Export Administration Regulations End-User Controls: Imposition of Restrictions on Certain Persons Identified on the List of Specially Designated Nationals and Blocked Persons (SDN List), 20107-20116 [2024-06067]
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Federal Register / Vol. 89, No. 56 / Thursday, March 21, 2024 / Rules and Regulations
for 2016, however, the Civil Penalties
Inflation Adjustment Act requires
agencies to make subsequent annual
adjustments for inflation
‘‘notwithstanding section 553 of title 5,
United States Code.’’ Moreover, the
2024 adjustments are made according to
a statutory formula that does not
provide for agency discretion.
Accordingly, a delay in effectiveness of
the 2024 adjustments is not required.
IV. Regulatory Requirements
Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
13563 direct agencies to assess all costs
and benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This rule is not a significant
regulatory action under E.O. 12866 and
was not reviewed by the Office of
Management and Budget (OMB).
Regulatory Flexibility Act
Appendix A to Part 1271 [Amended]
5. In appendix A to part 1271:
a. Remove the number ‘‘$23,727’’
wherever it appears and add in its place
the number ‘‘$24,496.’’
■ b. Remove the number ‘‘$237,268’’
wherever it appears and add in its place
the number ‘‘$244,958.’’
■
■
Nanette Smith,
Team Lead, NASA Directives and
Regulations.
BILLING CODE P
DEPARTMENT OF COMMERCE
RIN 0694–AI82
Claims, Lobbying, Penalties.
For the reasons stated in the
preamble, NASA amends 14 CFR parts
1264 and 1271 as follows:
Bureau of Industry and
Security, Department of Commerce.
ACTION: Final rule.
1. The authority citation for part 1264
continues to read as follows:
■
Authority: 31 U.S.C. 3809, 51 U.S.C.
20113(a).
[Amended]
2. In § 1264.102, remove the number
‘‘$13,508’’ wherever it appears and add
in its place the number ‘‘$13,946.’’
■
U.S.C. 603(a), 604(a).
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Export Administration Regulations
End-User Controls: Imposition of
Restrictions on Certain Persons
Identified on the List of Specially
Designated Nationals and Blocked
Persons (SDN List)
AGENCY:
PART 1264—IMPLEMENTATION OF
THE PROGRAM FRAUD CIVIL
PENALTIES ACT OF 1986
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[Amended]
4. In § 1271.400:
a. In paragraphs (a) and (b), remove
the text ‘‘not less than $23,727 and not
more than $237,268’’ and add in its
place the text ‘‘not less than $24,496
and not more than $244,958.’’
■ b. In paragraph (e), remove ‘‘$23,727’’
wherever it appears and add in its place
‘‘$24,496’’ and remove ‘‘$237,268’’ and
add in its place ‘‘$244,958.’’
[Docket No. 240308–0076]
List of Subjects in 14 CFR Parts 1264
and 1271
15:50 Mar 20, 2024
§ 1271.400
■
■
15 CFR Parts 740, 744 and 746
No collections of information
pursuant to the Paperwork Reduction
Act are contained in the final rule.
VerDate Sep<11>2014
Authority: Section 319, Pub. L. 101–121
(31 U.S.C. 1352); Pub. L. 97–258 (31 U.S.C.
6301 et seq.)
Bureau of Industry and Security
Paperwork Reduction Act
75
3. The authority citation for part 1271
continues to read as follows:
■
[FR Doc. 2024–05999 Filed 3–20–24; 8:45 am]
Because no notice of proposed
rulemaking is required, the Regulatory
Flexibility Act does not require an
initial or final regulatory flexibility
analysis.7
§ 1264.102
PART 1271—NEW RESTRICTIONS ON
LOBBYING
In this final rule, the Bureau
of Industry and Security (BIS) makes
changes to the end-user controls of the
Export Administration Regulations
(EAR) to add end-user controls, and in
certain cases expand existing end-user
controls, on certain persons identified
on the List of Specially Designated
Nationals and Blocked Persons (SDN
List) maintained by the Department of
the Treasury’s Office of Foreign Assets
Control (OFAC).
SUMMARY:
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20107
This rule is effective on March
21, 2024.
FOR FURTHER INFORMATION CONTACT: For
questions on this final rule, contact W.
Collmann Griffin, Senior Policy
Advisor, International Policy Office,
Bureau of Industry and Security,
Department of Commerce, Phone: 202–
482–1430, Email: william.griffin@
bis.doc.gov.
For emails, include ‘‘EAR
requirements for SDNs’’ in the subject
line.
DATES:
SUPPLEMENTARY INFORMATION:
I. Background
The U.S. Government has a number of
list-based tools to restrict economic
activities of individuals and entities to
protect U.S. national security or foreign
policy interests. BIS employs end-user
controls under the Export
Administration Regulations (EAR), 15
CFR parts 730–774, including the Entity
List (Supplement No. 4 to part 744 of
the EAR), to impose license
requirements for the export, reexport,
and transfer (in-country) of items
subject to the EAR. End-user
requirements and Entity List additions
allow for the monitoring of items subject
to the EAR, including less-sensitive
items. In the context of the Entity List,
BIS maintains stringent license review
policies and restrictions on the use of
EAR license exceptions specific to each
listed entity.
The U.S. Department of the Treasury’s
Office of Foreign Assets Control (OFAC)
maintains the List of Specially
Designated Nationals and Blocked
Persons (SDN List) to identify persons
whose property or interests in property
that are or come within the United
States or in the possession or control of
U.S. persons, wherever located, are
blocked (see appendix A to 31 CFR
chapter V and https://www.treas.gov/
sdn). These targeted economic sanctions
tools enable the U.S. Government to
escalate economic pressure and promote
deterrence while mitigating unintended
economic effects on the United States
and our partners and allies.
After reviewing categories of end
users and global activities that implicate
both financial and export control
concerns, BIS has determined to
implement EAR license requirements
for all items subject to the EAR for all
persons blocked under eleven OFACadministered sanctions programs. BIS
will also continue to apply license
requirements involving all items subject
to the EAR in connection with persons
sanctioned under three OFACadministered sanctions programs. The
EAR restrictions involving these
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fourteen OFAC-administered sanctions
programs serve as a force multiplier and
complement OFAC’s blocking sanctions,
which prohibit all transactions by U.S.
persons or within (or transiting) the
United States that involve any property
or interests in property of designated or
blocked persons, unless authorized by a
general or specific license issued by
OFAC, or exempt.
The imposition of these EAR license
requirements for exports, reexports, and
transfers (in-country) allows for the EAR
controls to act as a backstop for
activities over which OFAC does not
exercise jurisdiction, including deemed
exports and deemed reexports, and for
reexports and transfers (in-country) that
would otherwise not involve U.S.
persons (e.g., U.S. financial
institutions). Notably, the new license
requirements allow for controls on items
outside the United States,
complementing the existing authority in
many OFAC programs to impose
blocking sanctions on persons who
materially assist, sponsor, or provide
financial, material, or technological
support for, or goods or services to or in
support of, SDNs, even outside of U.S.
jurisdiction.
In this final rule, persons blocked
under fourteen OFAC sanctions
programs will be subject to stringent
export controls under the EAR. Each
program is listed below with the
corresponding sanctions authority and
program code or ‘‘identifier,’’ arranged
by thematic program to assist
understanding.
Related to Russia’s invasion of
Ukraine:
• Belarus Sanctions Regulations, 31
CFR part 548; Executive Order 13405
(OFAC program code or ‘‘identifier’’
[BELARUS]);
• Executive Order 14038
([BELARUS–EO14038]);
• Russian Harmful Foreign Activities
Sanctions Regulations 31 CFR part 587;
Executive Order 14024 [RUSSIA–
EO14024];
• Executive Order 13660
([UKRAINE–EO13660]);
• Executive Order 13661
([UKRAINE–EO13661]);
• Executive Order 13662 [UKRAINE–
EO13662]; and
• Executive Order 13685
([UKRAINE–EO13685]).
Related to terrorism:
• Foreign Terrorist Organizations
Sanctions Regulations, 31 CFR part 597
[FTO]; and
• Global Terrorism Sanctions
Regulations, 31 CFR part 594 [SDGT].
Related to WMD:
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• Weapons of Mass Destruction
Proliferators Sanctions Regulations, 31
CFR part 544 [NPWMD].
Related to narcotics trafficking or
other criminal networks:
• Executive Order 14059 [ILLICIT
DRUGS–EO14059];
• Narcotics Trafficking Sanctions
Regulations, 31 CFR part 536 [SDNT];
• Foreign Narcotics Kingpin
Sanctions Regulations, 31 CFR part 598
[SDNTK]; and
• Transnational Criminal
Organizations Sanctions Regulations, 31
CFR part 590; Executive Order 13581
[TCO].
See Program Tag Definitions for
OFAC Sanctions Lists for additional
information: https://ofac.treasury.gov/
specially-designated-nationals-list-sdnlist/program-tag-definitions-for-ofacsanctions-lists.
Prior to this final rule, persons
designated under two of these fourteen
OFAC-administered sanctions programs
(i.e., [ILLICIT DRUGS–EO14059] and
[TCO]) were not subject to restrictions
under the EAR. Persons designated
under the other twelve programs were
already subject to comprehensive export
controls under part 744 provisions, or
under provisions in parts 740 or 746 of
the EAR. As described below under
sections II and III, this final rule
expands certain of these part 744
provisions and revises part 744 to
feature a comprehensive, consolidated
provision that references all fourteen
OFAC-administered sanctions programs.
It also consolidates the relevant export
control restrictions from part 740 and
746 under this new provision in part
744.
The EAR, prior to this final rule,
imposed licensing restrictions on
export, reexport, and transfer (incountry) transactions involving all items
subject to the EAR in which persons
blocked under three OFACadministered sanctions programs—
[FTO], [SDGT], and [NPWMD]—served
as parties to the transaction. This rule
eliminates the three applicable
underlying sections in part 744 and
adds their contents to a consolidated
single section under § 744.8.
In addition, prior to this final rule, the
EAR imposed licensing restrictions on
exports, reexports, and transfers (incountry) of ‘luxury goods’ in which
persons blocked under seven of these
OFAC administered sanctions
programs—[BELARUS], [BELARUS–
EO14038], [RUSSIA–EO14024],
[UKRAINE–EO13660], [UKRAINE–
EO13661], [UKRAINE–EO13662], and
[UKRAINE–EO13685]—served as parties
to the transaction. This final rule
expands the license requirement to all
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items subject to the EAR and moves the
relevant regulatory contents from
current § 746.10(a)(2) into a
consolidated single section of the EAR
under § 744.8.
Prior to this final rule, the EAR also
imposed restrictions on the availability
of license exceptions for transactions
involving certain items in which
persons blocked under two of these
OFAC-administered sanctions programs,
[SDNT] and [SDNTK], served as parties
to the transaction. This final rule
restricts such license exception
availability further by adding a license
requirement for all items subject to the
EAR when a person blocked pursuant to
these two programs is a party to the
transaction and places the substantive
regulatory contents in a consolidated
single section of the EAR under § 744.8.
BIS will continue its regular
coordination with OFAC to impose
restrictions on persons designated under
other OFAC blocking or sanctions
programs in cases in which BIS
determines that its export controls
would be an effective tool to
complement OFAC’s sanctions
programs. All interested parties may
consult the Commerce Departmentmaintained Consolidated Screening List
(CSL), available to the public at https://
www.trade.gov/consolidated-screeninglist, as a single-search portal to identify
individuals and entities who appear on
lists maintained by the Departments of
Commerce, the Treasury, and State.
This final rule also makes several
structural and technical changes to part
744 and removes four end-user control
provisions under part 744 of the EAR
that are either outdated or obsolete in
light of changes made to other federal
authorities.
Specifically, this final rule:
A. Imposes end-user controls under
the EAR involving persons identified on
OFAC’s SDN List under eleven
categories with the following identifiers:
[BELARUS], [BELARUS–EO14038],
[RUSSIA–EO14024], [UKRAINE–
EO13660], [UKRAINE–EO13661],
[UKRAINE–EO13662], [UKRAINE–
EO13685], [ILLICIT DRUGS–EO14059],
[SDNT], [SDNTK], and [TCO].
B. Consolidates into a single section
the contents of several part 744 SDNrelated end-user provisions under the
EAR. Prior to this final rule, part 744
included five separate sections
involving SDNs designated in or
pursuant to several specified Executive
Orders (E.O.s). This final rule
consolidates the contents of those five
sections and the eleven new SDNrelated restrictions so that all of the
SDN-related end-user controls in part
744 will be in the same section. As part
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of this regulatory action, BIS removes
from the EAR two provisions: one
provision involving a terminated E.O.
that had targeted Specially Designated
Terrorists (SDTs) and a second
provision involving Iraq that does not
address current policy concerns under
the EAR.
C. Removes two end-user control
provisions in part 744 of the EAR that
are no longer needed because of the
existence of a broader end-user control
in § 744.11 that allows BIS to impose
restrictions on entities acting contrary to
the national security or foreign policy
interests of the United States.
II. Expansion of SDN-Related End-User
Controls Under the EAR
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A. Persons Designated on SDN List With
the Identifiers [BELARUS], [BELARUS–
EO14038], [RUSSIA–EO14024],
[UKRAINE–EO13660], [UKRAINE–
EO13661], [UKRAINE–EO13662], or
[UKRAINE–EO13685]
1. Export Controls Implemented Against
Russia and Belarus
In response to Russia’s February 2022
invasion of Ukraine, BIS imposed
extensive sanctions on Russia under the
EAR as part of the final rule,
‘‘Implementation of Sanctions Against
Russia Under the Export Administration
Regulations (EAR)’’ (the Russia
Sanctions Rule) (87 FR 12226, March 3,
2022). To address Belarus’s complicity
in the invasion, BIS imposed similar
sanctions on Belarus under the EAR in
a final rule, ‘‘Implementation of
Sanctions Against Belarus’’ (‘‘Belarus
Sanctions Rule’’) (87 FR 13048, March
6, 2022). During the last two years, BIS
has published a number of additional
final rules strengthening the export
controls on Russia and Belarus,
including measures undertaken in
coordination with U.S. allies and
partners.
