Export Administration Regulations: Crime Controls and Expansion/Update of U.S. Persons Controls

DEPARTMENT OF COMMERCE <SUBAGY>Bureau of Industry and Security</SUBAGY> <CFR>15 CFR Parts 736, 744, and 774</CFR> <DEPDOC>[Docket No. 240712-0191]</DEPDOC> <RIN>RIN 0694-AI35</RIN> <SUBJECT>Export Administration Regulations: Crime Controls and Expansion/Update of U.S. Persons Controls</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Bureau of Industry and Security, Department of Commerce. <HD SOURCE="HED">ACTION:</HD> Proposed rule, with request for comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Department of Commerce, Bureau of Industry and Security (BIS), seeks public comments on proposed amendments to the Export Administration Regulations (EAR) in support of U.S. national security and foreign policy interests. To build upon existing controls, BIS proposes establishing certain Foreign-Security End User (FSEU) and “U.S. persons” activities controls and Commerce Control List-based (CCL) controls. The proposed additions of the foreign-security end user control and “U.S. persons” activity controls would implement expanded authority under the Export Control Reform Act of 2018 (ECRA), as amended, to control certain “U.S. persons” activities under the EAR. Specific to the EAR's “U.S. persons” activities controls, BIS is proposing amendments to control “support” furnished by “U.S. persons” to identified foreign-security end users. In addition, BIS is proposing to add to the Commerce Control List two new unilateral item controls on facial recognition technology. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received by BIS no later than September 27, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments on this rule may be submitted to the Federal rulemaking portal ( <E T="03">www.regulations.gov</E> ). The <E T="03">regulations.gov</E> ID for this rule is: BIS-2023-0006. Please refer to RIN 0694-AI35 in all comments. All filers using the portal should use the name of the person or entity submitting the comments as the name of their files, in accordance with the instructions below. Anyone submitting business confidential information should clearly identify the business confidential portion at the time of submission, file a statement justifying nondisclosure and referring to the specific legal authority claimed, and provide a non-confidential version of the submission. For comments submitted electronically containing business confidential information, the file name of the business confidential version should begin with the characters “BC.” Any page containing business confidential information must be clearly marked “BUSINESS CONFIDENTIAL” on the top of that page. The corresponding non-confidential version of those comments must be clearly marked “PUBLIC.” The file name of the non-confidential version should begin with the character “P.” Any submissions with file names that do not begin with either a “BC” or a “P” will be assumed to be public and will be made publicly available through <E T="03">https://www.regulations.gov.</E> Commenters submitting business confidential information are encouraged to scan a hard copy of the non-confidential version to create an image of the file, rather than submitting a digital copy with redactions applied, to avoid inadvertent redaction errors which could enable the public to read business confidential information. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For questions specific to the human rights or foreign-security end-user provisions set forth in proposed § 744.25, contact Anthony Christino, Director, Human Rights and Embargoes Division, <E T="03">Anthony.Christino@bis.doc.gov,</E> Phone: (202) 482-3241. For general questions, contact Hillary Hess, Director, Regulatory Policy Division, <E T="03">rpd2@bis.doc.gov.</E> Include, “Human Rights End Users” on subject line of emails. Phone: (202) 482-2440. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Background</HD> In accordance with the Export Control Reform Act of 2018 (ECRA), the Bureau of Industry and Security (BIS) utilizes item-based controls, end-user-based controls, and specific licensing policies to address proliferation and prevent items subject to the Export Administration Regulations (EAR) from being diverted or misused contrary to U.S. national security and foreign policy interests. <E T="03">See</E> 50 U.S.C. 4811(2); 4813(a)(16); 15 CFR 742.7, 744.11. As set forth in 15 CFR 742.7, BIS imposes license requirements that support the protection of human rights (described in the EAR as crime control (CC) reasons for control). Under the licensing policy for CC-controlled items in § 742.7(b), BIS generally considers license applications favorably on a case-by-case basis unless there is civil disorder in the country or region of destination or unless there is a risk that the items will be used to violate or abuse human rights. In October 2020, BIS expanded this licensing policy beyond CC-controlled items to include