HR 3515 IH
111th CONGRESS
1st Session
H. R. 3515
To make improvements in the electronic filing of export data, to strengthen enforcement authorities with respect to the Export Administration Regulations, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
July 31, 2009
Mr. SHERMAN (for himself, Mr. MANZULLO, and Mr. SMITH of Washington) introduced the following bill; which was referred to the Committee on Foreign Affairs
A BILL
To make improvements in the electronic filing of export data, to strengthen enforcement authorities with respect to the Export Administration Regulations, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title- This Act may be cited as the `Export Control Improvements Act'.
(b) Table of Contents- The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I--IMPROVEMENTS IN ELECTRONIC FILING OF EXPORT DATA
Sec. 102. Conferences; registration for filers; notifications; fees.
Sec. 104. Conforming amendments.
Sec. 105. Authorization of appropriations.
TITLE II--EXPORT ENFORCEMENT ENHANCEMENT
Subtitle A--Enforcement of Export Administration Regulations
Sec. 211. Declaration of policy.
Sec. 213. Authorization of appropriations.
Subtitle B--Prevention of Transfer of Sensitive Items to Countries of Concern
Sec. 221. Identification of locations of concern with respect to transshipment, reexportation, or diversion of certain items to Iran.
Sec. 222. Destinations of Possible Diversion Concern and Destinations of Diversion Concern.
Sec. 223. Report on expanding diversion concern system to countries other than Iran.
Sec. 224. Annual report on transfers of militarily sensitive technology to countries and entities of concern.
TITLE I--IMPROVEMENTS IN ELECTRONIC FILING OF EXPORT DATA
SEC. 101. SHORT TITLE.
This title may be cited as the `Securing Exports Through Coordination and Technology Act'.
SEC. 102. CONFERENCES; REGISTRATION FOR FILERS; NOTIFICATIONS; FEES.
Chapter 9 of title 13, United States Code, is amended--
(1) by redesignating sections 302 through 307 as sections 306 through 311, respectively; and
(2) by inserting after section 301 the following new sections:
`Sec. 302. Conferences and seminars
`(a) Mandatory Conference Participation- The Secretary shall work with the Secretary of State, the Secretary of Defense, the Secretary of Homeland Security, and the Secretary of the Treasury to ensure that appropriate personnel of each of their respective departments and agencies that are involved in the regulation of exports or the enforcement of such regulation are made available, subject to the availability of such personnel, to participate in fora the purpose of which is to educate exporters about laws and regulations of the United States governing exports and about the Automated Export System in particular, including through seminars, educational or training meetings, exhibitions, symposiums, and other similar meetings.
`(b) Authority To Collect Fees- The Secretary may collect fees from any individual or other person attending or participating in any forum described in subsection (a) that is conducted by, or jointly with, the Department of Commerce. The Secretary may use contractors to collect such fees. Fees under this subsection may be collected in advance of the forum.
`(c) Disposition of Collected Fees- Amounts collected under subsection (b) shall be used to pay all or part of the cost of fora described in subsection (a), and shall be credited to the account from which the costs of such fora have been paid or will be paid.
`(d) Budget for Participating Agencies- In the case of any agency that does not have the available funds to participate in a forum under subsection (a), the Secretary shall make such sums available, from fees collected under subsection (b), as are necessary to allow such participation by the agency.
`(e) Availability of Materials to the Public- The Secretary shall make available to the public, including through its public website, relevant materials provided for the fora held under subsection (a).
`Sec. 303. Automated Export System registrations for filers
`(1) IN GENERAL- The Secretary may establish a registration program for agents to file information in the Automated Export System on behalf of the United States principal party in interest or the foreign principal party in interest. Such registration program may include authorization for individuals to file as well as any corporation, association, or partnership that is organized under the laws of the United States or of any State, the District of Columbia, or any commonwealth, territory, or possession of the United States.
`(2) QUALIFICATIONS FOR INDIVIDUALS- The Secretary may establish qualification requirements for an individual seeking to register under the program, except that an individual may be so registered only if the individual is a United States citizen, an alien lawfully admitted for permanent residence to the United States, or a national of the United States (in the case of a resident of a territory or possession of the United States). In assessing the qualification of an applicant for registration, the Secretary may conduct an examination to determine the applicant's knowledge of the Automated Export System and laws, regulations, and procedures related to the export of goods from the United States, and may require participation in a continuing education program on a periodic basis. The Secretary may also obtain information to determine an applicant's fitness and character to act as an Automated Export System filer. An individual who meets the requirements for registration under this paragraph shall be issued an Automated Export System registration.
`(3) QUALIFICATIONS FOR CORPORATIONS AND OTHER BUSINESS ENTITIES-
`(A) REQUIREMENTS- A corporation, association, or partnership may be registered under this subsection only if at least one official of the corporation or association who is designated by the corporation or association, or one member of the partnership, who is authorized to act on behalf of the corporation, association, or partnership, as the case may be--
`(i) holds a valid Automated Export System registration under paragraph (2);
`(ii) is responsible for the supervision and control of filing Shipper's Export Declaration information in the Automated Export System; and
`(iii) is a United States citizen, an alien lawfully admitted for permanent residence to the United States, or a national of the United States (in the case of a resident of a territory or possession of the United States).