Most recently, in a January 2024 rule,
‘‘Implementation of Additional
Sanctions Against Russia and Belarus
Under the Export Administration
Regulations (EAR) and Refinements to
Existing Controls,’’ BIS strengthened its
sanctions under the EAR against Russia
and Belarus, including by expanding the
scope of the EAR’s Russian and
Belarusian Industry Sector Sanctions,
expanding the EAR’s Russia/Belarus
foreign direct product rule to cover
certain EAR99 antennas, antenna
reflectors, and parts thereof, and other
actions to prohibit exports or reexports
of military and spacecraft-related items
to Russia and Belarus (89 FR 4804,
January 25, 2024). The Department of
Commerce took these actions to enhance
the effectiveness of its controls on these
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two countries and to better align them
with those implemented by U.S. allies
and partners.
2. Designations Made Pursuant to E.O.s
13405, 13660, 13661, 13662, 13685,
14024, and 14038 and BIS Actions To
Complement Such Designations
OFAC has taken action to address
Russia’s February 2022 invasion of
Ukraine, including adding various
persons to OFAC’s SDN List pursuant to
E.O. 13405, 13660, 13661, 13662, 13685,
14024, and 14038. Persons who are
blocked pursuant to one of these seven
E.O.s are designated on the SDN List
with the identifier [BELARUS],
[BELARUS–EO14038], [RUSSIA–
EO14024], [UKRAINE–EO13660],
[UKRAINE–EO13661], [UKRAINE–
EO13662], or [UKRAINE–EO13685] (see
https://www.treas.gov/sdn).
In this rule, in order to complement
the designations made under E.O.
13405, 13660, 13661, 13662, 13685,
14024, or 14038, BIS amends the EAR
to revise § 744.8 to impose a license
requirement for all exports, reexports, or
transfers (in-country) of items subject to
the EAR when a person designated
under one of these seven E.O.s is a party
to the transaction as defined in
§ 748.5(c) through (f). In particular,
these new EAR license requirements
under § 744.8 will apply to any reexport
or transfer (in-country) transaction that
is not subject to regulation by OFAC,
including due to the fact that the
transaction does not involve U.S.
persons or the U.S. financial system,
thereby ensuring that the U.S.
Government can restrict such activity.
These new license requirements will
apply broadly to all items subject to the
EAR. There will also be a prohibition on
the use of any license exceptions,
although as specified in new
§ 744.8(a)(2), the EAR authorization
requirements will take into account
OFAC general licenses and exemptions
to ensure consistency, and a restrictive
presumption of denial review policy
will apply to license applications
involving these persons as parties to the
transaction.
These EAR changes will limit these
persons’ access to items subject to the
EAR, regardless of their source. Also,
these actions will advance the U.S.
national security and foreign policy
objectives set forth in E.O. 13405,
13660, 13661, 13662, 13685, 14024, and
14038, and build upon the policy
objectives set forth in the Russia
Sanctions rules and in the Belarus
Sanctions rules as described above. This
rule is part of a set of larger U.S.
Government and partner and allied
country actions intended to increase the
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20109
financial, economic, and strategic
consequences of Russia’s further
invasion of Ukraine and Belarus’s
substantial enabling of such invasion,
and Russia’s ongoing military aggression
in Ukraine during the past two years.
In order to avoid duplication, if OFAC
issues a general license or specific
license that authorizes a transaction
with or involving a person blocked
under the applicable OFAC regulations
and included on the SDN List with the
identifier [BELARUS], [BELARUS–
EO14038], [RUSSIA–EO14024],
[UKRAINE–EO13660], [UKRAINE–
EO13661], [UKRAINE–EO13662], or
[UKRAINE–EO13685] or such
transaction is otherwise exempt from
OFAC’s regulations, then no additional
BIS authorization is required for
exports, reexports, or transfers (incountry) of any item subject to the EAR
when that person is a party to the
transaction as defined in § 748.5(c)
through (f), provided that a license
would otherwise only be required under
§ 744.8. A BIS license would still be
required for exports, reexports, or
transfers (in-country) that implicate
other parts of the EAR, including parts
742 and 746, as well as supplement no.
4 to part 744 or other end-use or enduser controls. For example, an entity
with the SDN List identifier [RUSSIA–
EO14024] would be subject to the
license requirements under § 744.8 but
could also be listed on the Entity List in
supplement no. 4 to part 744. If the
entity were listed on the Entity List, a
party seeking to make an export,
rexport, or transfer (in-country) would
have to overcome the additional EAR
license requirements. Alternatively, if
the item were highly controlled, such as
a ‘‘600 series’’ military item, the party
seeking to make an export, reexport, or
transfer (in-country) would have to
overcome Commerce Control List (CCL)based license requirements in addition
to requirements set forth in § 744.8.
BIS estimates new license
requirements under § 744.8 for persons
included on the SDN List with the
identifier [BELARUS], [BELARUS–
EO14038], [RUSSIA–EO14024],
[UKRAINE–EO13660], [UKRAINE–
EO13661], [UKRAINE–EO13662], or
[UKRAINE–EO13685] will result in an
additional five license applications
being submitted to BIS annually.
B. Persons Designated on the SDN List
With [ILLICIT DRUGS–EO14059],
[SDNT], [SDNTK], or [TCO] Identifiers
Related to Narcotics or Criminal
Activities
OFAC has taken various actions to
address narcotics or other criminal
activities, including by adding various
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persons to the SDN List with the
identifiers [ILLICIT DRUGS–EO14059],
[SDNT], [SDNTK], or [TCO].
This final rule adds persons
designated on the SDN List with the
following identifiers to § 744.8 of the
EAR: [ILLICIT DRUGS–EO14059]
(persons designated pursuant to E.O.
14059); [SDNT] (persons designated
pursuant to the Narcotics Trafficking
Sanctions Regulations, 31 CFR part
536); [SDNTK] (persons designated
pursuant to the Foreign Narcotics
Kingpin Sanctions Regulations, 31 CFR
part 598); and [TCO] (persons
designated pursuant to the
Transnational Criminal Organizations
Sanctions Regulations, 31 CFR part 590
and E.O. 13581). Consistent with these
SDN-related end-user controls, § 744.8,
as revised and consolidated by this final
rule, will impose license requirements
for all items subject to the EAR, restrict
the availability of all license exceptions,
and specify a presumption of denial
license review policy.
This rule removes and reserves
§ 740.2(a)(22) as a conforming change to
the addition of two of these SDN List
identifiers to § 744.8. Due to the fact that
§ 744.8 will include a restriction on the
use of EAR license exceptions for
export, reexport, and transfer (incountry) transactions involving all items
subject to the EAR, § 740.2(a)(22) is no
longer needed.
Prior to this final rule, the SDN
identifiers [SDNT] and [SDNTK] were
included in a general restriction on the
use of license exceptions under
§ 740.2(a)(22) for certain items. This
general restriction specified that the
export, reexport, or transfer (in-country)
of any item classified under a 0x5zz
Export Control Classification Number
(ECCN) (i.e., firearms and related items)
could not be authorized under an EAR
license exception when a party to the
transaction was designated on the SDN
List with one of these identifiers.
Because persons designated on the SDN
List with these identifiers were involved
in narcotics or other criminal activities,
BIS had restricted the use of all EAR
license exceptions for the firearms and
related items controlled under the 0x5zz
ECCNs to protect U.S. national security
and foreign policy interests. Due to the
fact that there is a worldwide license
requirement under the EAR for firearms,
BIS did not impose a license
requirement under part 744 for
transactions involving persons on the
SDN List with these identifiers who are
parties to the transaction, and instead
relied on the CCL-based license
requirements and related license review
policies.
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BIS has determined that the license
requirements for export, reexport, and
transfer (in-country) transactions in
which persons designated on the SDN
List with the identifiers [ILLICIT
DRUGS–EO14059], [SDNT], [SDNTK],
or [TCO] are parties to the transaction
should be expanded from CCL-based
requirements to all items subject to the
EAR to further protect U.S. national
security and foreign policy interests. In
order to avoid duplication, U.S. persons
are not required to seek separate BIS
authorization for an export, reexport, or
transfer (in-country) of any item subject
to both the EAR and OFAC’s regulations
when a person identified in § 744.8 is a
party to the transaction as defined in
§ 748.5(c) through (f). Therefore, if
OFAC authorizes an export from the
United States or an export, reexport, or
transfer (in-country) by a U.S. person to
a person identified in § 744.8, no
separate BIS authorization is required.
BIS estimates new license
requirements under § 744.8 for
transactions in which persons
designated on the SDN List with the
identifiers [ILLICIT DRUGS–EO14059],
[SDNT], [SDNTK], or [TCO] are parties
to the transaction will result in an
additional 15 license applications being
submitted to BIS annually.
III. Consolidation of the SDN-Related
End-User Controls Under the EAR
A. Increasing Use and Expansion of
End-User Controls
The increasing use of end-use and
end-user controls under the EAR has led
to an expansion of the number of
sections under part 744, ‘‘Control
Policy: End User and End-Use Based.’’
For example, there are five sections
similarly structured in part 744 that
prior to this final rule imposed
restrictions on certain persons
designated on the SDN List. This rule
simplifies part 744 by combining these
sections into a single section that will
specify the requirements under the EAR
and by adding the eleven new SDN
identifiers described above under
section II to the same consolidated
section. This streamlining and
restructuring will reduce the
compliance burden on parties because it
will be easier to review one
consolidated SDN-related section
instead of fourteen separate SDN-related
sections.
This final rule removes and reserves
§ 744.13, relating to persons identified
on the SDN List with the [SDT]
identifier, which OFAC no longer uses.
The now-obsolete [SDT] restrictions in
§ 744.13 are related to E.O. 12947 of
January 23, 1995, which was revoked on
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September 9, 2019, by E.O. 13886. E.O.
13886 also modified E.O. 13224, which
underlies the Global Terrorism
Sanctions Regulations (31 CFR part 594)
referenced in § 744.12. The existing
[SDT] SDNs were re-designated as
[SDGT] SDNs upon E.O. 12947’s
revocation. This final rule also does not
include the restrictions related to SDNs
with the [IRAQ2] identifier under
§ 744.18 as part of the consolidation
under revised § 744.8 because the vast
majority of these natural persons or
entities are either dead or no longer in
existence, and they remain designated
as SDNs primarily for purposes of
blocking financial assets. Therefore,
these additional EAR requirements are
no longer needed.
B. Consolidation of EAR Controls
Involving Items Destined for Certain
Persons Designated on the SDN List
1. Overview of the Consolidated
Controls
In part 744, this final rule removes
and reserves §§ 744.12, 744.13, 744.14,
and 744.18. For §§ 744.12 and 744.14,
this final rule adds the substance of
these controls to the revised § 744.8.
This final rule does not add the controls
under § 744.13 or under § 744.18 for the
reasons described above under section
III.A.
In § 744.8, this final rule revises this
section, including the heading, to reflect
the consolidation of §§ 744.12 and
744.14 therein. This final rule
additionally makes certain clarifying
changes to § 744.8, including clarifying
that the specified EAR requirements
apply to transfers (in-country) and that
OFAC general licenses remain available
for entities that are otherwise subject to
these license requirements under
§ 744.8.
Also, in § 744.8, this rule expands the
end-user controls under part 744 to
extend the controls to transactions
featuring as a party to the transaction a
person designated on the SDN List with
the identifiers [BELARUS], [BELARUS–
EO14038], [RUSSIA–EO14024],
[UKRAINE–EO13660], [UKRAINE–
EO13661], [UKRAINE–EO13662], or
[UKRAINE–EO13685] as described
under section II.A, and with the
identifiers [ILLICIT DRUGS–EO14059],
[SDNT], [SDNTK], or [TCO] as described
under section II.B of this final rule.
2. Comparison of the Original and
Consolidated EAR Controls for SDNs
Under Part 744
The EAR imposes license
requirements, license review policies,
and restrictions on the use of license
exceptions under certain sections of part
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744 of the EAR for transactions featuring
as a party to the transaction certain
persons designated on the SDN List
with specified identifiers, as described
in section III.B.1.
Table 1 identifies these EAR
restrictions prior to this final rule and
the corresponding EAR section for these
end-user requirements under § 744.8, as
revised. Because of the number of
sections this final rule removes and
consolidates under part 744, BIS
includes Table 1 to assist the exporting
community’s understanding of these
changes.
Table 2 identifies the eleven new SDN
List identifiers ([BELARUS], [ILLICIT
DRUGS–EO14059], [RUSSIA–EO14024],
[SDNT], [SDNTK], [TCO], [UKRAINE–
EO13660], [UKRAINE–EO13661],
[UKRAINE–EO13662], and [UKRAINE–
EO13685]) that this final rule adds to
the end-user requirements under part
744 of the EAR. BIS includes Table 2 to
assist the exporting community’s
understanding of these changes,
including specifying the requirements
in place prior to this final rule and the
new and expanded requirements under
this final rule.
TABLE 1—EXISTING SDN LIST IDENTIFIERS THAT REQUIRE A LICENSE FOR ALL ITEMS SUBJECT TO THE EAR THAT ARE
BEING CONSOLIDATED INTO § 744.8 OR ARE OTHERWISE BEING REMOVED FROM THE EAR
Sanctions
program
Program identifier
EAR section
prior to this
final rule
OFAC
sanctions list
New EAR
section in this
final rule
Terrorism-related
[FTO] ..........................
[SDGT] .......................
* [SDT] ........................
Foreign Terrorist Organizations Sanctions
Regulations, 31 CFR part 597.
Global Terrorism Sanctions Regulations,
31 CFR part 594.
Terrorism Regulations, 31 CFR part 595
SDN
§ 744.14
§ 744.8.
SDN
§ 744.12
§ 744.8.
N/A
§ 744.13
N/A, because this identifier is no longer
used.
WMD related
[NPWMD] ...................
Weapons of Mass Destruction
Proliferators Sanctions Regulations, 31
CFR part 544.
SDN
§ 744.8
§ 744.8.
Iraq related
* [IRAQ2] ....................
E.O. 13315; E.O. 13350 ...........................
SDN
§ 744.18
N/A, because the vast majority of these
persons or entities are either dead or
otherwise no longer in existence.
* Denotes SDN List identifiers that are being removed from part 744 license requirements in this final rule.
Some of the SDN List identifiers in
Table 2 are new to the EAR and others
were previously subject to EAR license
requirements or other restrictions that
are being expanded in this final rule
with the additions of these SDN List
identifiers to § 744.8.
