Addition of Certain Persons to the Entity List

AGENCY:

Bureau of Industry and Security, Commerce.

ACTION:

Final rule.

SUMMARY:

This rule amends the Export Administration Regulations (EAR) by adding eleven persons under twelve entries to the Entity List. The persons who are added to the Entity List have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States. These persons will be listed on the Entity List under the destinations of Crimea (Occupied), Russia, and Ukraine. There are twelve entries for the eleven persons on the Entity List because one person is being listed in multiple locations, resulting in an additional entry. Specifically, the additional entry covers one person that will be listed on the Entity List under the destination of Crimea (Occupied) and Ukraine.

DATES:

Effective date: This rule is effective July 22, 2014.

FOR FURTHER INFORMATION CONTACT:

Chair, End-User Review Committee, Office of the Assistant Secretary, Export Administration, Bureau of Industry and Security, Department of Commerce, Phone: (202) 482-5991, Fax: (202) 482-3911, Email: ERC@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

The Entity List (Supplement No. 4 to Part 744) notifies the public about entities that have engaged in activities that could result in an increased risk of the diversion of exported, reexported or transferred (in-country) items to weapons of mass destruction (WMD) programs. Since its initial publication, grounds for inclusion on the Entity List have expanded to include activities sanctioned by the State Department and activities contrary to U.S. national security or foreign policy interests, including terrorism and export control violations involving abuse of human rights. Certain exports, reexports, and transfers (in-country) to entities identified on the Entity List require licenses from BIS and are usually subject to a policy of denial. The availability of license exceptions in such transactions is very limited. The license review policy for each entity is identified in the license review policy column on the Entity List and the availability of license exceptions is noted in the Federal Register notices adding persons to the Entity List. BIS places entities on the Entity List based on certain sections of part 744 (Control Policy: End-User and End-Use Based) of the EAR.

The End-User Review Committee (ERC), composed of representatives of the Departments of Commerce (Chair), State, Defense, Energy and, where appropriate, the Treasury, makes all decisions regarding additions to, removals from, or other modifications to the Entity List. The ERC makes all decisions to add an entry to the Entity List by majority vote and all decisions to remove or modify an entry by unanimous vote. The Departments represented on the ERC approved these changes to the Entity List.

ERC Entity List Decisions

Additions to the Entity List

This rule implements the decision of the ERC to add eleven persons under twelve entries to the Entity List on the basis of § 744.11 (License requirements that apply to entities acting contrary to the national security or foreign policy interests of the United States) of the EAR. The twelve entries added to the Entity List consist of one person in Crimea (Occupied), eight persons in Russia, and three persons in Ukraine.

The ERC reviewed § 744.11(b) (Criteria for revising the Entity List) in making the determination to add these eleven persons to the Entity List. Under that paragraph, persons for whom there is reasonable cause to believe, based on specific and articulable facts, 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 and those acting on behalf of such persons may be added to the Entity List. The eleven persons being added to the Entity List have been determined by the ERC to be involved in activities that are contrary to the national security or foreign policy interests of the United State. Those activities are related to Russia's continued policy of destabilization in eastern Ukraine and ongoing occupation of Crimea and Sevastopol.

Over the past few days, Russian support to the separatists has fueled increased fighting and casualties in eastern Ukraine. Russia continues to provide the separatists with heavy weapons, equipment, and other financing, and continues to allow militants to enter Ukraine freely. In addition, Russia has returned many of its troops to border areas, and has been massing additional equipment near the border for potential transfer into Ukraine.

On March 6, 2014, the President of the United States issued Executive Order 13660 (79 FR 13493), Blocking Property of Certain Persons Contributing to the Situation in Ukraine, finding that the actions and policies of persons who have asserted governmental authority in Occupied Crimea without the authorization of the Government of Ukraine undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets, and thereby constitute an unusual and extraordinary threat to the national security and foreign policy of the United States. The Executive Order also declares a national emergency to deal with that threat.

Specifically, Executive Order 13660 blocks all property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of any United States person (including any foreign branch) of any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be responsible for or complicit in, or to have engaged in, directly or indirectly, actions or policies that undermine democratic processes or institutions in Ukraine; actions or policies that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine; or misappropriation of state assets of Ukraine or of an economically significant entity in Ukraine. Under Section 8 of Executive Order 13660, all agencies of the United States Government are directed to take all appropriate measures within their authority to carry out the provisions of the Order. The Department of the Treasury's Office of Foreign Assets Control, pursuant to Executive Order 13660, has designated the following three persons: Donetsk People's Republic, Feodosiya Enterprise, and Luhansk People's Republic. In conjunction with that designation, the Department of Commerce adds to the Entity List under this rule Donetsk People's Republic, Feodosiya Enterprise, and Luhansk People's Republic and imposes a license requirement for exports, reexports, or transfers (in-country) to these blocked persons. This license requirement implements an appropriate measure within the authority of the EAR to carry out the provisions of Executive Order 13660.