`(B) ADDITIONAL REGISTRATION REQUIREMENTS- The Secretary may establish such other registration requirements for corporations, associations, and partnerships as the Secretary considers appropriate. A corporation, association, or partnership that meets the requirements for registration under this paragraph shall be issued an Automated Export System registration.
`(4) FEDERAL MARITIME COMMISSION LICENSES- An ocean transportation intermediary (OTI) license issued by the Federal Maritime Commission may be used to satisfy the initial qualification requirements of the registration program under this subsection, if the Federal Maritime Commission maintains sufficient requirements with respect to such license, as determined by the Secretary.
`(5) LAPSE OF REGISTRATION- Registrations under this subsection shall be granted for a period of not less than 3 years, and may be renewed in such manner and under such conditions as are established by the Secretary.
`(b) Denial, Suspension, or Revocation of Registration-
`(1) GENERAL RULE- The Secretary may revoke or suspend a registration or deny an application for registration under subsection (a), which may take effect immediately, if the Secretary has reason to believe that the registrant or applicant has violated or will violate any regulations issued under this section or any law or regulation of the United States controlling exports. The Secretary may provide rules for notifying registrants and registration applicants of the process for revoking or suspending a registration or denying an application, consistent with the need to protect national security.
`(2) PROCEDURES FOR DENIAL, REVOCATION, OR SUSPENSION-
`(A) IN GENERAL- If a registration is revoked or suspended or an application is denied under paragraph (1), the Secretary shall send the registrant or applicant notice in writing specifically setting forth the grounds for suspension, revocation, or denial, shall allow the registrant or applicant a period of 30 calendar days beginning on the date on which the notice is received to respond in writing, and shall advise the registrant or applicant of the right to a hearing. A registrant or applicant may request an extension of time for such response, and the Secretary shall grant such extension for good cause shown. If no response is filed within that 30-day period, or any extension thereof, and the Secretary determines that the revocation, suspension, or denial is still warranted, the revocation, suspension, or denial shall become final.
`(B) HEARING- If a timely response is received under subparagraph (A) and the registrant or applicant requests a hearing, a hearing shall be held within 30 calendar days after the date on which the request is received, or at a later date if the registrant or applicant requests an extension and shows good cause therefor. An administrative law judge appointed under section 3105 of title 5 shall preside at the hearing, which shall be conducted in accordance with regulations issued by the Secretary. The administrative law judge shall issue a written decision either upholding, reversing, or modifying the decision of the Secretary, based solely on the record, setting forth the findings of fact, and the reasons for the decision.
`(C) SUSPENSION OF REGISTRATION PENDING APPEAL- In a case in which a person appeals a decision revoking or suspending a registration under this subsection, including an appeal under subsection (c), the Secretary may order that the registration continue to be suspended while the appeal is pending.
`(3) SETTLEMENT AND COMPROMISE- The Secretary may settle and compromise any proceeding that has been instituted under this subsection according to the terms and conditions agreed to by the parties, including the reduction of any proposed suspension or revocation.
`(4) LIMITATION OF ACTIONS- The Secretary may revoke or suspend a registration or deny an application for registration under this subsection only if the appropriate service of written notice is made under paragraph (2)(A) within 5 years after the date on which the alleged act described in paragraph (1) was committed, except that if the alleged act consists of fraud, the 5-year period shall begin on the date on which the alleged act was discovered.
`(1) IN GENERAL- A registrant under this section, or an applicant for a registration under this section, may appeal any decision of the administrative law judge under subsection (b) suspending or revoking the registration or denying the application by filing in the appropriate United States district court, within 60 days after the date on which the decision is issued, a written petition requesting that the decision be modified or set aside in whole or in part. A copy of the petition shall be served upon the Secretary. In cases involving revocation or suspension of a registration, the Secretary, after receiving the petition, shall file in the court the record upon which the decision complained of was entered.
`(2) FAILURE TO APPEAL- If an appeal is not filed within the time limits specified in paragraph (1), the decision of the administrative law judge under subsection (b) shall be final and conclusive.
`(d) Regulations- The Secretary shall provide a period of at least 90 days for the submission of public comments on any regulations issued to carry out this section, before such regulations may become effective.
`Sec. 304. Notification of relevant export requirements
`(a) In General- The Secretary, with the concurrence of the heads of the relevant departments and agencies, shall ensure that the Automated Export System will identify the filing of data in connection with an export from the United States if the country of destination of intended export or the export control information, or lack thereof, would result in a violation of any prohibition or restriction on exports under the laws and regulations of the United States.