TABLE 2—SDN LIST IDENTIFIERS ADDED TO § 744.8
Program identifier
EAR section
prior to this
final rule
OFAC
sanctions list
Sanctions program
New EAR
section in this
final rule
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Related to Russia’s invasion of Ukraine
[BELARUS] .........................
31 CFR part 548 ..................................
SDN
[BELARUS–EO14038] ........
31 CFR part 548 ..................................
SDN
[RUSSIA–EO14024] ...........
SDN
[UKRAINE–EO13660] .........
Russian Harmful Foreign Activities
Sanctions Regulations, 31 CFR part
587; E.O. 14024.
31 CFR part 589 ..................................
[UKRAINE–EO13661] .........
31 CFR part 589 ..................................
SDN
[UKRAINE–EO13662] .........
31 CFR part 589 ..................................
SDN
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§ 746.10, which required a license for
‘luxury goods’ identified in supplement no. 5 to part 746.
§ 746.10, which required a license for
‘luxury goods’ identified in supplement no. 5 to part 746.
§ 746.10, which required a license for
‘luxury goods’ identified in supplement no. 5 to part 746.
§ 746.10, which required a license for
‘luxury goods’ identified in supplement no. 5 to part 746.
§ 746.10, which required a license for
‘luxury goods’ identified in supplement no. 5 to part 746.
§ 746.10, which required a license for
‘luxury goods’ identified in supplement no. 5 to part 746.
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§ 744.8
§ 744.8
§ 744.8
§ 744.8
§ 744.8
§ 744.8
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TABLE 2—SDN LIST IDENTIFIERS ADDED TO § 744.8—Continued
EAR section
prior to this
final rule
OFAC
sanctions list
Program identifier
Sanctions program
[UKRAINE–EO13685] .........
31 CFR part 589 ..................................
SDN
§ 746.10, which required a license for
‘luxury goods’ identified in supplement no. 5 to part 746.
New EAR
section in this
final rule
§ 744.8
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Related to narcotics trafficking or other criminal networks
[ILLICIT DRUGS–EO14059]
[SDNT] ................................
31 CFR part 599 ..................................
Narcotics Trafficking Sanctions Regulations, 31 CFR part 536.
SDN
SDN
[SDNTK] ..............................
Foreign Narcotics Kingpin Sanctions
Regulations, 31 CFR part 598.
SDN
[TCO] ..................................
Transnational Criminal Organizations
Sanctions Regulations, 31 CFR part
590; Executive Order 13581.
SDN
IV. Removal of Two End-User Control
Sections Under the EAR
Section 744.11 (License requirements
that apply to entities acting or at
significant risk of acting contrary to the
national security or foreign policy
interests of the United States), provides
a basis for BIS to impose license
requirements by adding persons to the
Entity List who have been involved, are
involved, or pose a significant risk of
being or becoming involved in activities
that are contrary to the national security
or foreign policy interests of the United
States. Other sections of parts 744 (e.g.,
§ 744.3, relating to activities of concern
involving missile technology) and 746
are also used to add persons to the
Entity List. The substantive criteria set
forth in two sections of part 744,
§§ 744.10 (Restrictions on certain
entities in Russia) and 744.20 (License
requirements that apply to certain
sanctioned entities), are duplicative of
§ 744.11 and/or other provisions in parts
744 and 746), which provide sufficient
authority to add to the Entity List
persons meeting the criteria set forth in
those two sections. Therefore, this final
rule removes and reserves §§ 744.10 and
744.20.
This final rule will reduce by two the
number of sections that exporters,
reexports, and transferors will need to
review in part 744. Taking into account
the additional four sections that this
final rule removes as part of the
consolidation of the SDN restrictions
under § 744.8, as described under
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N/A (new SDN List-related identifier) ..
§ 740.2(a)(22), which restricted the
use of license exceptions for 0x5zz
items, but did not impose additional
license requirements for these persons. This final rule removes paragraph (a)(22) because it will be addressed under § 744.8.
§ 740.2(a)(22), which restricted the
use of license exceptions for 0x5zz
items but did not impose additional
license requirements for these persons. This final rule removes paragraph (a)(22) because it will be addressed under § 744.8.
N/A (new SDN List-related identifier) ..
section III above, as well as the removal
of the outdated SDN-related sections
§§ 744.13 and 744.18, these changes will
result in the removal of a total of six
sections from part 744, making the enduser controls under part 744 simpler
(thereby facilitating compliance) and
more effective while continuing to serve
to protect and advance U.S. national
security and foreign policy interests.
V. Amendments to the EAR
In § 740.2, this final rule removes and
reserves paragraph (a)(22) from the EAR
because its restrictions on certain SDNs
have been moved to the broader enduser restrictions under § 744.8.
In § 744.1, this final rule revises
paragraph (a)(1) (Introduction), to
remove references to §§ 744.12, 744.13,
744.14, and 744.18, and makes changes
to the reference to § 744.8 to reflect that
this section will now be the single
section in part 744 that specifies enduser license requirements for export,
reexport, and transfer (in-country)
transactions involving certain SDNs.
This final rule also removes the
sentences referencing §§ 744.18 and
744.20, which are simultaneously being
removed from the EAR. As a conforming
change, this final rule revises the
sentence that references § 744.7 to add
the term ‘‘transfer (in-country)’’ for
consistency with the requirements in
§ 744.7. For clarification purposes, this
final rule revises the section that
references § 744.19 to add the term
‘‘transfer (in-country).’’ In the sentence
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§ 744.8
§ 744.8
§ 744.8
§ 744.8
that specifies that these sections of part
744 include license review policies for
export license applications submitted as
required by these sections, this final
rule adds the phrase ‘‘reexport, and incountry transfer,’’ because the license
requirements of part 744 extend to
reexports and transfers (in-country). In
the sentence that refers to § 744.21, this
final rule makes updates for consistency
with the existing requirements under
§ 744.21 for Russia and Belarus, which
are different than those for the other
countries identified in § 744.21.
In § 744.7(b)(2) (Exports to U.S. or
Canadian Airline’s Installation or
Agent), this final rule adds the phrase
‘‘reexports, and transfers (in-country)’’
for clarity. This addition is consistent
with the agency’s longstanding position
that this paragraph is available for
reexports and transfers (in-country). In
§ 744.8 (Restrictions on exports and
reexports to persons designated
pursuant to E.O. 13382—blocking
property of weapons of mass destruction
proliferators and their supporters), this
final rule revises this section heading to
now read as ‘‘Restrictions on exports,
reexports, and transfers (in-country)
when certain persons designated on the
List of Specially Designated Nationals
and Blocked Persons (SDN List) are a
party to the transaction’’ to reflect the
broadened scope of this revised section.
Paragraph (a)(1) (Scope) defines the
scope of the revised § 744.8. The final
rule revises § 744.8 to impose EAR
license requirements, specify license
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review policies, and set forth
restrictions on the use of license
exceptions for exports, reexports, and
transfers (in-country) when a person
who is designated on the SDN List with
any of the following identifiers is a
party to the transaction as described in
§ 748.5(c) through (f): [BELARUS],
[BELARUS–EO14038], [RUSSIA–
EO14024], [UKRAINE–EO13660],
[UKRAINE–EO13661], [UKRAINE–
EO13662], [UKRAINE–EO13685],
[ILLICIT DRUGS–EO14059], [SDNT],
[SDNTK], and [TCO]. Paragraph (a)(1)
will also include a sentence specifying
that these persons are set forth in
appendix A to 31 CFR chapter V and on
OFAC’s website at https://
www.treas.gov/sdn to assist exporters,
reexporters, and transferors in
identifying these persons. This final rule
adds a new note 1 to paragraph (a)(1) to
include a cross reference to direct the
public to the OFAC website for Program
Tag Definitions for OFAC Sanctions
Lists for additional background rather
than carrying over the background
information from the underlying part
744 SDN-related sections.
Paragraph (a)(2) specifies the
relationship between BIS and OFAC for
these part 744 requirements specified
under § 744.8. Paragraph (a)(2) clarifies
that these EAR controls supplement and
strengthen the sanctions that are
imposed by OFAC on these SDNs to
better ensure that U.S. national security
and foreign policy interests are
protected in the case of export, reexport,
and transfer (in-country) transactions
involving items subject to the EAR.
Paragraph (a)(2) includes a sentence
identifying the most likely scenarios in
which the OFAC regulations generally
would not apply but the EAR controls
would. This final rule also includes a
sentence at the end of paragraph (a)(2)
to specify that in order to avoid
imposing a dual licensing requirement,
the EAR authorization requirements
specified in this section do not require
a separate EAR authorization if the
activities are authorized under an OFAC
specific or general license or are
exempted under OFAC’s regulations.
This final rule adds one note to
paragraph (a). New note 2 clarifies that
the Entity List in supplement no. 4 to
part 744 includes certain persons that
have also been designated on the SDN
List. This note includes a cross
reference to § 744.11 and supplement
no. 4 to part 744 for requirements and
related license review policies for these
entities, which take precedence over
those set forth in § 744.8. BIS also
clarifies in new note 1 that BIS requires
an EAR authorization as specified in the
license requirement column on the
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Entity List for these persons regardless
of whether the export, reexport, or
transfer (in-country) is authorized under
an OFAC specific or general license.
In § 744.8(b) (License requirements),
this final rule specifies that unless the
export, reexport, or transfer (in-country)
is authorized under an OFAC specific or
general license or exempt under OFAC’s
regulations, a license is required under
the EAR for the export, reexport, or
transfer (in-country) of any item
‘‘subject to the EAR’’ when a person
who is designated on OFAC’s SDN List
with any of the following identifiers is
a party to the transaction as described
in § 748.5(c) through (f): [BELARUS],
[BELARUS–EO14038], [RUSSIA–
EO14024], [UKRAINE–EO13660],
[UKRAINE–EO13661], [UKRAINE–
EO13662], [UKRAINE–EO13685],
[ILLICIT DRUGS–EO14059], [SDNT],
[SDNTK], and [TCO]. This rule also
adds one sentence at the end of
paragraph (b) to specify that a BIS
license is not required for transactions
described in this paragraph that would
have otherwise met all of the terms and
conditions of an OFAC general license
if the transactions had been subject to
OFAC jurisdiction.
In § 744.8(c) (License exceptions), this
final rule specifies that no license
exceptions may overcome the license
requirements in this section, except in
the case of entities that are also listed on
the Entity List in supplement no. 4 to
part 744 and for which certain license
exceptions are available. In such
circumstances, the specified license
exceptions may overcome the license
requirements of this section and
supplement no. 4 to part 744 that would
otherwise apply.
In § 744.8(d) (License review policy),
this final rule specifies that applications
for licenses required by this section will
be subject to a presumption of denial
review policy, except when note 1 to
paragraph (a) is applicable. When note
1 to paragraph (a)(1) is applicable, the
license review policy under the Entity
List entry for that person would take
precedence. This final rule also includes
a cross reference in paragraph (d) to
direct exporters, reexporters, and
transferors to consult OFAC concerning
transactions subject to OFAC licensing
requirements.
In § 744.8(e) (Violations), this final
rule includes, in streamlined form,
information included prior to this final
rule regarding violations of the EAR.
Specifically, paragraph (e)(1) states that
any export, reexport, or transfer (incountry) by a U.S. person of any item
subject both to the EAR and OFAC’s
regulations and not authorized by OFAC
when a person identified in paragraph
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Sfmt 4700
20113
(a)(1) is a party to the transaction as
defined in § 748.5(c) through (f)
constitutes a violation of the EAR. This
final rule also adds one sentence to
clarify that this paragraph does not
apply to entities identified under both
this section and on the Entity List in
supplement no. 4 to part 744. EAR
violations involving entities identified
under both this section and the Entity
List, will be addressed pursuant to
§§ 744.11 and 744.16.
This final rule adds paragraph (e)(2)
to specify that any export, reexport, or
transfer (in-country) by a U.S. person of
any item subject to the EAR that is not
subject to OFAC’s regulations and not
authorized by BIS when a person
identified in paragraph (a)(1) is a party
to the transaction as defined in
§ 748.5(c) through (f) constitutes a
violation of the EAR. Paragraph (e)(2)
also specifies that any export from
abroad, reexport, or transfer (in-country)
by a non-U.S. person of any item subject
to the EAR and not authorized by BIS
when a person identified in paragraph
(a)(1) is a party to the transaction as
defined in § 748.5(c) through (f)
constitutes a violation of the EAR.
This final rule also includes a note 3
to § 744.8 to specify that 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. This note is included for
consistency with previous SDN-related
restrictions under part 744 of the EAR.
In part 744, this final rule removes
and reserves §§ 744.12 and 744.14 as
conforming changes to the consolidation
under § 744.8 of the requirements
previously specified in those sections.
Also in part 744, this final rule removes
and reserves §§ 744.10, 744.13, 744.18,
and 744.20 because these sections are
no longer needed.
In § 746.10 (‘Luxury goods’ sanctions
against Russia and Belarus and Russian
and Belarusian oligarchs and malign
actors), this final rule revises paragraph
(a)(2) to remove the license requirement
and include a cross reference to § 744.8
of the EAR for additional license
requirements for persons designated on
OFAC’s SDN List with the identifier
[BELARUS–EO14038], [BELARUS],
[RUSSIA–EO14024], [UKRAINE–
EO13660], [UKRAINE–EO13661],
[UKRAINE–EO13662], or [UKRAINE–
EO13685]. The license requirement
under § 744.8 is for all items subject to
the EAR, which includes all ‘luxury
goods’ identified in supplement no. 5 to
part 746. This rule adds to § 746.10 a
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cross reference to the expanded license
requirements under § 744.8 to alert
exporters, reexporters, and transferors to
the fact that persons with these SDN
identifiers remain subject to a license
requirement (expanded in scope by this
rule) under § 744.8.
Savings Clause
For the changes being made in this
final rule, shipments of items removed
from eligibility for a License Exception
or export, reexport, or transfer (incountry) without a license (NLR) as a
result of this regulatory action that were
en route aboard a carrier to a port of
export, reexport, or transfer (in-country),
on March 21, 2024, pursuant to actual
orders for export, reexport, or transfer
(in-country) to or within a foreign
destination, may proceed to that
destination under the previous
eligibility for a License Exception or
export, reexport, or transfer (in-country)
without a license (NLR) provided the
export, reexport, or transfer (in-country)
is completed no later than on April 22,
2024.