The three persons added to the Entity List in this rule under Executive Order 13660 have engaged in actions or policies that undermine democratic processes or institutions in Ukraine and threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine. Donetsk People's Republic and Luhansk People's Republic are both separatist organizations that operate in eastern Ukraine. Feodosiya Enterprise, an oil storage terminal located in Crimea (Occupied), which was previously an asset of Ukraine's state-controlled Naftogaz, has engaged in the misappropriation of state assets of Ukraine. Therefore, pursuant to § 744.11 of the EAR, the conduct of these three persons raises sufficient concern that prior review of exports, reexports, or transfers (in-country) of items subject to the EAR involving these persons, and the possible imposition of license conditions or license denials on shipments to these persons, will enhance BIS's ability to protect the foreign policy and national security interests of the United States.

On March 16, 2014, the President of the United States issued Executive Order 13661 (79 FR 15533), Blocking Property of Additional Persons Contributing to the Situation in Ukraine. This Order expanded the scope of the national emergency declared in Executive Order 13660, finding that the actions and policies of the Government of the Russian Federation with respect to Ukraine—including the recent deployment of Russian Federation military forces in Occupied Crimea—undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets, and thereby constitute an unusual and extraordinary threat to the national security and foreign policy of the United States.

Specifically, Executive Order 13661 includes a directive that all property and interests in property that are in the United States, that hereafter come within the United States, or that are or thereafter come within the possession or control of any United States person (including any foreign branch) of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: Persons operating in the arms or related materiel sector in the Russian Federation. Under Section 8 of the Order, all agencies of the United States Government are directed to take all appropriate measures within their authority to carry out the provisions of the Order. The Department of the Treasury's Office of Foreign Assets Control, pursuant to Executive Order 13661, has designated the following eight persons: Federal State Unitary Enterprise State Research and Production Enterprise Bazalt, Joint Stock Company Concern Almaz-Antey, Joint Stock Company Concern Radio-Electronic Technologies, Joint Stock Company Concern Sozvezdie, Joint Stock Company Military-Industrial Corporation NPO Mashinostroyenia, Kalashnikov Concern, Konstruktorskoe Byuro Priborostroeniya Otkrytoe Aktsionernoe Obshchestvo, and Uralvagonzavod. In conjunction with that designation, the Department of Commerce adds to the Entity List under this rule Federal State Unitary Enterprise State Research and Production Enterprise Bazalt, Joint Stock Company Concern Almaz-Antey, Joint Stock Company Concern Radio-Electronic Technologies, Joint Stock Company Concern Sozvezdie, Joint Stock Company Military-Industrial Corporation NPO Mashinostroyenia, Kalashnikov Concern, Konstruktorskoe Byuro Priborostroeniya Otkrytoe Aktsionernoe Obshchestvo, and Uralvagonzavod and imposes a license requirement for exports, reexports, or transfers (in-country) to these blocked persons. This license requirement implements an appropriate measure within the authority of the EAR to carry out the provisions of Executive Order 13661.

The eight persons added to the Entity List in this rule under Executive Order 13661 operate in the Russian Federation's arms or related materiel sector. Federal State Unitary Enterprise State Research and Production Enterprise Bazalt produces aircraft, ground and marine munitions; Joint Stock Company Concern Almaz-Antey produces air defense missile systems; Joint Stock Company Concern Radio-Electronic Technologies and Joint Stock Company Concern Sozvezdie focus on electronic warfare; Joint Stock Company Military-Industrial Corporation NPO Mashinostroyenia produces advanced space and rocketry equipment; Kalashnikov Concern produces firearms, including Kalashnikov assault rifles; Konstruktorskoe Byuro Priborostroeniya Otkrytoe Aktsionernoe Obshchestvo produces high precision weapons, including guided weapon systems such as anti-tank missiles and anti-aircraft systems; Uralvagonzavod produces combat vehicles, including tanks and ordnance. Therefore, pursuant to § 744.11 of the EAR, the conduct of these eight persons raises sufficient concern that prior review of exports, reexports, or transfers (in-country) of items subject to the EAR involving these persons, and the possible imposition of license conditions or license denials on shipments to these persons, will enhance BIS's ability to protect the foreign policy and national security interests of the United States.