`(b) Sufficiency and Timeliness of Export Control Information in the Automated Export System- Not later than 1 year after the date of the enactment of the Securing Exports Through Coordination and Technology Act, the Secretary, with the concurrence of the heads of the relevant departments and agencies and in consultation with representatives of affected industries and nongovernmental organizations with relevant expertise, shall--
`(1) ensure on an ongoing basis that changes in laws and regulations controlling exports from the United States are reflected in the Automated Export System upon implementation of those changes;
`(2) enable on an ongoing basis the classification of products to be exported in a manner sufficient to carry out the purposes of this section; and
`(3) ensure on an ongoing basis that all lists maintained by the United States and comprised of persons or entities to whom exports are restricted are available in a standardized format and contain sufficient descriptive information to enable their effective use by exporters (through the Automated Export System or otherwise) to screen transactions and prevent diversions of exported items for unauthorized destinations, parties, or uses.
`(c) Minimum Requirements- The Secretary, with the concurrence of the heads of the relevant departments and agencies and in consultation with representatives of affected industries and nongovernmental organizations with relevant expertise, shall ensure that the Automated Export System contains at least the following operational features:
`(1) The Automated Export System will process data filed in connection with an export and will alert the filer to export license requirements under the laws and regulations of the United States.
`(2) If the data filed that is associated with the export does not satisfy requirements under the export control laws and regulations of the United States, the Automated Export System will issue notices, compliance alerts, and other warnings, as appropriate, that the transaction may not satisfy export requirements, accompanied by references to the applicable authorities.
`(3) The Automated Export System will retain records of actions of users while filing export data.
`(d) Construction- Nothing in this section shall be construed to authorize an export solely because the Automated Export System accepts the filing of data.
`Sec. 305. Fees and charges
`The Secretary may issue regulations prescribing reasonable fees and charges, with particular sensitivity to small businesses, to defray the costs of the Secretary in carrying out this chapter.'.
SEC. 103. DEFINITIONS.
Chapter 9 of title 13, United States Code, is amended by adding at the end the following new section:
`Sec. 312. Definitions
`(1) AUTOMATED EXPORT SYSTEM- The term `Automated Export System' means the automated and electronic system for filing export information established under this chapter.
`(2) RELEVANT DEPARTMENTS AND AGENCIES- The term `relevant departments and agencies' means the Department of State, the Department of Defense, the Department of Homeland Security, and the Department of the Treasury.
`(3) Shipper'S EXPORT DECLARATION- The term `Shipper's Export Declaration' means the export information filed under this chapter.'.
SEC. 104. CONFORMING AMENDMENTS.
(a) Regulations, Orders, etc- Section 306 of title 13, United States Code, as redesignated by section 102(1) of this Act, is amended by striking the last sentence and inserting `The Secretary shall make rules, regulations, and orders, and amendments thereto, with the concurrence of the Secretary of Homeland Security.'.
(b) Cross References- Section 309 of title 13, United States Code, as redesignated by section 102(1) of this Act, is amended--
(1) in subsection (b), by striking `304' and inserting `308'; and
(A) in paragraph (1), by striking `304' and inserting `308';
(B) in paragraph (4), by striking `306' and inserting `310'; and
(C) in paragraph (5), by striking `304' and inserting `308'.
(c) Table of Contents- The table of contents for chapter 9 of title 13, United States Code, is amended to read as follows:
`301. Collection and publication.
`302. Conferences and seminars.
`303. Automated Export System registrations for filers.
`304. Notification of reelvant export requirements.
`306. Rules, regulations, and orders.
`307. Secretary of Treasury functions.
`308. Filing export information, delayed filings, penalties for failure to file.
`309. Penalties for unlawful export information activities.
`310. Delegation of functions.
`311. Relationship to general census law.
SEC. 105. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as may be necessary to carry out the amendments made by this title.
TITLE II--EXPORT ENFORCEMENT ENHANCEMENT
SEC. 201. SHORT TITLE.
This title may be cited as the `Export Enforcement Act of 2009'.
Subtitle A--Enforcement of Export Administration Regulations
SEC. 211. DECLARATION OF POLICY.
The Congress declares that, at a time of evolving threats and changing relationships with other countries, as well as rapid technological change and an increasingly globalized economy, United States strategic export controls are in urgent need of a comprehensive review in order to assure those controls are achieving their intended purposes of protecting the national security of the United States in the Global War on Terrorism and of promoting the economic and foreign policy interests of the United States, in particular by assuring that--
(1) export authorization procedures are properly designed to prioritize which exports may be approved quickly for trusted partners of the United States and which require greater scrutiny in order to safeguard national interests;
(2) strategic export controls appropriately and effectively identify and protect technologies critical to United States national security interests; and
(3) coordination among the responsible departments and agencies of the Government of the United States is improved in order to enhance efficiency, information sharing, and the consistent execution of United States policy.
SEC. 212. ENFORCEMENT.