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Export Control Reform Act of 2018
On August 13, 2018, the President
signed into law the John S. McCain
National Defense Authorization Act for
Fiscal Year 2019, which included the
Export Control Reform Act of 2018
(ECRA) (codified, as amended, at 50
U.S.C. 4801–4852). ECRA provides the
legal basis for BIS’s principal authorities
and serves as the authority under which
BIS issues this rule.
Rulemaking Requirements
1. BIS has examined the impact of this
rule as required by Executive Orders
12866, 13563, and 14094, which direct
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (e.g., potential economic,
environmental, public, health, and
safety effects, distributive impacts, and
equity). This final rule is considered a
‘‘significant regulatory action’’ under
sec. 3(f) 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 the following OMB-approved
collections of information subject to the
PRA: 0694–0088, ‘‘Multi-Purpose
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Application,’’ which carries a burden
hour estimate of 29.6 minutes for a
manual or electronic submission; 0694–
0096 ‘‘Five Year Records Retention
Period,’’ which carries a burden hour
estimate of less than one minute; and
0607–0152 ‘‘Automated Export System
(AES) Program,’’ which carries a burden
hour estimate of three minutes per
electronic submission. This rule
changes the respondent burden under
these control numbers by increasing the
estimated number of submissions by
twenty, which is not expected to exceed
the current approved estimates.
3. This rule does not contain policies
with federalism implications as that
term is defined in E.O. 13132.
4. Pursuant to section 1762 of ECRA
(50 U.S.C. 4821), this action is exempt
from the Administrative Procedure Act
(APA) (5 U.S.C. 553) requirements for
notice of proposed rulemaking,
opportunity for public participation,
and delay in effective date. While
section 1762 of ECRA provides
sufficient authority for such an
exemption, this action is also
independently exempt from these APA
requirements because it involves a
military or foreign affairs function of the
United States (5 U.S.C. 553(a)(1)).
5. Because neither the Administrative
Procedure Act nor any other law
requires that notice of proposed
rulemaking and an opportunity for
public comment be given for this rule,
the analytical requirements of the
Regulatory Flexibility Act (5 U.S.C. 601
et seq.) are not applicable. Accordingly,
no Final Regulatory Flexibility Analysis
is required and none has been prepared.
List of Subjects
15 CFR Part 740
Administrative practice and
procedure, Exports, Reporting and
recordkeeping requirements.
15 CFR Part 744
Exports, Reporting and recordkeeping
requirements, Terrorism.
15 CFR Part 746
Exports, Reporting and recordkeeping
requirements.
For the reasons stated in the
preamble, parts 740, 744 and 746 of the
Export Administration Regulations (15
CFR parts 730 through 774) are
amended as follows:
PART 740—LICENSE EXCEPTIONS
1. The authority citation for part 740
continues to read as follows:
■
Authority: 50 U.S.C. 4801–4852; 50 U.S.C.
4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C.
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Fmt 4700
Sfmt 4700
7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR,
1996 Comp., p. 228; E.O. 13222, 66 FR 44025,
3 CFR, 2001 Comp., p. 783.
§ 740.2
[Amended]
2. Section 740.2 is amended by
removing and reserving paragraph
(a)(22).
■
PART 744—END-USE AND END-USER
CONTROLS
3. The authority citation for 15 CFR
part 744 continues to read as follows:
■
Authority: 50 U.S.C. 4801–4852; 50 U.S.C.
4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C.
3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201
et seq.; 22 U.S.C. 7210; 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. 12938, 59 FR 59099, 3 CFR, 1994
Comp., p. 950; E.O. 13026, 61 FR 58767, 3
CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR
45167, 3 CFR, 1998 Comp., p. 208; E.O.
13222, 66 FR 44025, 3 CFR, 2001 Comp., p.
783; E.O. 13224, 66 FR 49079, 3 CFR, 2001
Comp., p. 786; Notice of September 19, 2022,
87 FR 57569 (September 21, 202); Notice of
November 8, 2022, 87 FR 68015, 3 CFR, 2022
Comp., p. 563; Notice of September 7, 2023,
88 FR 62439 (September 11, 2023).
4. Section 744.1 is amended by
revising paragraph (a)(1) to read as
follows:
■
§ 744.1
General provisions.
(a)(1) Introduction. In this part,
references to the EAR are references to
15 CFR chapter VII, subchapter C. This
part contains prohibitions against
exports, reexports, and selected
transfers to certain end users and end
uses as introduced under General
Prohibitions Five (End use/End users)
and Nine (Orders, Terms, and
Conditions), unless authorized by BIS.
Sections 744.2, 744.3, and 744.4
prohibit exports, reexports, and
transfers (in-country) of items subject to
the EAR to defined nuclear, missile, and
chemical and biological weapons
proliferation activities. Section 744.5
prohibits exports, reexports, and
transfers (in-country) of items subject to
the EAR to defined nuclear maritime
end-uses. Consistent with General
Prohibition Seven (Support of
Proliferation Activities and certain
Military-Intelligence End Uses and End
Users (‘‘U.S. person’’ activities)), § 744.6
prohibits specific activities by U.S.
persons in support of certain nuclear,
missile, chemical and biological
weapons end uses, and whole plants for
chemical weapons precursors, as well as
certain military-intelligence end uses
and military-intelligence end users.
Section 744.7 prohibits exports,
reexports, and transfers (in-country) of
certain items for certain aircraft and
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vessels. Section 744.8 prohibits exports,
reexports, and transfers (in-country)
without authorization when a person
designated on the list of Specially
Designated Nationals and Blocked
Persons (SDN List) pursuant to certain
specified sanctions programs is a party
to the transaction. Section 744.9 sets
forth restrictions on exports, reexports,
and transfers (in-country) of certain
cameras, systems, or related
components. Section 744.11 imposes
license requirements, to the extent
specified in supplement no. 4 to this
part, on entities listed in supplement
no. 4 to this part for activities contrary
to the national security or foreign policy
interests of the United States. Section
744.15 sets forth the conditions for
exports, reexports, and transfers (incountry) to persons listed on the
Unverified List (UVL) in supplement no.
6 to this part, the criteria for revising the
UVL, as well as procedures for
requesting removal or modification of a
listing on the UVL. Section 744.16 sets
forth the license requirements, policies
and procedures for the Entity List.
Section 744.17 sets forth restrictions on
exports, reexports, and transfers (incountry) of microprocessors and
associated ‘‘software’’ and ‘‘technology’’
for military end uses and to military end
users. Section 744.19 sets forth BIS’s
licensing policy for applications for
export, reexport, and transfer (incountry) when a party to the transaction
is an entity that has been sanctioned
pursuant to any of three specified
statutes that require certain license
applications to be denied. In addition,
these sections include license review
standards for export, reexport, and incountry transfer license applications
submitted as required by these sections.
It should also be noted that part 764 of
the EAR prohibits exports, reexports,
and certain transfers of items subject to
the EAR to denied parties. Section
744.21 imposes restrictions for exports,
reexports, and transfers (in-country) of
item subject to the EAR listed in
supplement no. 2 to this part for a
military end use or military end user in
Burma, Cambodia, the People’s
Republic of China (PRC or China),
Nicaragua, or Venezuela and for a
Burmese, Cambodian, Chinese,
Nicaraguan, or Venezuelan military end
user if identified in supplement no. 7 to
this part. Section 744.21 also imposes
restrictions for exports, reexports, and
transfers (in-country) for all items
subject to the EAR for a military end use
or military end user in Belarus or Russia
and for a Belarusian or Russian military
end user wherever located if identified
on supplement no. 4 to this part.
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Section 744.22 imposes restrictions on
exports, reexports, and transfers (incountry) for a military-intelligence end
use or military-intelligence end user in
Burma, China, Russia, or Venezuela; or
for a country listed in Country Groups
E:1 or E:2 (see supplement no. 1 to part
740 of the EAR). Section 744.23 sets
forth restrictions on exports, reexports,
and transfers (in-country) for certain
‘‘supercomputer’’ and semiconductor
manufacturing end use.
*
*
*
*
*
■ 5. Section 744.7 is amended by
revising the paragraph (b)(2) heading to
read as follows:
§ 744.7 Restrictions on certain exports to
and for the use of certain foreign vessels
or aircraft.
*
*
*
*
*
(b) * * *
(2) Exports, reexports, and transfers
(in-country) to U.S. or Canadian
Airline’s Installation or Agent. * * *
*
*
*
*
*
■ 6. Section 744.8 is revised to read as
follows:
§ 744.8 Restrictions on exports, reexports,
and transfers (in-country) when certain
persons designated on the list of Specially
Designated Nationals and Blocked Persons
(SDN List) are a party to the transaction.
(a) Scope. (1) In addition to any other
EAR license requirements that may be
applicable, this section imposes EAR
license requirements, license review
policies, and restrictions on the use of
license exceptions for exports,
reexports, and transfers (in-country)
when a person who is designated on the
Department of the Treasury, Office of
Foreign Assets Control’s (OFAC) List of
Specially Designated Nationals and
Blocked Persons (SDN List) with any of
the following identifiers is a party to the
transaction, as described in § 748.5(c)
through (f):
(i) Related to Russia’s invasion of
Ukraine.
(A) [BELARUS–EO14038];
(B) [BELARUS];
(C) [RUSSIA–EO14024];
(D) [UKRAINE–EO13660];
(E) [UKRAINE–EO13661];
(F) [UKRAINE–EO13662]; or
(G) [UKRAINE–EO13685].
(ii) Terrorism-related.
(A) [FTO]; or
(B) [SDGT].
(iii) WMD-related.
(A) [NPWMD].
(B) [Reserved]
(iv) Related to narcotics trafficking or
other criminal networks.
(A) [ILLICIT DRUGS–EO14059];
(B) [SDNT];
(C) [SDNTK]; or
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20115
(D) [TCO].
Note 1 to paragraph (a)(1): The names of
such designations are published in the
Federal Register and incorporated into the
SDN List, as set forth in appendix A to 31
CFR chapter V and on OFAC’s website at
https://www.treas.gov/sdn. See Program Tag
Definitions for OFAC Sanctions Lists for
additional information: https://
ofac.treasury.gov/specially-designatednationals-list-sdn-list/program-tagdefinitions-for-ofac-sanctions-lists.
(2) These EAR controls supplement
and strengthen the sanctions that are
imposed by OFAC on these SDNs to
better ensure that U.S. national security
and foreign policy interests are
protected. Specifically, this section
imposes controls on exports, reexports,
or transfers (in-country) of items subject
to the EAR where the OFAC regulations
are not applicable, such as in certain
situations involving deemed exports
and deemed reexports, and reexports
and transfers (in-country) not involving
the U.S. financial system or otherwise
involving U.S. persons. To avoid
imposing a duplicative license
requirement, the transactions specified
in this section do not require separate
EAR authorization if the transactions are
authorized under an OFAC specific or
general license or are exempted under
OFAC’s regulations.
Note 2 to paragraph (a): The Entity List in
supplement no. 4 to part 744 includes certain
persons that have also been designated with
certain identifiers on the SDN List. See
§ 744.11 and supplement no. 4 to part 744 for
requirements, including license review
policies, for these entities, which take
precedence over the requirements in this
§ 744.8. BIS requires an EAR authorization as
specified in the license requirement column
on the Entity List for export, reexport, and
transfer (in-country) transactions involving
items subject to the EAR in which these
persons are parties to the transaction
regardless of whether such transaction is
authorized under an OFAC specific or
general license or exempted under OFAC’s
regulations.
(b) License requirements. Unless the
export, reexport, or transfer (in-country)
is authorized under an OFAC specific or
general license or exempted under
OFAC’s regulations, a license is
required under the EAR for the export,
reexport, or transfer (in-country) of any
item ‘‘subject to the EAR’’ when a
person who is designated on OFAC’s
SDN List with any of the identifiers set
forth in paragraph (a)(1) is a party to the
transaction as described in § 748.5(c)
through (f). A Department of Commerce
license is not required for transactions
described in this paragraph (b) that
would have otherwise met all of the
terms and conditions of an OFAC
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general license if the transactions had
been subject to OFAC jurisdiction.
(c) License exceptions. No license
exceptions may overcome the license
requirements in this section, except for
entities that are also listed on the Entity
List in supplement no. 4 to part 744 that
have certain license exception
eligibility, which is available to
overcome the license requirements of
this section and supplement no. 4 to
part 744 for that specific entity.
(d) License review policy.
Applications for licenses required by
this section will be subject to a
presumption of denial license review
policy, except when note 1 to paragraph
(a)(1) of this section is applicable and
the license review policy specified on
the Entity List in supplement no. 4 to
part 744 is different, in which case the
license review policy under the
applicable Entity List entry for that
person would govern. You should
consult OFAC regarding transactions
subject to licensing requirements under
regulations maintained by OFAC.
(e) Violations. (1) Any export,
reexport, or transfer (in-country) by a
U.S. person of any item subject to both
the EAR and regulations maintained by
OFAC in situations in which a person
identified in paragraph (a)(1) is a party
to the transaction as described in
§ 748.5(c) through (f) that is not
authorized by OFAC constitutes a
violation of the EAR. This paragraph
does not apply to entities identified
under both this section and the Entity
List in supplement no. 4 to part 744.
EAR violations involving entities
identified under both this section and
the Entity List will be addressed
pursuant to §§ 744.11 and 744.16.
(2) Any export, reexport, or transfer
(in-country) of any item subject to the
EAR in which a person identified in
paragraph (a)(1) is a party to the
transaction as described in § 748.5(c)
through (f) and such transaction is not
subject to regulations maintained by
OFAC and not authorized by BIS
constitutes a violation of the EAR.
Note 3 to § 744.8: 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.
7. Sections 744.10, 744.12 through
744.14, 744.18, and 744.20 are removed
and reserved.
■
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PART 746—EMBARGOES AND OTHER
SPECIAL CONTROLS
8. The authority citation for 15 CFR
part 746 continues to read as follows:
■
Authority: 50 U.S.C. 4801–4852; 50 U.S.C.
4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C.
287c; Sec 1503, Pub. L. 108–11, 117 Stat. 559;
22 U.S.C. 2151 note; 22 U.S.C. 6004; 22
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O.
12854, 58 FR 36587, 3 CFR, 1993 Comp., p.