For all eleven persons added to the Entity List, there is a license requirement for all items subject to the EAR and a license review policy of presumption of denial. The license requirements apply to any transaction in which items are to be exported, reexported, or transferred (in-country) to any of the persons or in which such persons act as purchaser, intermediate consignee, ultimate consignee, or end-user. In addition, no license exceptions are available for exports, reexports, or transfers (in-country) to the persons being added to the Entity List in this rule.

This final rule adds the following eleven persons under twelve entries to the Entity List:

Crimea (Occupied)

(1) Feodosiya Enterprise, a.k.a., the following four aliases:

—Feodosia Oil Products Supply Co.; and

—Feodosiya Enterprise on Providing Oil Products; and

—Feodosiyske Company for the Oil; and

—Theodosiya Oil Terminal.

Feodosiya, Geologicheskaya str. 2, Crimea 98107, Ukraine; and Feodosia, Str. Geological 2, Crimea 98107, Ukraine (See alternate addresses under Ukraine).

Russia

(1) Federal State Unitary Enterprise State Research and Production Enterprise Bazalt, a.k.a., the following three aliases:

—Federal State Unitary Enterprise, State Research and Production Enterprise Bazalt; and

—Fsue Srpe Bazalt; and

—State Research and Production Enterprise Bazalt.

32 Velyaminovskaya, Moscow 105318, Russia;

(2) Joint-Stock Company Concern Almaz-Antey, a.k.a., the following four aliases:

—Almaz-Antey Corp; and

—Almaz-Antey Defense Corporation; and

—Almaz-Antey JSC; and

—Otkrytoe Aktsionernoe Obshchestvo Kontsern PVO Almaz Antei.

41 ul. Vereiskaya, Moscow, 121471, Russia;

(3) Joint-Stock Company Concern Radio-Electronic Technologies, a.k.a., the following three aliases:

—Concern Radio-Electronic Technologies; and

—JSC Concern Radio-Electronic Technologies; and

—Kret.

20/1 Korp. 1 ul. Goncharnaya, Moscow 109240, Russia;

(4) Joint Stock Company Concern Sozvezdie, a.k.a., the following one alias:

—JSC Concern Sozvezdie.

14 Plekhanovskaya Street, Voronezh, Russia; and

14 ul. Plekhanovskaya, Voronezh, Voronezhskaya obl. 394018, Russia;

(5) Joint Stock Company Military-Industrial Corporation NPO Mashinostroyenia, a.k.a., the following eight aliases:

—Joint Stock Company Military Industrial Consortium NPO Mashinostroyenia; and

—JSC MIC NPO Mashinostroyenia; and

—MIC NPO Mashinostroyenia JSC; and

—MIC NPO Mashinostroyeniya JSC; and

—Military Industrial Corporation NPO Mashinostroenia OAO; and

—Open Joint Stock Company Military Industrial Corporation Scientific and Production Machine Building Association; and

—Voenno-Promyshlennaya Korporatsiya Nauchno-Proizvodstvennoe Obedinenie Mashinostroeniya OAO; and

—VPK NPO Mashinostroeniya.

33, Gagarina St., Reutov-town, Moscow Region 143966, Russia; and

33 Gagarin Street, Reutov, Moscow Region, 143966, Russia; and

33 Gagarina ul., Reutov, Moskovskaya obl 143966;

(6) Kalashnikov Concern, a.k.a., the following eight aliases:

—Concern Kalashnikov; and

—Izhevskiy Mashinostroitel'nyi Zavod OAO; and

—Izhmash R&D Center; and

—JSC NPO Izhmash; and

—NPO Izhmash OAO; and

—OJSC Concern Kalashnikov; and

—OJSC Izhmash; and

—Scientific Production Association Izhmash Joint Stock Company.

3, Derjabin Pr., Izhevsk, Udmurt Republic, 426006, Russia;

(7) Konstruktorskoe Byuro Priborostroeniya Otkrytoe Aktsionernoe Obshchestvo, a.k.a., the following five aliases:

—Instrument Design Bureau; and

—JSC KBP Instrument Design Bureau; and

—KBP Instrument Design Bureau; and

—KBP Instrument Design Bureau Joint Stock Company; and

—KBP OAO.

59 Shcheglovskaya Zaseka ul., Tula 300001, Russia;

(8) Uralvagonzavod, a.k.a., the following eight aliases:

—Nauchno-Proizvodstvennaya Korporatsiya Uralvagonzavod OAO; and

—NPK Uralvagonzavod; and

—NPK Uralvagonzavod OAO; and

—OJSC Research and Production Corporation Uralvagonzavod; and

—Research and Production Corporation Uralvagonzavod; and

—Research and Production Corporation Uralvagonzavod OAO; and

—Uralvagonzavod Corporation; and

—UVZ.

