International Law Advisory - BIS Issues Final Rule on Licensing Policy for Sanctioned Entities

On Thursday, June 9, 2005, the Department of Commerce, Bureau of Industry and Security (BIS) published a final rule implementing a licensing policy for license requests involving entities subject to sanctions imposed by the Department of State.  (See 70 Fed. Reg. 33,693 (June 9, 2005)).  The rule codifies, without alteration, an interim rule implemented by BIS in March of this year.  (See 70 Fed. Reg. 10,865 (March 7, 2005)).

The earlier rule created a new provision in the Export Administration Regulations, 15 C.F.R. § 744.19, which imposes a general policy of denial for license requests involving any applicant, purchaser, ultimate consignee, intermediate consignee, end-user, or other party to the transaction who has been subject to sanctions under any of the following three statutes:

1. the Iran-Iraq Arms Nonproliferation Act of 1992 (Public Law 102-484);
   
2. the Iran Nonproliferation Act of 2000 (Public Law 106-178); or
   
3. sections 11B(b)(1)(B)(i) and 11B(b)(1)(B)(ii) of the Export Administration Act of 1979.

Those statutory provisions include language prohibiting the issuance of export licenses to sanctioned persons.  Previous to this rule, however, there was no explicit language in the EAR implementing those statutory denial policies.

The March rule also created a separate provision in the EAR, codified at 15 C.F.R. § 744.20, authorizing BIS to impose licensing restrictions on entities that have been sanctioned by the State Department (such entities will be listed in the Entity List in Supplement 4 to Part 744 of the EAR).  The March rule designated one entity under that provision, the Tula Instrument Design Bureau of the Russian government, which the State Department found in 1999 to have delivered military equipment to countries designated by the State Department as state sponsors of terror.

If you have any questions regarding the new rule, please contact Ed Krauland at 202-429-8083 or David Lorello at 202-429-6757.