614; E.O. 12918, 59 FR 28205, 3 CFR, 1994
Comp., p. 899; E.O. 13222, 66 FR 44025, 3
CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR
26751, 3 CFR, 2004 Comp., p 168;
Presidential Determination 2003–23, 68 FR
26459, 3 CFR, 2004 Comp., p. 320;
Presidential Determination 2007–7, 72 FR
1899, 3 CFR, 2006 Comp., p. 325; Notice of
May 8, 2023, 88 FR 30211 (May 10, 2023).
9. Section 746.10 is amended by:
a. Revising paragraph (a)(2);
b. Revising paragraph (a)(3)
introductory text; and
■ c. Removing the final sentence of the
paragraph (c) introductory text.
The revisions read as follows:
■
■
■
§ 746.10 ‘Luxury goods’ sanctions against
Russia and Belarus and Russian and
Belarusian oligarchs and malign actors.
(a) * * *
(2) Russian and Belarusian oligarch
and malign actors. The license
requirements under this section for
persons designated on OFAC’s SDN List
with the identifier [BELARUS],
[BELARUS–EO14038], [RUSSIA–E.O.
14024], [UKRAINE–EO13660],
[UKRAINE–EO13661], [UKRAINE–
EO13662], or [UKRAINE–EO13685]
were removed from this section on
March 21, 2024, because a broader
license requirement for all items subject
to the EAR is required under § 744.8 as
of March 21, 2024, which includes all
‘luxury goods’ under supplement no. 5
to part 746 and any other item subject
to the EAR. See § 744.8 of the EAR for
license requirements for persons
designated on OFAC’s SDN List with
the identifier [BELARUS], [BELARUS–
EO14038], [RUSSIA–E.O. 14024],
[UKRAINE–EO13660], [UKRAINE–
EO13661], [UKRAINE–EO13662], or
[UKRAINE–EO13685].
(3) Exclusion from scope of U.S.origin controlled content under
paragraph (a)(1) of this section. For
purposes of determining U.S.-origin
controlled content under supplement
no. 2 to part 734 of the EAR when
making a de minimis calculation for
reexports and exports from abroad to
Russia or Belarus, the license
requirements in paragraph (a)(1) of this
section are not used to determine
controlled U.S.-origin content in a
foreign-made item, provided the criteria
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in paragraphs (a)(3)(i) and (ii) of this
section are met:
*
*
*
*
*
Thea D. Rozman Kendler,
Assistant Secretary for Export
Administration.
[FR Doc. 2024–06067 Filed 3–20–24; 8:45 am]
BILLING CODE 3510–33–P
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 587
Publication of Russian Harmful
Foreign Activities Sanctions
Regulations Web General Licenses 88,
88A, 89, 90, 91, 91A, 92, and 93
Office of Foreign Assets
Control, Treasury.
ACTION: Publication of Web General
Licenses.
AGENCY:
The Department of the
Treasury’s Office of Foreign Assets
Control (OFAC) is publishing eight
general licenses (GLs) issued pursuant
to the Russian Harmful Foreign
Activities Sanctions Regulations: GLs
88, 88A, 89, 90, 91, 91A, 92, and 93,
each of which were previously made
available on OFAC’s website.
DATES: GLs 88, 88A, 89, 90, 91, 91A, 92,
and 93 were issued on February 23,
2024. See SUPPLEMENTARY INFORMATION
for additional relevant dates.
FOR FURTHER INFORMATION CONTACT:
OFAC: Assistant Director for Licensing,
202–622–2480; Assistant Director for
Regulatory Affairs, 202–622–4855; or
Assistant Director for Compliance, 202–
622–2490.
SUPPLEMENTARY INFORMATION:
SUMMARY:
Electronic Availability
This document and additional
information concerning OFAC are
available on OFAC’s website: https://
ofac.treasury.gov.
Background
On February 23, 2024, OFAC issued
GLs 88, 89, 90, 91, 92, and 93 to
authorize certain transactions otherwise
prohibited by the Russian Harmful
Foreign Activities Sanctions
Regulations, 31 CFR part 587 (RuHSR).
Also on February 23, 2024, OFAC
issued GLs 88A and 91A, which
superseded GLs 88 and 91, respectively.
GL 88 had an expiration date of April
8, 2024; GLs 88A, 89, 90, and 92 expire
on April 8, 2024. GL 91 had an
expiration date of May 23, 2024; GL 91A
expires on May 23, 2024. Each GL was
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[Federal Register Volume 89, Number 56 (Thursday, March 21, 2024)]
[Rules and Regulations]
[Pages 20107-20116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06067]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 740, 744 and 746
[Docket No. 240308-0076]
RIN 0694-AI82
Export Administration Regulations End-User Controls: Imposition
of Restrictions on Certain Persons Identified on the List of Specially
Designated Nationals and Blocked Persons (SDN List)
AGENCY: Bureau of Industry and Security, Department of Commerce.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this final rule, the Bureau of Industry and Security (BIS)
makes changes to the end-user controls of the Export Administration
Regulations (EAR) to add end-user controls, and in certain cases expand
existing end-user controls, on certain persons identified on the List
of Specially Designated Nationals and Blocked Persons (SDN List)
maintained by the Department of the Treasury's Office of Foreign Assets
Control (OFAC).
DATES: This rule is effective on March 21, 2024.
FOR FURTHER INFORMATION CONTACT: For questions on this final rule,
contact W. Collmann Griffin, Senior Policy Advisor, International
Policy Office, Bureau of Industry and Security, Department of Commerce,
Phone: 202-482-1430, Email: [email protected].
For emails, include ``EAR requirements for SDNs'' in the subject
line.
SUPPLEMENTARY INFORMATION:
I. Background
The U.S. Government has a number of list-based tools to restrict
economic activities of individuals and entities to protect U.S.
national security or foreign policy interests. BIS employs end-user
controls under the Export Administration Regulations (EAR), 15 CFR
parts 730-774, including the Entity List (Supplement No. 4 to part 744
of the EAR), to impose license requirements for the export, reexport,
and transfer (in-country) of items subject to the EAR. End-user
requirements and Entity List additions allow for the monitoring of
items subject to the EAR, including less-sensitive items. In the
context of the Entity List, BIS maintains stringent license review
policies and restrictions on the use of EAR license exceptions specific
to each listed entity.
The U.S. Department of the Treasury's Office of Foreign Assets
Control (OFAC) maintains the List of Specially Designated Nationals and
Blocked Persons (SDN List) to identify persons whose property or
interests in property that are or come within the United States or in
the possession or control of U.S. persons, wherever located, are
blocked (see appendix A to 31 CFR chapter V and https://www.treas.gov/sdn). These targeted economic sanctions tools enable the U.S.
Government to escalate economic pressure and promote deterrence while
mitigating unintended economic effects on the United States and our
partners and allies.
After reviewing categories of end users and global activities that
implicate both financial and export control concerns, BIS has
determined to implement EAR license requirements for all items subject
to the EAR for all persons blocked under eleven OFAC-administered
sanctions programs. BIS will also continue to apply license
requirements involving all items subject to the EAR in connection with
persons sanctioned under three OFAC-administered sanctions programs.
The EAR restrictions involving these
[[Page 20108]]
fourteen OFAC-administered sanctions programs serve as a force
multiplier and complement OFAC's blocking sanctions, which prohibit all
transactions by U.S. persons or within (or transiting) the United
States that involve any property or interests in property of designated
or blocked persons, unless authorized by a general or specific license
issued by OFAC, or exempt.
The imposition of these EAR license requirements for exports,
reexports, and transfers (in-country) allows for the EAR controls to
act as a backstop for activities over which OFAC does not exercise
jurisdiction, including deemed exports and deemed reexports, and for
reexports and transfers (in-country) that would otherwise not involve
U.S. persons (e.g., U.S. financial institutions). Notably, the new
license requirements allow for controls on items outside the United
States, complementing the existing authority in many OFAC programs to
impose blocking sanctions on persons who materially assist, sponsor, or
provide financial, material, or technological support for, or goods or
services to or in support of, SDNs, even outside of U.S. jurisdiction.
In this final rule, persons blocked under fourteen OFAC sanctions
programs will be subject to stringent export controls under the EAR.
Each program is listed below with the corresponding sanctions authority
and program code or ``identifier,'' arranged by thematic program to
assist understanding.
Related to Russia's invasion of Ukraine:
Belarus Sanctions Regulations, 31 CFR part 548; Executive
Order 13405 (OFAC program code or ``identifier'' [BELARUS]);
Executive Order 14038 ([BELARUS-EO14038]);
Russian Harmful Foreign Activities Sanctions Regulations
31 CFR part 587; Executive Order 14024 [RUSSIA-EO14024];
Executive Order 13660 ([UKRAINE-EO13660]);
Executive Order 13661 ([UKRAINE-EO13661]);
Executive Order 13662 [UKRAINE-EO13662]; and
Executive Order 13685 ([UKRAINE-EO13685]).
Related to terrorism:
Foreign Terrorist Organizations Sanctions Regulations, 31
CFR part 597 [FTO]; and
Global Terrorism Sanctions Regulations, 31 CFR part 594
[SDGT].
Related to WMD:
Weapons of Mass Destruction Proliferators Sanctions
Regulations, 31 CFR part 544 [NPWMD].
Related to narcotics trafficking or other criminal networks:
Executive Order 14059 [ILLICIT DRUGS-EO14059];
Narcotics Trafficking Sanctions Regulations, 31 CFR part
536 [SDNT];
Foreign Narcotics Kingpin Sanctions Regulations, 31 CFR
part 598 [SDNTK]; and
Transnational Criminal Organizations Sanctions
Regulations, 31 CFR part 590; Executive Order 13581 [TCO].
See Program Tag Definitions for OFAC Sanctions Lists for additional
information: https://ofac.treasury.gov/specially-designated-nationals-list-sdn-list/program-tag-definitions-for-ofac-sanctions-lists.
Prior to this final rule, persons designated under two of these
fourteen OFAC-administered sanctions programs (i.e., [ILLICIT DRUGS-
EO14059] and [TCO]) were not subject to restrictions under the EAR.
Persons designated under the other twelve programs were already subject
to comprehensive export controls under part 744 provisions, or under
provisions in parts 740 or 746 of the EAR. As described below under
sections II and III, this final rule expands certain of these part 744
provisions and revises part 744 to feature a comprehensive,
consolidated provision that references all fourteen OFAC-administered
sanctions programs. It also consolidates the relevant export control
restrictions from part 740 and 746 under this new provision in part
744.
The EAR, prior to this final rule, imposed licensing restrictions
on export, reexport, and transfer (in-country) transactions involving
all items subject to the EAR in which persons blocked under three OFAC-
administered sanctions programs--[FTO], [SDGT], and [NPWMD]--served as
parties to the transaction. This rule eliminates the three applicable
underlying sections in part 744 and adds their contents to a
consolidated single section under Sec. 744.8.
In addition, prior to this final rule, the EAR imposed licensing
restrictions on exports, reexports, and transfers (in-country) of
`luxury goods' in which persons blocked under seven of these OFAC
administered sanctions programs--[BELARUS], [BELARUS-EO14038], [RUSSIA-
EO14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], and
[UKRAINE-EO13685]--served as parties to the transaction. This final
rule expands the license requirement to all items subject to the EAR
and moves the relevant regulatory contents from current Sec.
746.10(a)(2) into a consolidated single section of the EAR under Sec.
744.8.
Prior to this final rule, the EAR also imposed restrictions on the
availability of license exceptions for transactions involving certain
items in which persons blocked under two of these OFAC-administered
sanctions programs, [SDNT] and [SDNTK], served as parties to the
transaction. This final rule restricts such license exception
availability further by adding a license requirement for all items
subject to the EAR when a person blocked pursuant to these two programs
is a party to the transaction and places the substantive regulatory
contents in a consolidated single section of the EAR under Sec. 744.8.
BIS will continue its regular coordination with OFAC to impose
restrictions on persons designated under other OFAC blocking or
sanctions programs in cases in which BIS determines that its export
controls would be an effective tool to complement OFAC's sanctions
programs. All interested parties may consult the Commerce Department-
maintained Consolidated Screening List (CSL), available to the public
at https://www.trade.gov/consolidated-screening-list, as a single-
search portal to identify individuals and entities who appear on lists
maintained by the Departments of Commerce, the Treasury, and State.
This final rule also makes several structural and technical changes
to part 744 and removes four end-user control provisions under part 744
of the EAR that are either outdated or obsolete in light of changes
made to other federal authorities.
Specifically, this final rule:
A. Imposes end-user controls under the EAR involving persons
identified on OFAC's SDN List under eleven categories with the
following identifiers: [BELARUS], [BELARUS-EO14038], [RUSSIA-EO14024],
[UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], [UKRAINE-
EO13685], [ILLICIT DRUGS-EO14059], [SDNT], [SDNTK], and [TCO].
B. Consolidates into a single section the contents of several part
744 SDN-related end-user provisions under the EAR. Prior to this final
rule, part 744 included five separate sections involving SDNs
designated in or pursuant to several specified Executive Orders
(E.O.s). This final rule consolidates the contents of those five
sections and the eleven new SDN-related restrictions so that all of the
SDN-related end-user controls in part 744 will be in the same section.
As part
[[Page 20109]]
of this regulatory action, BIS removes from the EAR two provisions: one
provision involving a terminated E.O. that had targeted Specially
Designated Terrorists (SDTs) and a second provision involving Iraq that
does not address current policy concerns under the EAR.
C. Removes two end-user control provisions in part 744 of the EAR
that are no longer needed because of the existence of a broader end-
user control in Sec. 744.11 that allows BIS to impose restrictions on
entities acting contrary to the national security or foreign policy
interests of the United States.
II. Expansion of SDN-Related End-User Controls Under the EAR
A. Persons Designated on SDN List With the Identifiers [BELARUS],
[BELARUS-EO14038], [RUSSIA-EO14024], [UKRAINE-EO13660], [UKRAINE-
EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685]
1. Export Controls Implemented Against Russia and Belarus
In response to Russia's February 2022 invasion of Ukraine, BIS
imposed extensive sanctions on Russia under the EAR as part of the
final rule, ``Implementation of Sanctions Against Russia Under the
Export Administration Regulations (EAR)'' (the Russia Sanctions Rule)
(87 FR 12226, March 3, 2022). To address Belarus's complicity in the
invasion, BIS imposed similar sanctions on Belarus under the EAR in a
final rule, ``Implementation of Sanctions Against Belarus'' (``Belarus
Sanctions Rule'') (87 FR 13048, March 6, 2022). During the last two
years, BIS has published a number of additional final rules
strengthening the export controls on Russia and Belarus, including
measures undertaken in coordination with U.S. allies and partners.