(1) IN GENERAL- To the extent necessary or appropriate for the enforcement of the Export Administration Regulations, or for the imposition of any penalty, forfeiture, or liability arising under the Export Administration Regulations--
(A) the head of any department or agency exercising any function under the Export Administration Regulations and officers or employees of such department or agency specifically designated by the head thereof) may conduct investigations within the United States;
(B) the Secretary of Commerce (and officers and employees of the Office of Export Enforcement of the Department of Commerce specifically designated by the Secretary of Commerce), and the head of any department or agency with responsibility for enforcing the Export Administration Regulations (and officers and employees of such department or agency specifically designated by the head of such department or agency), may conduct investigations outside of the United States;
(C) the head of any department or agency with the responsibility for enforcing the Export Administration Regulations (and the officers or employees of such department or agency) may obtain information from, require reports or the keeping of records by, inspect the books, records, and other writings, premises, or property of, and take the sworn testimony of, any person;
(D)(i) the officers or employees of such department or agency may administer oaths or affirmations, and may by subpoena require any person to appear and testify or to appear and produce books, records, and other writings, or both; and
(ii) in the case of contumacy by, or refusal to obey a subpoena issued to, any such person, a district court of the United States, after notice to any such person and hearing, shall have jurisdiction to issue an order requiring such person to appear and give testimony or to appear and produce books, records, and other writings, or both, and any failure to obey such order of the court may be punished by such court as a contempt thereof; and
(E) the Secretary of Commerce (and officers or employees of the Department of Commerce designated by the Secretary) may conduct, outside the United States, pre-license investigations and post-shipment verifications of items licensed for export.
(A) IN GENERAL- Subject to subparagraph (B)--
(i) the Secretary of Commerce shall have the responsibility for the enforcement of the restrictive trade practices and boycott provisions of the Export Administration Regulations;
(ii) to the extent necessary or appropriate for the enforcement of the Export Administration Regulations, or for the imposition of any penalty, forfeiture, or liability arising under the Export Administration Regulations, the Secretary of Commerce may search, detain (after search), and seize goods or technology--
(I) at places within the United States other than those ports of entry or exit from the United States where officers of U.S. Immigration and Customs Enforcement and U.S. Customs and Border Protection are authorized by law to conduct such activities; and
(II) at places outside the United States where the Office of Export Enforcement of the Department of Commerce, pursuant to agreements or other arrangements with other countries, is authorized to perform enforcement activities;
(iii) the search, detention (after search), or seizure of goods or technology at ports and places authorized under clause (ii) may be conducted by officers or employees of the Department of Commerce designated by the Secretary of Commerce, with the concurrence of the Secretary of Homeland Security; and
(iv) enforcement activities under this section that are conducted outside the United States, except for prelicense investigations and post-shipment verifications, shall be conducted with the concurrence of the Secretary of Homeland Security.
(B) AUTHORITY OF OFFICE OF EXPORT ENFORCEMENT- The Secretary of Commerce may designate any employee of the Office of Export Enforcement of the Department of Commerce to do the following in carrying out enforcement authority under this section:
(i) Execute any warrant or other process issued by a court or officer of competent jurisdiction.
(ii) Make arrests without warrant for any offense against the United States committed in such officer's presence or view or any felony offense against the United States if such officer has probable cause to believe that the person to be arrested has committed or is committing that felony offense.
(3) ATTORNEY GENERAL GUIDELINES- The authority conferred by paragraph (2) shall be exercised consistent with guidelines approved by the Attorney General.
(4) BEST PRACTICES GUIDELINES-
(A) IN GENERAL- The Secretary of Commerce, in consultation with the technical advisory committees established pursuant to section 5(h) of the Export Administration Act of 1979, and representative exporters, shippers, trade facilitators, freight forwarders, and reexporters, shall continue to publish and update `best practices' guidelines to help industries develop and implement, on a voluntary basis, effective export control programs in compliance with the Export Administration Regulations.
(B) EXPORT COMPLIANCE PROGRAM- The existence of an effective export compliance program and high quality overall export compliance effort is one of the factors that ordinarily should be given weight as a mitigating factor in a civil penalty action under the Export Administration Regulations.
(5) REFERENCE TO ENFORCEMENT- For purposes of this section, a reference to the enforcement of, or a violation of, the Export Administration Regulations includes a reference to the enforcement or a violation of any order or license issued pursuant to the Export Administration Regulations.
(b) Immunity- A person shall not be excused from complying with any requirements under this section because of the person's privilege against self-incrimination, but the immunity provisions of section 6002 of title 18, United States Code, shall apply with respect to any individual who specifically claims such privilege.
(c) Confidentiality of Information-
(1) EXEMPTIONS FROM DISCLOSURE-
(A) INFORMATION OBTAINED ON OR BEFORE JUNE 30, 1980- Except as otherwise provided by the third sentence of section 8(b)(2) and by section 11(c)(2)(C) of the Export Administration Act of 1979, information obtained under the Export Administration Act of 1979, or any predecessor statute, on or before June 30, 1980, that is deemed confidential, including Shipper's Export Declarations, or with respect to which a request for confidential treatment is made by the person furnishing such information, shall not be subject to disclosure under section 552 of title 5, United States Code, and such information shall not be published or disclosed, unless the Secretary of Commerce determines that withholding such information is contrary to the national interest.
