that:

(1) A civil penalty not to exceed $11,000 per violation may be

imposed on any person who violates or attempts to violate any license,

order, or regulation issued under the Act;

(2) Whoever willfully violates or willfully attempts to violate any

license, order, or regulation issued under the Act, upon conviction,

shall be fined not more than $50,000, and if a natural person, may also

be imprisoned for not more than 10 years; and any officer, director, or

agent of any corporation who knowingly participates in such violation

may be punished by a like fine, imprisonment, or both.

(b) The criminal penalties provided in the Act are subject to

increase pursuant to 18 U.S.C. 3571.

(c) Attention is also directed to 18 U.S.C. 1001, which provides

that whoever, in any matter within the jurisdiction of any department

or agency of the United States, knowingly and willfully falsifies,

conceals, or covers up by any trick, scheme, or device a material fact,

or makes any false, fictitious, or fraudulent statement or

representation or makes or uses any false writing or document knowing

the same to contain any false, fictitious, or fraudulent statement or

entry shall be fined under title 18, United States Code, or imprisoned

not more than five years, or both.

(d) Violations of this part may also be subject to relevant

provisions of other applicable laws.

Sec. 539.702 Prepenalty notice.

(a) When required. If the Director of the Office of Foreign Assets

Control has reasonable cause to believe that there has occurred a

violation of any provision of this part or a violation of the

provisions of any license, ruling, regulation, order, direction, or

instruction issued by or pursuant to the direction or authorization of

the Secretary of the Treasury pursuant to this part or otherwise under

the International Emergency Economic Powers Act, and the Director

determines that further proceedings are warranted, the Director shall

issue to the person concerned a notice of intent to impose a monetary

penalty. This prepenalty notice shall be issued whether or not another

agency has taken any action with respect to this matter.

(b) Contents--(1) Facts of violation. The prepenalty notice shall

describe the violation, specify the laws and regulations allegedly

violated, and state the amount of the proposed monetary penalty.

(2) Right to respond. The prepenalty notice also shall inform the

respondent of respondent's right to make a written presentation within

30 days of the date of mailing of the notice as to why a monetary

penalty should not be imposed or why, if imposed, the monetary penalty

should be in a lesser amount than proposed.

Sec. 539.703 Response to prepenalty notice; informal settlement.

(a) Deadline for response. The respondent shall have 30 days from

the date of mailing of the prepenalty notice to make a written response

to the Director of the Office of Foreign Assets Control.

(b) Form and contents of response. The written response need not be

in any particular form, but must contain information sufficient to

indicate that it is in response to the prepenalty notice. It should

contain responses to the allegations in the prepenalty notice and set

forth the reasons why the respondent believes the penalty should not be

imposed or why, if imposed, it should be in a lesser amount than

proposed.

(c) Informal settlement. In addition or as an alternative to a

written response to a prepenalty notice issued pursuant to this

section, the respondent or respondent's representative may contact the

Office of Foreign Assets Control as advised in the prepenalty notice to

propose the settlement of allegations contained in the prepenalty

notice and related matters. In the event of settlement at the

prepenalty stage, the claim proposed in the prepenalty notice will be

withdrawn, the respondent is not required to take a written position on

allegations contained in the prepenalty notice, and the Office of

Foreign Assets Control will make no final determination as to whether a

violation occurred. The amount accepted in settlement of allegations in

a prepenalty notice may vary from the civil penalty that might finally

be imposed in the event of a formal determination of violation. In the

event no settlement is reached, the 30-day period specified in

paragraph (a) of this section for written response to the prepenalty

notice remains in effect unless additional time is granted by the

Office of Foreign Assets Control.

Sec. 539.704 Penalty imposition or withdrawal.

(a) No violation. If, after considering any response to a

prepenalty notice and any relevant facts, the Director of the Office of

Foreign Assets Control determines that there was no violation by the

respondent named in the prepenalty notice, the Director promptly

[[Page 8720]]

shall notify the respondent in writing of that determination and that

no monetary penalty will be imposed.

(b) Violation. If, after considering any response to a prepenalty

notice and any relevant facts, the Director of the Office of Foreign

Assets Control determines that there was a violation by the respondent

named in the prepenalty notice, the Director promptly shall issue a

written notice of the imposition of the monetary penalty to the

respondent.

(1) The penalty notice shall inform the respondent that payment of

the assessed penalty must be made within 30 days of the date of mailing

of the penalty notice.

(2) The penalty notice shall inform the respondent of the

requirement to furnish the respondent's taxpayer identification number

pursuant to 31 U.S.C. 7701 and that such number will be used for

purposes of collecting and reporting on any delinquent penalty amount.