Most recently, in a January 2024 rule, ``Implementation of
Additional Sanctions Against Russia and Belarus Under the Export
Administration Regulations (EAR) and Refinements to Existing
Controls,'' BIS strengthened its sanctions under the EAR against Russia
and Belarus, including by expanding the scope of the EAR's Russian and
Belarusian Industry Sector Sanctions, expanding the EAR's Russia/
Belarus foreign direct product rule to cover certain EAR99 antennas,
antenna reflectors, and parts thereof, and other actions to prohibit
exports or reexports of military and spacecraft-related items to Russia
and Belarus (89 FR 4804, January 25, 2024). The Department of Commerce
took these actions to enhance the effectiveness of its controls on
these two countries and to better align them with those implemented by
U.S. allies and partners.
2. Designations Made Pursuant to E.O.s 13405, 13660, 13661, 13662,
13685, 14024, and 14038 and BIS Actions To Complement Such Designations
OFAC has taken action to address Russia's February 2022 invasion of
Ukraine, including adding various persons to OFAC's SDN List pursuant
to E.O. 13405, 13660, 13661, 13662, 13685, 14024, and 14038. Persons
who are blocked pursuant to one of these seven E.O.s are designated on
the SDN List with the identifier [BELARUS], [BELARUS-EO14038], [RUSSIA-
EO14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or
[UKRAINE-EO13685] (see https://www.treas.gov/sdn).
In this rule, in order to complement the designations made under
E.O. 13405, 13660, 13661, 13662, 13685, 14024, or 14038, BIS amends the
EAR to revise Sec. 744.8 to impose a license requirement for all
exports, reexports, or transfers (in-country) of items subject to the
EAR when a person designated under one of these seven E.O.s is a party
to the transaction as defined in Sec. 748.5(c) through (f). In
particular, these new EAR license requirements under Sec. 744.8 will
apply to any reexport or transfer (in-country) transaction that is not
subject to regulation by OFAC, including due to the fact that the
transaction does not involve U.S. persons or the U.S. financial system,
thereby ensuring that the U.S. Government can restrict such activity.
These new license requirements will apply broadly to all items subject
to the EAR. There will also be a prohibition on the use of any license
exceptions, although as specified in new Sec. 744.8(a)(2), the EAR
authorization requirements will take into account OFAC general licenses
and exemptions to ensure consistency, and a restrictive presumption of
denial review policy will apply to license applications involving these
persons as parties to the transaction.
These EAR changes will limit these persons' access to items subject
to the EAR, regardless of their source. Also, these actions will
advance the U.S. national security and foreign policy objectives set
forth in E.O. 13405, 13660, 13661, 13662, 13685, 14024, and 14038, and
build upon the policy objectives set forth in the Russia Sanctions
rules and in the Belarus Sanctions rules as described above. This rule
is part of a set of larger U.S. Government and partner and allied
country actions intended to increase the financial, economic, and
strategic consequences of Russia's further invasion of Ukraine and
Belarus's substantial enabling of such invasion, and Russia's ongoing
military aggression in Ukraine during the past two years.
In order to avoid duplication, if OFAC issues a general license or
specific license that authorizes a transaction with or involving a
person blocked under the applicable OFAC regulations and included on
the SDN List with the identifier [BELARUS], [BELARUS-EO14038], [RUSSIA-
EO14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or
[UKRAINE-EO13685] or such transaction is otherwise exempt from OFAC's
regulations, then no additional BIS authorization is required for
exports, reexports, or transfers (in-country) of any item subject to
the EAR when that person is a party to the transaction as defined in
Sec. 748.5(c) through (f), provided that a license would otherwise
only be required under Sec. 744.8. A BIS license would still be
required for exports, reexports, or transfers (in-country) that
implicate other parts of the EAR, including parts 742 and 746, as well
as supplement no. 4 to part 744 or other end-use or end-user controls.
For example, an entity with the SDN List identifier [RUSSIA-EO14024]
would be subject to the license requirements under Sec. 744.8 but
could also be listed on the Entity List in supplement no. 4 to part
744. If the entity were listed on the Entity List, a party seeking to
make an export, rexport, or transfer (in-country) would have to
overcome the additional EAR license requirements. Alternatively, if the
item were highly controlled, such as a ``600 series'' military item,
the party seeking to make an export, reexport, or transfer (in-country)
would have to overcome Commerce Control List (CCL)-based license
requirements in addition to requirements set forth in Sec. 744.8.
BIS estimates new license requirements under Sec. 744.8 for
persons included on the SDN List with the identifier [BELARUS],
[BELARUS-EO14038], [RUSSIA-EO14024], [UKRAINE-EO13660], [UKRAINE-
EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685] will result in an
additional five license applications being submitted to BIS annually.
B. Persons Designated on the SDN List With [ILLICIT DRUGS-EO14059],
[SDNT], [SDNTK], or [TCO] Identifiers Related to Narcotics or Criminal
Activities
OFAC has taken various actions to address narcotics or other
criminal activities, including by adding various
[[Page 20110]]
persons to the SDN List with the identifiers [ILLICIT DRUGS-EO14059],
[SDNT], [SDNTK], or [TCO].
This final rule adds persons designated on the SDN List with the
following identifiers to Sec. 744.8 of the EAR: [ILLICIT DRUGS-
EO14059] (persons designated pursuant to E.O. 14059); [SDNT] (persons
designated pursuant to the Narcotics Trafficking Sanctions Regulations,
31 CFR part 536); [SDNTK] (persons designated pursuant to the Foreign
Narcotics Kingpin Sanctions Regulations, 31 CFR part 598); and [TCO]
(persons designated pursuant to the Transnational Criminal
Organizations Sanctions Regulations, 31 CFR part 590 and E.O. 13581).
Consistent with these SDN-related end-user controls, Sec. 744.8, as
revised and consolidated by this final rule, will impose license
requirements for all items subject to the EAR, restrict the
availability of all license exceptions, and specify a presumption of
denial license review policy.
This rule removes and reserves Sec. 740.2(a)(22) as a conforming
change to the addition of two of these SDN List identifiers to Sec.
744.8. Due to the fact that Sec. 744.8 will include a restriction on
the use of EAR license exceptions for export, reexport, and transfer
(in-country) transactions involving all items subject to the EAR, Sec.
740.2(a)(22) is no longer needed.
Prior to this final rule, the SDN identifiers [SDNT] and [SDNTK]
were included in a general restriction on the use of license exceptions
under Sec. 740.2(a)(22) for certain items. This general restriction
specified that the export, reexport, or transfer (in-country) of any
item classified under a 0x5zz Export Control Classification Number
(ECCN) (i.e., firearms and related items) could not be authorized under
an EAR license exception when a party to the transaction was designated
on the SDN List with one of these identifiers. Because persons
designated on the SDN List with these identifiers were involved in
narcotics or other criminal activities, BIS had restricted the use of
all EAR license exceptions for the firearms and related items
controlled under the 0x5zz ECCNs to protect U.S. national security and
foreign policy interests. Due to the fact that there is a worldwide
license requirement under the EAR for firearms, BIS did not impose a
license requirement under part 744 for transactions involving persons
on the SDN List with these identifiers who are parties to the
transaction, and instead relied on the CCL-based license requirements
and related license review policies.
BIS has determined that the license requirements for export,
reexport, and transfer (in-country) transactions in which persons
designated on the SDN List with the identifiers [ILLICIT DRUGS-
EO14059], [SDNT], [SDNTK], or [TCO] are parties to the transaction
should be expanded from CCL-based requirements to all items subject to
the EAR to further protect U.S. national security and foreign policy
interests. In order to avoid duplication, U.S. persons are not required
to seek separate BIS authorization for an export, reexport, or transfer
(in-country) of any item subject to both the EAR and OFAC's regulations
when a person identified in Sec. 744.8 is a party to the transaction
as defined in Sec. 748.5(c) through (f). Therefore, if OFAC authorizes
an export from the United States or an export, reexport, or transfer
(in-country) by a U.S. person to a person identified in Sec. 744.8, no
separate BIS authorization is required.
BIS estimates new license requirements under Sec. 744.8 for
transactions in which persons designated on the SDN List with the
identifiers [ILLICIT DRUGS-EO14059], [SDNT], [SDNTK], or [TCO] are
parties to the transaction will result in an additional 15 license
applications being submitted to BIS annually.
III. Consolidation of the SDN-Related End-User Controls Under the EAR
A. Increasing Use and Expansion of End-User Controls
The increasing use of end-use and end-user controls under the EAR
has led to an expansion of the number of sections under part 744,
``Control Policy: End User and End-Use Based.'' For example, there are
five sections similarly structured in part 744 that prior to this final
rule imposed restrictions on certain persons designated on the SDN
List. This rule simplifies part 744 by combining these sections into a
single section that will specify the requirements under the EAR and by
adding the eleven new SDN identifiers described above under section II
to the same consolidated section. This streamlining and restructuring
will reduce the compliance burden on parties because it will be easier
to review one consolidated SDN-related section instead of fourteen
separate SDN-related sections.
This final rule removes and reserves Sec. 744.13, relating to
persons identified on the SDN List with the [SDT] identifier, which
OFAC no longer uses. The now-obsolete [SDT] restrictions in Sec.
744.13 are related to E.O. 12947 of January 23, 1995, which was revoked
on September 9, 2019, by E.O. 13886. E.O. 13886 also modified E.O.
13224, which underlies the Global Terrorism Sanctions Regulations (31
CFR part 594) referenced in Sec. 744.12. The existing [SDT] SDNs were
re-designated as [SDGT] SDNs upon E.O. 12947's revocation. This final
rule also does not include the restrictions related to SDNs with the
[IRAQ2] identifier under Sec. 744.18 as part of the consolidation
under revised Sec. 744.8 because the vast majority of these natural
persons or entities are either dead or no longer in existence, and they
remain designated as SDNs primarily for purposes of blocking financial
assets. Therefore, these additional EAR requirements are no longer
needed.
B. Consolidation of EAR Controls Involving Items Destined for Certain
Persons Designated on the SDN List
1. Overview of the Consolidated Controls
In part 744, this final rule removes and reserves Sec. Sec.
744.12, 744.13, 744.14, and 744.18. For Sec. Sec. 744.12 and 744.14,
this final rule adds the substance of these controls to the revised
Sec. 744.8. This final rule does not add the controls under Sec.
744.13 or under Sec. 744.18 for the reasons described above under
section III.A.
In Sec. 744.8, this final rule revises this section, including the
heading, to reflect the consolidation of Sec. Sec. 744.12 and 744.14
therein. This final rule additionally makes certain clarifying changes
to Sec. 744.8, including clarifying that the specified EAR
requirements apply to transfers (in-country) and that OFAC general
licenses remain available for entities that are otherwise subject to
these license requirements under Sec. 744.8.
Also, in Sec. 744.8, this rule expands the end-user controls under
part 744 to extend the controls to transactions featuring as a party to
the transaction a person designated on the SDN List with the
identifiers [BELARUS], [BELARUS-EO14038], [RUSSIA-EO14024], [UKRAINE-
EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685] as
described under section II.A, and with the identifiers [ILLICIT DRUGS-
EO14059], [SDNT], [SDNTK], or [TCO] as described under section II.B of
this final rule.
2. Comparison of the Original and Consolidated EAR Controls for SDNs
Under Part 744
The EAR imposes license requirements, license review policies, and
restrictions on the use of license exceptions under certain sections of
part
[[Page 20111]]
744 of the EAR for transactions featuring as a party to the transaction
certain persons designated on the SDN List with specified identifiers,
as described in section III.B.1.
Table 1 identifies these EAR restrictions prior to this final rule
and the corresponding EAR section for these end-user requirements under
Sec. 744.8, as revised. Because of the number of sections this final
rule removes and consolidates under part 744, BIS includes Table 1 to
assist the exporting community's understanding of these changes.
Table 2 identifies the eleven new SDN List identifiers ([BELARUS],
[ILLICIT DRUGS-EO14059], [RUSSIA-EO14024], [SDNT], [SDNTK], [TCO],
[UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], and [UKRAINE-
EO13685]) that this final rule adds to the end-user requirements under
part 744 of the EAR. BIS includes Table 2 to assist the exporting
community's understanding of these changes, including specifying the
requirements in place prior to this final rule and the new and expanded
requirements under this final rule.
Table 1--Existing SDN List Identifiers That Require a License for All Items Subject to the EAR That Are Being
Consolidated Into Sec. 744.8 or Are Otherwise Being Removed From the EAR
----------------------------------------------------------------------------------------------------------------
EAR section
Program identifier Sanctions program OFAC sanctions list prior to this New EAR section in
final rule this final rule
----------------------------------------------------------------------------------------------------------------
Terrorism-related
----------------------------------------------------------------------------------------------------------------
[FTO]......................... Foreign Terrorist SDN Sec. 744.14 Sec. 744.8.
Organizations
Sanctions
Regulations, 31
CFR part 597.
[SDGT]........................ Global Terrorism SDN Sec. 744.12 Sec. 744.8.
Sanctions
Regulations, 31
CFR part 594.
* [SDT]....................... Terrorism N/A Sec. 744.13 N/A, because this
Regulations, 31 identifier is no
CFR part 595. longer used.
----------------------------------------------------------------------------------------------------------------
WMD related
----------------------------------------------------------------------------------------------------------------
[NPWMD]....................... Weapons of Mass SDN Sec. 744.8 Sec. 744.8.
Destruction
Proliferators
Sanctions
Regulations, 31
CFR part 544.
----------------------------------------------------------------------------------------------------------------
Iraq related
----------------------------------------------------------------------------------------------------------------
* [IRAQ2]..................... E.O. 13315; E.O. SDN Sec. 744.18 N/A, because the
13350. vast majority of
these persons or
entities are
either dead or
otherwise no
longer in
existence.
----------------------------------------------------------------------------------------------------------------
* Denotes SDN List identifiers that are being removed from part 744 license requirements in this final rule.