(B) INFORMATION OBTAINED AFTER JUNE 30, 1980- Except as otherwise provided by the third sentence of section 8(b)(2) and by section 11(c)(2)(C) of the Export Administration Act of 1979, information obtained under the Export Administration Act of 1979 after June 30, 1980, or under the Export Administration Regulations may be withheld from disclosure only to the extent permitted by statute, except that information obtained for the purpose of consideration of, or concerning, license applications under the Export Administration Act of 1979 or the Export Administration Regulations shall be withheld from public disclosure unless the release of such information is determined by the Secretary of Commerce to be in the national interest.
(2) WITHHOLDING OF INFORMATION FROM FEDERAL AGENCIES BARRED- Nothing in this section or the Export Administration Regulations shall be construed as authorizing the withholding of information from other Federal agencies for purposes of the enforcement of the Export Administration Regulations, any regulation, rule, order, or license issued under the International Emergency Economic Powers Act, or any other provision of law.
(3) INFORMATION TO THE CONGRESS AND GAO-
(A) IN GENERAL- Nothing in this section shall be construed as authorizing the withholding of information from the Congress or from the Government Accountability Office.
(B) AVAILABILITY TO THE CONGRESS-
(i) IN GENERAL- Any information obtained at any time under the Export Administration Act of 1979, under previous Acts regarding the control of exports, or under the Export Administration Regulations, including any report or license application required under any such Act or the Export Administration Regulations, shall be made available to a committee or subcommittee of Congress of appropriate jurisdiction, upon the request of the chairman or ranking minority member of such committee or subcommittee.
(ii) PROHIBITION ON FURTHER DISCLOSURE- No such committee or subcommittee, or member thereof, may disclose any information obtained under the Export Administration Act of 1979, under previous Acts regarding the control of exports, or under the Export Administration Regulations, that is submitted on a confidential basis unless the full committee determines that the withholding of that information is contrary to the national interest.
(i) IN GENERAL- Notwithstanding paragraph (1), information described in clause (i) of subparagraph (B) shall, consistent with the protection of intelligence, counterintelligence, and law enforcement sources, methods, and activities, as determined by the agency that originally obtained the information, and consistent with section 716 of title 31, United States Code, be made available only by that agency, upon request, to the Comptroller General of the United States or to any officer or employee of the Government Accountability Office authorized by the Comptroller General to have access to such information.
(ii) PROHIBITION ON FURTHER DISCLOSURE- No officer or employee of the Government Accountability Office may disclose, except to the Congress in accordance with this paragraph, any such information that is submitted on a confidential basis or from which any individual can be identified.
(A) IN GENERAL- Any department or agency that obtains information that is relevant to the enforcement of the Export Administration Regulations, including information pertaining to any investigation, shall furnish such information to each department or agency with enforcement responsibilities under this section to the extent consistent with the protection of intelligence, counterintelligence, and law enforcement sources, methods, and activities.
(B) EXCEPTIONS- The provisions of this paragraph shall not apply to information subject to the restrictions set forth in section 9 of title 13, United States Code, and return information, as defined in subsection (b) of section 6103 of the Internal Revenue Code of 1986 (26 U.S.C. 6103(b)), may be disclosed only as authorized by that section.
(C) EXCHANGE OF INFORMATION- The Secretary of Commerce and the Secretary of Homeland Security, upon request, shall exchange any licensing and enforcement information with each other that is necessary to facilitate enforcement efforts under this section.
(D) INTERAGENCY CONSULTATIONS- The Secretary of Commerce, the Attorney General, and the Secretary of Homeland Security shall consult on a continuing basis with one another and with the head of other departments and agencies that obtain information subject to this paragraph, in order to facilitate the exchange of such information.
(d) Reporting Requirements- In the administration of this section and the Export Administration Regulations, reporting requirements shall be so designed as to reduce the cost of reporting, recordkeeping, and export documentation required under this section and the Export Administration Regulations to the extent feasible consistent with effective enforcement and compilation of useful trade statistics. Reporting, recordkeeping, and export documentation requirements shall be periodically reviewed and revised in the light of developments in the field of information technology.
(e) Simplification of Regulations- The Secretary of Commerce, in consultation with appropriate departments and agencies of the United States and with appropriate technical advisory committees established pursuant to section 5(h) of the Export Administration Act of 1979, shall review the Export Administration Regulations, including the commodity control list, in order to determine how compliance with the provisions of the Export Administration Regulations can be facilitated by simplifying the Export Administration Regulations, by simplifying or clarifying the commodity control list, or by any other means.
(1) IN GENERAL- Any tangible items lawfully seized under subsection (a) by designated officers or employees shall be subject to forfeiture to the United States.
(2) PROCEDURES- Any seizure or forfeiture under this subsection shall be made in accordance with the procedures set forth in section 981 of title 18, United States Code.