28, Vostochnoye shosse, Nizhni Tagil, Sverdlovsk region 622007, Russia; and

28 Vostochnoe shosse, Nizhni Tagil, Sverdlovskaya oblast 622007, Russia; and

40, Bolshaya Yakimanka Street, Moscow 119049, Russia.

Ukraine

(1) Donetsk People's Republic,

Donetsk Region, Ukraine;

(2) Feodosiya Enterprise, a.k.a., the following four aliases:

—Feodosia Oil Products Supply Co.; and

—Feodosiya Enterprise on Providing Oil Products; and

—Feodosiyske Company for the Oil; and

—Theodosiya Oil Terminal.

Feodosiya, Geologicheskaya str. 2, Crimea 98107, Ukraine; and

Feodosia, Str. Geological 2, Crimea 98107, Ukraine (See alternate addresses under Crimea (Occupied)).

(3) Luhansk People's Republic, a.k.a., the following two aliases:

—Lugansk People's Republic; and

—People's Republic of Luhansk.

Luhansk Region, Ukraine.

Savings Clause

Shipments of items removed from eligibility for a License Exception or export or reexport without a license (NLR) as a result of this regulatory action that were en route aboard a carrier to a port of export or reexport, on July 22, 2014, pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license (NLR).

Export Administration Act

Although the Export Administration Act expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013) and as extended by the Notice of August 8, 2013, 78, 2013, 78 FR 49107 (August 12, 2013), has continued the Export Administration Regulations in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222 as amended by Executive Order 13637.

Rulemaking Requirements

1. Executive Orders 13563 and 12866 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). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been determined to be not significant for purposes of Executive Order 12866.

2. Notwithstanding any other provision of law, no person is required to respond to nor 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 regulation involves collections previously approved by OMB under control number 0694-0088, Simplified Network Application Processing System, which includes, among other things, license applications and carries a burden estimate of 43.8 minutes for a manual or electronic submission. Total burden hours associated with the PRA and OMB control number 0694-0088 are not expected to increase as a result of this rule. You may send comments regarding the collection of information associated with this rule, including suggestions for reducing the burden, to Jasmeet K. Seehra, Office of Management and Budget (OMB), by email to Jasmeet_K._Seehra@omb.eop.gov, or by fax to (202) 395-7285.

3. This rule does not contain policies with Federalism implications as that term is defined in Executive Order 13132.

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public comment and a delay in effective date are inapplicable because this regulation involves a military or foreign affairs function of the United States. (See 5 U.S.C. 553(a)(1)). BIS implements this rule to protect U.S. national security or foreign policy interests by preventing items from being exported, reexported, or transferred (in country) to the persons being added to the Entity List. If this rule were delayed to allow for notice and comment and a delay in effective date, then entities being added to the Entity List by this action would continue to be able to receive items without a license and to conduct activities contrary to the national security or foreign policy interests of the United States. In addition, publishing a proposed rule would give these parties notice of the U.S. Government's intention to place them on the Entity List and would create an incentive for these persons to either accelerate receiving items subject to the EAR to conduct activities that are contrary to the national security or foreign policy interests of the United States, and/or to take steps to set up additional aliases, change addresses, and other measures to try to limit the impact of the listing on the Entity List once a final rule was published. Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

List of Subject in 15 CFR Part 744

• Exports
• Reporting and recordkeeping requirements
• Terrorism

Accordingly, part 744 of the Export Administration Regulations (15 CFR parts 730-774) is amended as follows:

PART 744—[AMENDED]

1. The authority citation for 15 CFR part 744 continues to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 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. 12947, 60 FR 5079, 3 CFR, 1995 Comp., p. 356; 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 August 8, 2013, 78 FR 49107 (August 12, 2013); Notice of September 18, 2013, 78 FR 58151 (September 20, 2013); Notice of November 7, 2013, 78 FR 67289 (November 12, 2013); Notice of January 21, 2014, 79 FR 3721 (January 22, 2014).

2. Supplement No. 4 to part 744 is amended:

a. By adding under Crimea (Occupied), in alphabetical order, one entity;

b. By adding under Russia, in alphabetical order, eight Russian entities; and

c. By adding under Ukraine, in alphabetical order, three Ukrainian entities.

The additions read as follows:

Supplement No. 4 to Part 744—Entity List