Some of the SDN List identifiers in Table 2 are new to the EAR and
others were previously subject to EAR license requirements or other
restrictions that are being expanded in this final rule with the
additions of these SDN List identifiers to Sec. 744.8.
Table 2--SDN List Identifiers Added to Sec. 744.8
----------------------------------------------------------------------------------------------------------------
New EAR
EAR section section in
Program identifier Sanctions program OFAC sanctions list prior to this this final
final rule rule
----------------------------------------------------------------------------------------------------------------
Related to Russia's invasion of Ukraine
----------------------------------------------------------------------------------------------------------------
[BELARUS]........................... 31 CFR part 548.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[BELARUS-EO14038]................... 31 CFR part 548.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[RUSSIA-EO14024].................... Russian Harmful SDN Sec. 746.10, Sec. 744.8
Foreign which required a
Activities license for
Sanctions `luxury goods'
Regulations, 31 identified in
CFR part 587; supplement no. 5
E.O. 14024. to part 746.
[UKRAINE-EO13660]................... 31 CFR part 589.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[UKRAINE-EO13661]................... 31 CFR part 589.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[UKRAINE-EO13662]................... 31 CFR part 589.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[[Page 20112]]
[UKRAINE-EO13685]................... 31 CFR part 589.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
----------------------------------------------------------------------------------------------------------------
Related to narcotics trafficking or other criminal networks
----------------------------------------------------------------------------------------------------------------
[ILLICIT DRUGS-EO14059]............. 31 CFR part 599.. SDN N/A (new SDN List- Sec. 744.8
related
identifier).
[SDNT].............................. Narcotics SDN Sec. Sec. 744.8
Trafficking 740.2(a)(22),
Sanctions which restricted
Regulations, 31 the use of
CFR part 536. license
exceptions for
0x5zz items, but
did not impose
additional
license
requirements for
these persons.
This final rule
removes
paragraph
(a)(22) because
it will be
addressed under
Sec. 744.8.
[SDNTK]............................. Foreign Narcotics SDN Sec. Sec. 744.8
Kingpin 740.2(a)(22),
Sanctions which restricted
Regulations, 31 the use of
CFR part 598. license
exceptions for
0x5zz items but
did not impose
additional
license
requirements for
these persons.
This final rule
removes
paragraph
(a)(22) because
it will be
addressed under
Sec. 744.8.
[TCO]............................... Transnational SDN N/A (new SDN List- Sec. 744.8
Criminal related
Organizations identifier).
Sanctions
Regulations, 31
CFR part 590;
Executive Order
13581.
----------------------------------------------------------------------------------------------------------------
IV. Removal of Two End-User Control Sections Under the EAR
Section 744.11 (License requirements that apply to entities acting
or at significant risk of acting contrary to the national security or
foreign policy interests of the United States), provides a basis for
BIS to impose license requirements by adding persons to the Entity List
who have been involved, are involved, or pose a significant risk of
being or becoming involved in activities that are contrary to the
national security or foreign policy interests of the United States.
Other sections of parts 744 (e.g., Sec. 744.3, relating to activities
of concern involving missile technology) and 746 are also used to add
persons to the Entity List. The substantive criteria set forth in two
sections of part 744, Sec. Sec. 744.10 (Restrictions on certain
entities in Russia) and 744.20 (License requirements that apply to
certain sanctioned entities), are duplicative of Sec. 744.11 and/or
other provisions in parts 744 and 746), which provide sufficient
authority to add to the Entity List persons meeting the criteria set
forth in those two sections. Therefore, this final rule removes and
reserves Sec. Sec. 744.10 and 744.20.
This final rule will reduce by two the number of sections that
exporters, reexports, and transferors will need to review in part 744.
Taking into account the additional four sections that this final rule
removes as part of the consolidation of the SDN restrictions under
Sec. 744.8, as described under section III above, as well as the
removal of the outdated SDN-related sections Sec. Sec. 744.13 and
744.18, these changes will result in the removal of a total of six
sections from part 744, making the end-user controls under part 744
simpler (thereby facilitating compliance) and more effective while
continuing to serve to protect and advance U.S. national security and
foreign policy interests.
V. Amendments to the EAR
In Sec. 740.2, this final rule removes and reserves paragraph
(a)(22) from the EAR because its restrictions on certain SDNs have been
moved to the broader end-user restrictions under Sec. 744.8.
In Sec. 744.1, this final rule revises paragraph (a)(1)
(Introduction), to remove references to Sec. Sec. 744.12, 744.13,
744.14, and 744.18, and makes changes to the reference to Sec. 744.8
to reflect that this section will now be the single section in part 744
that specifies end-user license requirements for export, reexport, and
transfer (in-country) transactions involving certain SDNs. This final
rule also removes the sentences referencing Sec. Sec. 744.18 and
744.20, which are simultaneously being removed from the EAR. As a
conforming change, this final rule revises the sentence that references
Sec. 744.7 to add the term ``transfer (in-country)'' for consistency
with the requirements in Sec. 744.7. For clarification purposes, this
final rule revises the section that references Sec. 744.19 to add the
term ``transfer (in-country).'' In the sentence that specifies that
these sections of part 744 include license review policies for export
license applications submitted as required by these sections, this
final rule adds the phrase ``reexport, and in-country transfer,''
because the license requirements of part 744 extend to reexports and
transfers (in-country). In the sentence that refers to Sec. 744.21,
this final rule makes updates for consistency with the existing
requirements under Sec. 744.21 for Russia and Belarus, which are
different than those for the other countries identified in Sec.
744.21.
In Sec. 744.7(b)(2) (Exports to U.S. or Canadian Airline's
Installation or Agent), this final rule adds the phrase ``reexports,
and transfers (in-country)'' for clarity. This addition is consistent
with the agency's longstanding position that this paragraph is
available for reexports and transfers (in-country). In Sec. 744.8
(Restrictions on exports and reexports to persons designated pursuant
to E.O. 13382--blocking property of weapons of mass destruction
proliferators and their supporters), this final rule revises this
section heading to now read as ``Restrictions on exports, reexports,
and transfers (in-country) when certain persons designated on the List
of Specially Designated Nationals and Blocked Persons (SDN List) are a
party to the transaction'' to reflect the broadened scope of this
revised section.
Paragraph (a)(1) (Scope) defines the scope of the revised Sec.
744.8. The final rule revises Sec. 744.8 to impose EAR license
requirements, specify license
[[Page 20113]]
review policies, and set forth restrictions on the use of license
exceptions for exports, reexports, and transfers (in-country) when a
person who is designated on the SDN List with any of the following
identifiers is a party to the transaction as described in Sec.
748.5(c) through (f): [BELARUS], [BELARUS-EO14038], [RUSSIA-EO14024],
[UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], [UKRAINE-
EO13685], [ILLICIT DRUGS-EO14059], [SDNT], [SDNTK], and [TCO].
Paragraph (a)(1) will also include a sentence specifying that these
persons are set forth in appendix A to 31 CFR chapter V and on OFAC's
website at https://www.treas.gov/sdn to assist exporters, reexporters,
and transferors in identifying these persons. This final rule adds a
new note 1 to paragraph (a)(1) to include a cross reference to direct
the public to the OFAC website for Program Tag Definitions for OFAC
Sanctions Lists for additional background rather than carrying over the
background information from the underlying part 744 SDN-related
sections.
Paragraph (a)(2) specifies the relationship between BIS and OFAC
for these part 744 requirements specified under Sec. 744.8. Paragraph
(a)(2) clarifies that these EAR controls supplement and strengthen the
sanctions that are imposed by OFAC on these SDNs to better ensure that
U.S. national security and foreign policy interests are protected in
the case of export, reexport, and transfer (in-country) transactions
involving items subject to the EAR. Paragraph (a)(2) includes a
sentence identifying the most likely scenarios in which the OFAC
regulations generally would not apply but the EAR controls would. This
final rule also includes a sentence at the end of paragraph (a)(2) to
specify that in order to avoid imposing a dual licensing requirement,
the EAR authorization requirements specified in this section do not
require a separate EAR authorization if the activities are authorized
under an OFAC specific or general license or are exempted under OFAC's
regulations.
This final rule adds one note to paragraph (a). New note 2
clarifies that the Entity List in supplement no. 4 to part 744 includes
certain persons that have also been designated on the SDN List. This
note includes a cross reference to Sec. 744.11 and supplement no. 4 to
part 744 for requirements and related license review policies for these
entities, which take precedence over those set forth in Sec. 744.8.
BIS also clarifies in new note 1 that BIS requires an EAR authorization
as specified in the license requirement column on the Entity List for
these persons regardless of whether the export, reexport, or transfer
(in-country) is authorized under an OFAC specific or general license.
In Sec. 744.8(b) (License requirements), this final rule specifies
that unless the export, reexport, or transfer (in-country) is
authorized under an OFAC specific or general license or exempt under
OFAC's regulations, a license is required under the EAR for the export,
reexport, or transfer (in-country) of any item ``subject to the EAR''
when a person who is designated on OFAC's SDN List with any of the
following identifiers is a party to the transaction as described in
Sec. 748.5(c) through (f): [BELARUS], [BELARUS-EO14038], [RUSSIA-
EO14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662],
[UKRAINE-EO13685], [ILLICIT DRUGS-EO14059], [SDNT], [SDNTK], and [TCO].
This rule also adds one sentence at the end of paragraph (b) to specify
that a BIS license is not required for transactions described in this
paragraph that would have otherwise met all of the terms and conditions
of an OFAC general license if the transactions had been subject to OFAC
jurisdiction.
In Sec. 744.8(c) (License exceptions), this final rule specifies
that no license exceptions may overcome the license requirements in
this section, except in the case of entities that are also listed on
the Entity List in supplement no. 4 to part 744 and for which certain
license exceptions are available. In such circumstances, the specified
license exceptions may overcome the license requirements of this
section and supplement no. 4 to part 744 that would otherwise apply.
In Sec. 744.8(d) (License review policy), this final rule
specifies that applications for licenses required by this section will
be subject to a presumption of denial review policy, except when note 1
to paragraph (a) is applicable. When note 1 to paragraph (a)(1) is
applicable, the license review policy under the Entity List entry for
that person would take precedence. This final rule also includes a
cross reference in paragraph (d) to direct exporters, reexporters, and
transferors to consult OFAC concerning transactions subject to OFAC
licensing requirements.
In Sec. 744.8(e) (Violations), this final rule includes, in
streamlined form, information included prior to this final rule
regarding violations of the EAR. Specifically, paragraph (e)(1) states
that any export, reexport, or transfer (in-country) by a U.S. person of
any item subject both to the EAR and OFAC's regulations and not
authorized by OFAC when a person identified in paragraph (a)(1) is a
party to the transaction as defined in Sec. 748.5(c) through (f)
constitutes a violation of the EAR. This final rule also adds one
sentence to clarify that this paragraph does not apply to entities
identified under both this section and on the Entity List in supplement
no. 4 to part 744. EAR violations involving entities identified under
both this section and the Entity List, will be addressed pursuant to
Sec. Sec. 744.11 and 744.16.
This final rule adds paragraph (e)(2) to specify that any export,
reexport, or transfer (in-country) by a U.S. person of any item subject
to the EAR that is not subject to OFAC's regulations and not authorized
by BIS when a person identified in paragraph (a)(1) is a party to the
transaction as defined in Sec. 748.5(c) through (f) constitutes a
violation of the EAR. Paragraph (e)(2) also specifies that any export
from abroad, reexport, or transfer (in-country) by a non-U.S. person of
any item subject to the EAR and not authorized by BIS when a person
identified in paragraph (a)(1) is a party to the transaction as defined
in Sec. 748.5(c) through (f) constitutes a violation of the EAR.
This final rule also includes a note 3 to Sec. 744.8 to specify
that 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. This note is included for consistency
with previous SDN-related restrictions under part 744 of the EAR.
In part 744, this final rule removes and reserves Sec. Sec. 744.12
and 744.14 as conforming changes to the consolidation under Sec. 744.8
of the requirements previously specified in those sections. Also in
part 744, this final rule removes and reserves Sec. Sec. 744.10,
744.13, 744.18, and 744.20 because these sections are no longer needed.
In Sec. 746.10 (`Luxury goods' sanctions against Russia and
Belarus and Russian and Belarusian oligarchs and malign actors), this
final rule revises paragraph (a)(2) to remove the license requirement
and include a cross reference to Sec. 744.8 of the EAR for additional
license requirements for persons designated on OFAC's SDN List with the
identifier [BELARUS-EO14038], [BELARUS], [RUSSIA-EO14024], [UKRAINE-
EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685].
The license requirement under Sec. 744.8 is for all items subject to
the EAR, which includes all `luxury goods' identified in supplement no.
5 to part 746. This rule adds to Sec. 746.10 a
[[Page 20114]]
cross reference to the expanded license requirements under Sec. 744.8
to alert exporters, reexporters, and transferors to the fact that
persons with these SDN identifiers remain subject to a license
requirement (expanded in scope by this rule) under Sec. 744.8.
Savings Clause
For the changes being made in this final rule, shipments of items
removed from eligibility for a License Exception or export, reexport,
or transfer (in-country) without a license (NLR) as a result of this
regulatory action that were en route aboard a carrier to a port of
export, reexport, or transfer (in-country), on March 21, 2024, pursuant
to actual orders for export, reexport, or transfer (in-country) to or
within a foreign destination, may proceed to that destination under the
previous eligibility for a License Exception or export, reexport, or
transfer (in-country) without a license (NLR) provided the export,
reexport, or transfer (in-country) is completed no later than on April
22, 2024.
Export Control Reform Act of 2018
On August 13, 2018, the President signed into law the John S.
McCain National Defense Authorization Act for Fiscal Year 2019, which
included the Export Control Reform Act of 2018 (ECRA) (codified, as
amended, at 50 U.S.C. 4801-4852). ECRA provides the legal basis for
BIS's principal authorities and serves as the authority under which BIS
issues this rule.
Rulemaking Requirements
1. BIS has examined the impact of this rule as required by
Executive Orders 12866, 13563, and 14094, which direct agencies to
assess all costs and benefits of available regulatory alternatives and,
if regulation is necessary, to select regulatory approaches that
maximize net benefits (e.g., potential economic, environmental, public,
health, and safety effects, distributive impacts, and equity). This
final rule is considered a ``significant regulatory action'' under sec.