(g) Undercover Investigation Operations-
(1) USE OF FUNDS- In the case of any undercover investigative operation conducted by the Office of Export Enforcement of the Department of Commerce that is necessary for the detection and prosecution of a violation of the Export Administration Regulations--
(A) funds made available for export enforcement under this section may be used to purchase property, buildings, and other facilities, and to lease equipment, conveyances, and space within the United States, without regard to sections 1341 and 3324 of title 31, United States Code, section 8141 of title 40, United States Code, sections 3732(a) and 3741 of the Revised Statutes of the United States (41 U.S.C. 11(a) and 22), and sections 304(a), 304A, 304B, 304C, and 305 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 254(a), 254b, 254c, 254d, and 255);
(B) funds made available for export enforcement under this section may be used to establish or to acquire proprietary corporations or business entities as part of an undercover operation, and to operate such corporations or business entities on a commercial basis, without regard to sections 1341, 3324, and 9102 of title 31, United States Code;
(C) funds made available for export enforcement under this section and the proceeds from undercover operations may be deposited in banks or other financial institutions without regard to section 648 of title 18, United States Code, and section 3302 of title 31, United States Code; and
(D) the proceeds from undercover operations may be used to offset necessary and reasonable expenses incurred in such operations without regard to section 3302 of title 31, United States Code, if the Secretary of Commerce certifies in writing that the action authorized by subparagraph (A), (B), (C), or (D) for which the funds would be used is necessary for the conduct of the undercover operation.
(2) DISPOSITION OF BUSINESS ENTITIES- If a corporation or business entity established or acquired as part of an undercover operation has a net value of more than $250,000 and is to be liquidated, sold, or otherwise disposed of, the Secretary of Commerce shall report the circumstances to the Comptroller General of the United States as much in advance of such disposition as the Secretary of Commerce determines is practicable. The proceeds of the liquidation, sale, or other disposition, after obligations incurred by the corporation or business enterprise are met, shall be deposited in the Treasury of the United States as miscellaneous receipts. Any property or equipment purchased pursuant to paragraph (1) may be retained for subsequent use in undercover operations under this section. When such property or equipment is no longer needed, it shall be considered surplus and disposed of as surplus government property.
(3) DEPOSIT OF PROCEEDS- As soon as the proceeds from an undercover investigative operation of the Office of Export Enforcement of the Department of Commerce with respect to which an action is authorized and carried out under this subsection are no longer needed for the conduct of such operation, the proceeds or the balance of the proceeds remaining at the time shall be deposited into the Treasury of the United States as miscellaneous receipts.
(A) AUDIT- The Secretary of Commerce shall conduct a detailed financial audit of each closed undercover investigative operation of the Office of Export Enforcement of the Department of Commerce. Not later than 180 days after an undercover operation is closed, the Secretary of Commerce shall submit to the Congress a report on the results of the audit.
(B) REPORT- The Secretary of Commerce shall submit to the appropriate congressional committees, in the Secretary's annual report to the Congress on the administration of export controls and the Export Administration Regulations, the following additional information:
(i) The number of undercover investigative operations pending as of the end of the period for which the report is submitted.
(ii) The number of undercover investigative operations commenced in the 1-year period preceding the period for which the report is submitted.
(iii) The number of undercover investigative operations closed in the 1-year period preceding the period for which such report is submitted and, with respect to each such closed undercover operation, the results obtained and any civil claims made with respect to the operation.
(5) DEFINITIONS- In this subsection:
(A) CLOSED- The term `closed', with respect to an undercover investigative operation, refers to the earliest point in time at which all criminal proceedings (other than appeals) pursuant to the investigative operation are concluded, or covert activities pursuant to such operation are concluded, whichever occurs later.
(B) UNDERCOVER INVESTIGATIVE OPERATION AND UNDERCOVER OPERATION-
(i) IN GENERAL- The terms `undercover investigative operation' and `undercover operation' mean any undercover investigative operation conducted by the Office of Export Enforcement of the Department of Commerce--
(I) in which the gross receipts (excluding interest earned) exceed $25,000, or expenditures (other than expenditures for salaries of employees) exceed $75,000; and
(II) which is exempt from section 3302 or 9102 of title 31, United States Code.
(ii) EXCEPTION- Subclauses (I) and (II) of clause (i) shall not apply with respect to the report to the Congress required by paragraph (4)(B).
(h) Authorization for Bureau of Industry and Security- The Secretary of Commerce may authorize, without fiscal year limitation, the expenditure of funds transferred to, paid to, received by, or made available to the Bureau of Industry and Security of the Department of Commerce as a reimbursement in accordance with section 9703 of title 31, United States Code (as added by Public Law 102-393).
SEC. 213. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as may be necessary to carry out this subtitle for each fiscal year.
SEC. 214. DEFINITIONS.
(1) APPROPRIATE CONGRESSIONAL COMMITTEES- The term `appropriate congressional committees' means the Committee on Foreign Affairs of the House of Representatives and the Committee on Foreign Relations of the Senate.
(2) EXPORT ADMINISTRATION REGULATIONS- The term `Export Administration Regulations' means the Export Administration Regulations as maintained and amended under the authority of the International Emergency Economic Powers Act and codified, as of the date of the enactment of this Act, in subchapter C of chapter VII of title 15, Code of Federal Regulations.
Subtitle B--Prevention of Transfer of Sensitive Items to Countries of Concern
SEC. 221. IDENTIFICATION OF LOCATIONS OF CONCERN WITH RESPECT TO TRANSSHIPMENT, REEXPORTATION, OR DIVERSION OF CERTAIN ITEMS TO IRAN.