Sec. 539.705 Administrative collection; referral to United States

Department of Justice.

In the event that the respondent does not pay the penalty imposed

pursuant to this part or make payment arrangements acceptable to the

Director of the Office of Foreign Assets Control within 30 days of the

date of mailing of the penalty notice, the matter may be referred for

administrative collection measures by the Department of the Treasury or

to the United States Department of Justice for appropriate action to

recover the penalty in a civil suit in a Federal district court.

Subpart H--Procedures

Sec. 539.801 Procedures.

For license application procedures and procedures relating to

amendments, modifications, or revocations of licenses; administrative

decisions; rulemaking; and requests for documents pursuant to the

Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see

part 501, subpart D, of this chapter.

Sec. 539.802 Delegation by the Secretary of the Treasury.

Any action that the Secretary of the Treasury is authorized to take

pursuant to Executive Order 12938 of November 14, 1994 (59 FR 59099, 3

CFR, 1994 Comp., p. 950), as amended by Executive Order 13094 of July

28, 1998 (63 FR 40803, July 30, 1998), and any further Executive orders

relating to the national emergency declared in Executive Order 12938

may be taken by the Director of the Office of Foreign Assets Control or

by any other person to whom the Secretary of the Treasury has delegated

authority so to act.

Subpart I--Paperwork Reduction Act

Sec. 539.901 Paperwork Reduction Act notice.

For approval by the Office of Management and Budget (``OMB'') under

the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information

collections relating to recordkeeping and reporting requirements,

licensing procedures (including those pursuant to statements of

licensing policy), and other procedures, see Sec. 501.901 of this

chapter. An agency may not conduct or sponsor, and a person is not

required to respond to, a collection of information unless it displays

a valid control number assigned by OMB.

Appendix I to Part 539--Designated Foreign Persons

The following foreign persons have been determined by the Secretary

of State to have materially contributed or attempted to contribute

materially to the efforts of a foreign country, project, or entity of

proliferation concern to use, acquire, design, develop, produce, or

stockpile weapons of mass destruction or missiles capable of delivering

such weapons, for purposes of section 4(a) of Executive Order 12938, as

amended by section 1(a) of Executive Order 13094, and to be subject to

import measures authorized in Executive Orders 12938 and 13094. They,

and any entities owned or controlled by them, unless indicated

otherwise, are designated foreign persons for purposes of this part.

The applicable effective date and citation to the Federal Register for

each such person is given in brackets after that person's name and

identifying information:

1. Baltic State Technical University, including at 1/21, 1-ya

Krasnoarmeiskaya Ul., 198005 St. Petersburg, Russia [July 30, 1998;

63 FR 42089, August 6, 1998].

2. Europalace 2000, including at Moscow, Russia [July 30, 1998; 63

FR 42089, August 6, 1998].

3. Glavkosmos, including at 9 Krasnoproletarskaya St., 103030

Moscow, Russia [July 30, 1998; 63 FR 42089, August 6, 1998].

4. Grafit, also known as (``aka'') State Scientific Research

Institute of Graphite or NIIGRAFIT, including at 2 Ulitsa

Elektrodnaya, 111524 Moscow, Russia [July 30, 1998; 63 FR 42089,

August 6, 1998].

5. INOR Scientific Center, including at Moscow, Russia [July 30,

1998; 63 FR 42089, August 6, 1998].

6. MOSO Company, including at Moscow, Russia [July 30, 1998; 63 FR

42089, August 6, 1998].

7. Polyus Scientific Production Association, including at 3 Ulitsa

Vvedenskogo, 117342 Moscow, Russia [July 30, 1998; 63 FR 42089,

August 6, 1998].

8. D. Mendeleyev University of Chemical Technology of Russia,

including at 9 Miusskaya Sq., Moscow 125047, Russia [January 8,

1999; 64 FR 2935, January 19, 1999].

9. Moscow Aviation Institute (MAI), including at 4 Volokolamskoye

Shosse, Moscow 125871, Russia [January 8, 1999; 64 FR 2935, January

19, 1999].

10. The Scientific Research and Design Institute of Power

Technology, aka NIKIET, Research and Development Institute of Power

Engineering [RDIPE], and ENTEK, including at 101000, P.O. Box 788,

Moscow, Russia [January 8, 1999; 64 FR 2935, January 19, 1999].

Dated: February 1, 1999.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: February 9, 1999.

Elisabeth A. Bresee,

Assistant Secretary (Enforcement), Department of the Treasury.

[FR Doc. 99-4328 Filed 2-18-99; 11:37 am]

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