3(f) 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 the following OMB-approved collections of information subject
to the PRA: 0694-0088, ``Multi-Purpose Application,'' which carries a
burden hour estimate of 29.6 minutes for a manual or electronic
submission; 0694-0096 ``Five Year Records Retention Period,'' which
carries a burden hour estimate of less than one minute; and 0607-0152
``Automated Export System (AES) Program,'' which carries a burden hour
estimate of three minutes per electronic submission. This rule changes
the respondent burden under these control numbers by increasing the
estimated number of submissions by twenty, which is not expected to
exceed the current approved estimates.
3. This rule does not contain policies with federalism implications
as that term is defined in E.O. 13132.
4. Pursuant to section 1762 of ECRA (50 U.S.C. 4821), this action
is exempt from the Administrative Procedure Act (APA) (5 U.S.C. 553)
requirements for notice of proposed rulemaking, opportunity for public
participation, and delay in effective date. While section 1762 of ECRA
provides sufficient authority for such an exemption, this action is
also independently exempt from these APA requirements because it
involves a military or foreign affairs function of the United States (5
U.S.C. 553(a)(1)).
5. Because neither the Administrative Procedure Act nor any other
law requires that notice of proposed rulemaking and an opportunity for
public comment be given for this rule, the analytical requirements of
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not
applicable. Accordingly, no Final Regulatory Flexibility Analysis is
required and none has been prepared.
List of Subjects
15 CFR Part 740
Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.
15 CFR Part 744
Exports, Reporting and recordkeeping requirements, Terrorism.
15 CFR Part 746
Exports, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, parts 740, 744 and 746 of
the Export Administration Regulations (15 CFR parts 730 through 774)
are amended as follows:
PART 740--LICENSE EXCEPTIONS
0
1. The authority citation for part 740 continues to read as follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR
58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR,
2001 Comp., p. 783.
Sec. 740.2 [Amended]
0
2. Section 740.2 is amended by removing and reserving paragraph
(a)(22).
PART 744--END-USE AND END-USER CONTROLS
0
3. The authority citation for 15 CFR part 744 continues to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22
U.S.C. 7201 et seq.; 22 U.S.C. 7210; 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. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3
CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp.,
p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice
of September 19, 2022, 87 FR 57569 (September 21, 202); Notice of
November 8, 2022, 87 FR 68015, 3 CFR, 2022 Comp., p. 563; Notice of
September 7, 2023, 88 FR 62439 (September 11, 2023).
0
4. Section 744.1 is amended by revising paragraph (a)(1) to read as
follows:
Sec. 744.1 General provisions.
(a)(1) Introduction. In this part, references to the EAR are
references to 15 CFR chapter VII, subchapter C. This part contains
prohibitions against exports, reexports, and selected transfers to
certain end users and end uses as introduced under General Prohibitions
Five (End use/End users) and Nine (Orders, Terms, and Conditions),
unless authorized by BIS. Sections 744.2, 744.3, and 744.4 prohibit
exports, reexports, and transfers (in-country) of items subject to the
EAR to defined nuclear, missile, and chemical and biological weapons
proliferation activities. Section 744.5 prohibits exports, reexports,
and transfers (in-country) of items subject to the EAR to defined
nuclear maritime end-uses. Consistent with General Prohibition Seven
(Support of Proliferation Activities and certain Military-Intelligence
End Uses and End Users (``U.S. person'' activities)), Sec. 744.6
prohibits specific activities by U.S. persons in support of certain
nuclear, missile, chemical and biological weapons end uses, and whole
plants for chemical weapons precursors, as well as certain military-
intelligence end uses and military-intelligence end users. Section
744.7 prohibits exports, reexports, and transfers (in-country) of
certain items for certain aircraft and
[[Page 20115]]
vessels. Section 744.8 prohibits exports, reexports, and transfers (in-
country) without authorization when a person designated on the list of
Specially Designated Nationals and Blocked Persons (SDN List) pursuant
to certain specified sanctions programs is a party to the transaction.
Section 744.9 sets forth restrictions on exports, reexports, and
transfers (in-country) of certain cameras, systems, or related
components. Section 744.11 imposes license requirements, to the extent
specified in supplement no. 4 to this part, on entities listed in
supplement no. 4 to this part for activities contrary to the national
security or foreign policy interests of the United States. Section
744.15 sets forth the conditions for exports, reexports, and transfers
(in-country) to persons listed on the Unverified List (UVL) in
supplement no. 6 to this part, the criteria for revising the UVL, as
well as procedures for requesting removal or modification of a listing
on the UVL. Section 744.16 sets forth the license requirements,
policies and procedures for the Entity List. Section 744.17 sets forth
restrictions on exports, reexports, and transfers (in-country) of
microprocessors and associated ``software'' and ``technology'' for
military end uses and to military end users. Section 744.19 sets forth
BIS's licensing policy for applications for export, reexport, and
transfer (in-country) when a party to the transaction is an entity that
has been sanctioned pursuant to any of three specified statutes that
require certain license applications to be denied. In addition, these
sections include license review standards for export, reexport, and in-
country transfer license applications submitted as required by these
sections. It should also be noted that part 764 of the EAR prohibits
exports, reexports, and certain transfers of items subject to the EAR
to denied parties. Section 744.21 imposes restrictions for exports,
reexports, and transfers (in-country) of item subject to the EAR listed
in supplement no. 2 to this part for a military end use or military end
user in Burma, Cambodia, the People's Republic of China (PRC or China),
Nicaragua, or Venezuela and for a Burmese, Cambodian, Chinese,
Nicaraguan, or Venezuelan military end user if identified in supplement
no. 7 to this part. Section 744.21 also imposes restrictions for
exports, reexports, and transfers (in-country) for all items subject to
the EAR for a military end use or military end user in Belarus or
Russia and for a Belarusian or Russian military end user wherever
located if identified on supplement no. 4 to this part. Section 744.22
imposes restrictions on exports, reexports, and transfers (in-country)
for a military-intelligence end use or military-intelligence end user
in Burma, China, Russia, or Venezuela; or for a country listed in
Country Groups E:1 or E:2 (see supplement no. 1 to part 740 of the
EAR). Section 744.23 sets forth restrictions on exports, reexports, and
transfers (in-country) for certain ``supercomputer'' and semiconductor
manufacturing end use.
* * * * *
0
5. Section 744.7 is amended by revising the paragraph (b)(2) heading to
read as follows:
Sec. 744.7 Restrictions on certain exports to and for the use of
certain foreign vessels or aircraft.
* * * * *
(b) * * *
(2) Exports, reexports, and transfers (in-country) to U.S. or
Canadian Airline's Installation or Agent. * * *
* * * * *
0
6. Section 744.8 is revised to read as follows:
Sec. 744.8 Restrictions on exports, reexports, and transfers (in-
country) when certain persons designated on the list of Specially
Designated Nationals and Blocked Persons (SDN List) are a party to the
transaction.
(a) Scope. (1) In addition to any other EAR license requirements
that may be applicable, this section imposes EAR license requirements,
license review policies, and restrictions on the use of license
exceptions for exports, reexports, and transfers (in-country) when a
person who is designated on the Department of the Treasury, Office of
Foreign Assets Control's (OFAC) List of Specially Designated Nationals
and Blocked Persons (SDN List) with any of the following identifiers is
a party to the transaction, as described in Sec. 748.5(c) through (f):
(i) Related to Russia's invasion of Ukraine.
(A) [BELARUS-EO14038];
(B) [BELARUS];
(C) [RUSSIA-EO14024];
(D) [UKRAINE-EO13660];
(E) [UKRAINE-EO13661];
(F) [UKRAINE-EO13662]; or
(G) [UKRAINE-EO13685].
(ii) Terrorism-related.
(A) [FTO]; or
(B) [SDGT].
(iii) WMD-related.
(A) [NPWMD].
(B) [Reserved]
(iv) Related to narcotics trafficking or other criminal networks.
(A) [ILLICIT DRUGS-EO14059];
(B) [SDNT];
(C) [SDNTK]; or
(D) [TCO].
Note 1 to paragraph (a)(1): The names of such designations are
published in the Federal Register and incorporated into the SDN
List, as set forth in appendix A to 31 CFR chapter V and on OFAC's
website at https://www.treas.gov/sdn. See Program Tag Definitions
for OFAC Sanctions Lists for additional information: https://ofac.treasury.gov/specially-designated-nationals-list-sdn-list/program-tag-definitions-for-ofac-sanctions-lists.
(2) These EAR controls supplement and strengthen the sanctions that
are imposed by OFAC on these SDNs to better ensure that U.S. national
security and foreign policy interests are protected. Specifically, this
section imposes controls on exports, reexports, or transfers (in-
country) of items subject to the EAR where the OFAC regulations are not
applicable, such as in certain situations involving deemed exports and
deemed reexports, and reexports and transfers (in-country) not
involving the U.S. financial system or otherwise involving U.S.
persons. To avoid imposing a duplicative license requirement, the
transactions specified in this section do not require separate EAR
authorization if the transactions are authorized under an OFAC specific
or general license or are exempted under OFAC's regulations.
Note 2 to paragraph (a): The Entity List in supplement no. 4 to
part 744 includes certain persons that have also been designated
with certain identifiers on the SDN List. See Sec. 744.11 and
supplement no. 4 to part 744 for requirements, including license
review policies, for these entities, which take precedence over the
requirements in this Sec. 744.8. BIS requires an EAR authorization
as specified in the license requirement column on the Entity List
for export, reexport, and transfer (in-country) transactions
involving items subject to the EAR in which these persons are
parties to the transaction regardless of whether such transaction is
authorized under an OFAC specific or general license or exempted
under OFAC's regulations.
(b) License requirements. Unless the export, reexport, or transfer
(in-country) is authorized under an OFAC specific or general license or
exempted under OFAC's regulations, a license is required under the EAR
for the export, reexport, or transfer (in-country) of any item
``subject to the EAR'' when a person who is designated on OFAC's SDN
List with any of the identifiers set forth in paragraph (a)(1) is a
party to the transaction as described in Sec. 748.5(c) through (f). A
Department of Commerce license is not required for transactions
described in this paragraph (b) that would have otherwise met all of
the terms and conditions of an OFAC
[[Page 20116]]
general license if the transactions had been subject to OFAC
jurisdiction.
(c) License exceptions. No license exceptions may overcome the
license requirements in this section, except for entities that are also
listed on the Entity List in supplement no. 4 to part 744 that have
certain license exception eligibility, which is available to overcome
the license requirements of this section and supplement no. 4 to part
744 for that specific entity.
(d) License review policy. Applications for licenses required by
this section will be subject to a presumption of denial license review
policy, except when note 1 to paragraph (a)(1) of this section is
applicable and the license review policy specified on the Entity List
in supplement no. 4 to part 744 is different, in which case the license
review policy under the applicable Entity List entry for that person
would govern. You should consult OFAC regarding transactions subject to
licensing requirements under regulations maintained by OFAC.
(e) Violations. (1) Any export, reexport, or transfer (in-country)
by a U.S. person of any item subject to both the EAR and regulations
maintained by OFAC in situations in which a person identified in
paragraph (a)(1) is a party to the transaction as described in Sec.
748.5(c) through (f) that is not authorized by OFAC constitutes a
violation of the EAR. This paragraph does not apply to entities
identified under both this section and the Entity List in supplement
no. 4 to part 744. EAR violations involving entities identified under
both this section and the Entity List will be addressed pursuant to
Sec. Sec. 744.11 and 744.16.
(2) Any export, reexport, or transfer (in-country) of any item
subject to the EAR in which a person identified in paragraph (a)(1) is
a party to the transaction as described in Sec. 748.5(c) through (f)
and such transaction is not subject to regulations maintained by OFAC
and not authorized by BIS constitutes a violation of the EAR.
Note 3 to Sec. 744.8: 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.
0
7. Sections 744.10, 744.12 through 744.14, 744.18, and 744.20 are
removed and reserved.
PART 746--EMBARGOES AND OTHER SPECIAL CONTROLS
0
8. The authority citation for 15 CFR part 746 continues to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 287c; Sec 1503, Pub. L. 108-11, 117
Stat. 559; 22 U.S.C. 2151 note; 22 U.S.C. 6004; 22 U.S.C. 7201 et
seq.; 22 U.S.C. 7210; E.O. 12854, 58 FR 36587, 3 CFR, 1993 Comp., p.
614; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 13222,
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3
CFR, 2004 Comp., p 168; Presidential Determination 2003-23, 68 FR
26459, 3 CFR, 2004 Comp., p. 320; Presidential Determination 2007-7,
72 FR 1899, 3 CFR, 2006 Comp., p. 325; Notice of May 8, 2023, 88 FR
30211 (May 10, 2023).
0
9. Section 746.10 is amended by:
0
a. Revising paragraph (a)(2);
0
b. Revising paragraph (a)(3) introductory text; and
0
c. Removing the final sentence of the paragraph (c) introductory text.
The revisions read as follows:
Sec. 746.10 `Luxury goods' sanctions against Russia and Belarus and
Russian and Belarusian oligarchs and malign actors.
(a) * * *
(2) Russian and Belarusian oligarch and malign actors. The license
requirements under this section for persons designated on OFAC's SDN
List with the identifier [BELARUS], [BELARUS-EO14038], [RUSSIA-E.O.
14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or
[UKRAINE-EO13685] were removed from this section on March 21, 2024,
because a broader license requirement for all items subject to the EAR
is required under Sec. 744.8 as of March 21, 2024, which includes all
`luxury goods' under supplement no. 5 to part 746 and any other item
subject to the EAR. See Sec. 744.8 of the EAR for license requirements
for persons designated on OFAC's SDN List with the identifier
[BELARUS], [BELARUS-EO14038], [RUSSIA-E.O. 14024], [UKRAINE-EO13660],
[UKRAINE-EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685].
(3) Exclusion from scope of U.S.-origin controlled content under
paragraph (a)(1) of this section. For purposes of determining U.S.-
origin controlled content under supplement no. 2 to part 734 of the EAR
when making a de minimis calculation for reexports and exports from
abroad to Russia or Belarus, the license requirements in paragraph
(a)(1) of this section are not used to determine controlled U.S.-origin
content in a foreign-made item, provided the criteria in paragraphs
(a)(3)(i) and (ii) of this section are met:
* * * * *
Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2024-06067 Filed 3-20-24; 8:45 am]
BILLING CODE 3510-33-P