Not later than 180 days after the date of the enactment of this Act, and annually thereafter, the President shall submit to the appropriate congressional committees a report that identifies all countries that the President determines are of concern with respect to transshipment, reexportation, or diversion of items subject to the provisions of the Export Administration Regulations to an entity owned or controlled by the Government of Iran.
SEC. 222. DESTINATIONS OF POSSIBLE DIVERSION CONCERN AND DESTINATIONS OF DIVERSION CONCERN.
(a) Destinations of Possible Diversion Concern-
(1) DESIGNATION- The Secretary of Commerce shall designate a country as a Destination of Possible Diversion Concern if the Secretary, in consultation with the Secretary of State and the Secretary of the Treasury, determines that such designation is appropriate to carry out activities to strengthen the export control systems of that country based on criteria that include--
(A) the volume of items that originated in the United States that are transported through the country to end-users whose identities cannot be verified;
(B) the inadequacy of the export and reexport controls of the country;
(C) the unwillingness or demonstrated inability of the government of the country to control diversion activities; and
(D) the unwillingness or inability of the government of the country to cooperate with the United States in interdiction efforts.
(2) STRENGTHENING EXPORT CONTROL SYSTEMS OF DESTINATIONS OF POSSIBLE DIVERSION CONCERN- If the Secretary of Commerce designates a country as a Destination of Possible Diversion Concern under paragraph (1), the United States shall initiate government-to-government activities described in paragraph (3) to strengthen the export control systems of the country.
(3) GOVERNMENT-TO-GOVERNMENT ACTIVITIES DESCRIBED- The government-to-government activities described in this paragraph include--
(A) cooperation by agencies and departments of the United States with counterpart agencies and departments in a country designated as a Destination of Possible Diversion Concern under paragraph (1) to--
(i) develop or strengthen export control systems in the country;
(ii) strengthen cooperation and facilitate enforcement of export control systems in the country; and
(iii) promote information and data exchanges among agencies of the country and with the United States; and
(B) efforts by the Office of International Programs of the Department of Commerce to strengthen the export control systems of the country to--
(i) facilitate legitimate trade in high-technology goods; and
(ii) prevent terrorists and state sponsors of terrorism, including Iran, from obtaining nuclear, biological, and chemical weapons, defense technologies, components for improvised explosive devices, and other defense items.
(b) Destinations of Diversion Concern-
(1) DESIGNATION- The Secretary of Commerce shall designate a country as a Destination of Diversion Concern if the Secretary, in consultation with the Secretary of State and the Secretary of the Treasury, determines--
(A) that the government of the country is directly involved in transshipment, reexportation, or diversion of items that originated in the United States to end-users whose identities cannot be verified or to entities owned or controlled by the Government of Iran; or
(B) in the case of a country that has been designated as a Destination of Possible Diversion Concern under subsection (a)(1), that the country has, upon the expiration of the 12-month period beginning on the date of such designation--
(i) failed to cooperate with the government-to-government activities initiated by the United States under subsection (a)(2); or
(ii) based on the criteria described in subsection (a)(1), failed to adequately strengthen the export control systems of the country.
(2) LICENSING CONTROLS WITH RESPECT TO DESTINATIONS OF DIVERSION CONCERN-
(A) REPORT ON SUSPECT ITEMS-
(i) IN GENERAL- Not later than 45 days after the date of the enactment of this Act, the Secretary of Commerce, in consultation with appropriate representatives of the United States intelligence community, the Secretary of State, and the Secretary of the Treasury, shall submit to the appropriate congressional committees a report containing a list of items that, if the items were transshipped, reexported, or diverted to Iran, could contribute to--
(I) Iran obtaining nuclear, biological, or chemical weapons, defense technologies, components for improvised explosive devices, or other defense items; or
(II) support by Iran for acts of international terrorism.
(ii) CONSIDERATIONS FOR LIST- In developing the list required under clause (i), the Secretary of Commerce shall consider--
(I) the items subject to licensing requirements under section 742.8 of title 15, Code of Federal Regulations (or any corresponding similar regulation or ruling) and other existing licensing requirements; and
(II) the items added to the list of items for which a license is required for exportation to North Korea by the final rule of the Bureau of Export Administration of the Department of Commerce issued on June 19, 2000 (65 Fed. Reg. 38148; relating to export restrictions on North Korea).
(B) LICENSING REQUIREMENT- Not later than 180 days after the date of the enactment of this Act, the Secretary of Commerce shall require a license to export an item on the list required under subparagraph (A)(i) to a country designated as a Destination of Diversion Concern.
(3) WAIVER- The President may waive the imposition of the licensing requirement under paragraph (2)(B) with respect to a country designated as a Destination of Diversion Concern if the President--
(A) determines that such a waiver is in the national interest of the United States; and
(B) submits to the appropriate congressional committees a report describing the reasons for the determination.