those items controlled for any other reason (85 FR 63007, Oct. 6, 2020). In April 2024, BIS further revised the CC licensing policy such that certain firearms and related items have a distinct licensing policy (89 FR 34680, April 30, 2024). In addition to item-based controls and licensing policy, BIS imposes end-user controls to promote the national security and foreign policy interests of the United States, which includes the promotion and protection of human rights. Entity List additions may be made to address activities that present a risk of being contrary to the national security and foreign policy interests of the United States, including the protection of human rights. <E T="03">See</E> 15 CFR 744.11(b). To date, BIS has added 103 entities for such human rights reasons. With this proposed rule, BIS would add end user, end use, and item-based controls. On November 14, 1994, Executive Order 12938 (E.O. 12938, 59 FR 59099) directed BIS to continue to regulate the activities of “U.S. persons” to prevent their participation in activities that could contribute to the proliferation of weapons of mass destruction. This control, which is set forth in § 744.6 of the EAR, imposes licensing requirements on assistance furnished by “U.S. persons” in connection with activities of proliferation concern, even when such assistance does not involve any items subject to the EAR or any foreign entities subject to specified restrictions under the EAR ( <E T="03">e.g.,</E> persons whose export privileges have been denied under the EAR). Subsequently, with the enactment of ECRA as part of the John S. McCain NDAA for FY 2019 (Pub. L. 115-232), Congress authorized, in ECRA section 1753(a)(2)(F), the control of “U.S. persons” activities related not only to weapons of mass destruction and their means of delivery, but also to specific “foreign military intelligence services.” Accordingly, in January 2021, BIS amended § 744.6 of the EAR to add a new restriction on the activities of “U.S. persons” in support of certain military-intelligence end uses and end users. BIS also created a new § 744.22 that targeted exports, reexports, and transfers (in- country) destined for certain military-intelligence end uses or end users (86 FR 4865, Jan. 15, 2021). Subsequently, section 5589(b) of the December 2022 National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023 (Pub. L. 117-263, NDAA for FY 2023) amended section 1753(a)(2)(F) of ECRA (50 U.S.C. 4812(a)(2)(F)) by providing BIS with the statutory authority to impose controls on “the activities of United States persons, wherever located, relating to specific foreign military, security, or intelligence services.” Consistent with this statutory amendment, in this proposed rule, BIS would add to the “U.S. persons” activities control in § 744.6 “support” of foreign-security end user activities and would expand existing part 744 restrictions to encompass activities of “U.S. persons” in connection with defined foreign-security end users. Specifically, BIS proposes to add paragraph (b)(8) as the prohibition on “U.S. persons” `support' in § 744.6(b)(8) to apply to foreign-security end users. BIS is proposing amendments to the EAR on military and intelligence end user controls, and controls that would restrict U.S. persons' support of such end users, in a separate rule published concurrently with this rule. Consistent with section 1754(d)(1) of ECRA (50 U.S.C. 4813(d)(1)) and § 744.6 of the EAR, BIS proposes to regulate the “U.S. persons” activities described above only to the extent they are not subject to a license requirement or general prohibition administered by another Federal department or agency. Accordingly, “U.S. persons” are required to seek a license from BIS only for the activities described in section 744.6 that are not subject to a license requirement or general prohibition administered by the Department of Energy, Department of State, Department of the Treasury, or other federal department or agency. The issuance of a license by BIS, or any other federal department or agency, does not authorize “U.S. persons” to engage in any activity that is otherwise prohibited by law, including criminal statutes. <E T="03">See</E> 15. CFR 744.6(a). In addition to the “U.S. persons” activities control and foreign-security end user controls, BIS is proposing new item controls for facial recognition systems. In July 2020, BIS published a <E T="03">Notice of Inquiry (NOI) on Advanced Surveillance Systems and Other Items of Human Rights Concern</E> NOI. (85 FR 43532, July 17, 2020; “July 2020 NOI”). The proposed amendments in this proposed rule were informed by the public comments on the July 2020 NOI. In that NOI, BIS requested comments on: (1) new license requirements on crime control and detection items, including facial recognition software and other biometric systems for surveillance; (2) the proposed r ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 49k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━