(c) Termination of Designation- The designation of a country as a Destination of Possible Diversion Concern or a Destination of Diversion Concern shall terminate on the date on which the Secretary of Commerce determines, based on the criteria described in subparagraphs (A) through (D) of subsection (a)(1), and certifies to the appropriate congressional committees and the President that the country has adequately strengthened the export control systems of the country to prevent transshipment, reexportation, and diversion of items through the country to end-users whose identities cannot be verified or to entities owned or controlled by the Government of Iran.
(d) Authorization of Appropriations- There are authorized to be appropriated such sums as may be necessary to carry out this section.
SEC. 223. REPORT ON EXPANDING DIVERSION CONCERN SYSTEM TO COUNTRIES OTHER THAN IRAN.
Not later than 180 days after the date of the enactment of this Act, the President shall submit to the appropriate congressional committees a report that--
(1) identifies any country that the President determines may be transshipping, reexporting, or diverting items subject to the provisions of the Export Administration Regulations to another country if such other country--
(A) is seeking to obtain nuclear, biological, or chemical weapons, defense technologies, components for improvised explosive devices, or other defense items; or
(B) provides support for acts of international terrorism; and
(2) assesses the feasability and advisability of expanding the system established under section 222 for designating countries as Destinations of Possible Diversion Concern and Destinations of Diversion Concern to include countries identified under paragraph (1).
SEC. 224. ANNUAL REPORT ON TRANSFERS OF MILITARILY SENSITIVE TECHNOLOGY TO COUNTRIES AND ENTITIES OF CONCERN.
(a) Annual Report- Not later than March 30 of each year beginning in 2010, the President shall transmit to the Congress a report on transfers to countries and entities of concern during the preceding calendar year of the most significant categories of United States technologies and technical information with potential military applications.
(b) Contents of Report- The report required by subsection (a) shall include, at a minimum, the following:
(1) An assessment by the President of efforts by countries and entities of concern to acquire technologies and technical information referred to in subsection (a) during the preceding calendar year.
(2) An assessment by the President of the cumulative impact of licenses granted by the United States for exports of technologies and technical information referred to in subsection (a) to countries and entities of concern during the preceding 5-calendar year period on--
(A) the military capabilities of such countries and entities; and
(B) countermeasures that may be necessary to overcome the use of such technologies and technical information.
(3) An audit by the Inspectors General of the Departments of Defense, State, Commerce, Homeland Security, Energy, and the Treasury, in consultation with appropriate representatives of the United States intelligence community, of the policies and procedures of the United States Government with respect to the export of technologies and technical information referred to in subsection (a) to countries and entities of concern.
(c) Additional Requirement for First Report- The first annual report required by subsection (a) shall include an assessment by the Inspectors General of the Departments of Defense, State, Commerce, Homeland Security, Energy, and the Treasury of the adequacy of current export controls and counterintelligence measures to protect against the acquisition by countries and entities of concern of United States technology and technical information referred to in subsection (a).
(d) Support of Other Agencies- Upon the request of any of the officials responsible for preparing an assessment or audit required by subsection (b) or (c), the heads of other departments and agencies shall make available to those officials all information necessary to carry to prepare such assessment or audit.
(e) Classified and Unclassified Reports- Each report required by this section shall be submitted in classified form and unclassified form.
(f) Definition- In this section, the term `countries and entities of concern' means--
(1) any country that is a state sponsor of terrorism;
(A) has detonated a nuclear explosive device (as defined in section 830(4) of the Nuclear Proliferation Prevention Act of 1994 (22 U.S.C. 6305(4))); and
(B) is not a member of the North Atlantic Treaty Organization; and
(A) is engaged in international terrorism or activities in preparation thereof; or
(B) is directed or controlled by the government of a country described in paragraph (1) or (2).
SEC. 225. DEFINITIONS.
(1) APPROPRIATE CONGRESSIONAL COMMITTEES- The term `appropriate congressional committees' means--
(A) the Committee on Banking, Housing, and Urban Affairs, the Committee on Foreign Relations, and the Select Committee on Intelligence of the Senate; and
(B) the Committee on Financial Services, the Committee on Foreign Affairs, and the Permanent Select Committee on Intelligence of the House of Representatives.
(2) END-USER- The term `end-user' means an end-user as that term is used in the Export Administration Regulations.
(3) ENTITY OWNED OR CONTROLLED BY THE GOVERNMENT OF IRAN- The term `entity owned or controlled by the Government of Iran' includes--
(A) any corporation, partnership, association, or other entity in which the Government of Iran owns a majority or controlling interest; and
(B) any entity that is otherwise controlled by the Government of Iran.
(4) EXPORT ADMINISTRATION REGULATIONS- The term `Export Administration Regulations' means the Export Administration Regulations as maintained and amended under the authority of the International Emergency Economic Powers Act and codified, as of the date of the enactment of this Act, in subchapter C of chapter VII of title 15, Code of Federal Regulations.
(5) GOVERNMENT- The term `government' includes any agency or instrumentality of a government.
(6) IRAN- The term `Iran' includes any agency or instrumentality of Iran.
(7) STATE SPONSOR OF TERRORISM- The term `state sponsor of terrorism' means any country the government of which the Secretary of State has determined has repeatedly provided support for acts of international terrorism pursuant to--
(A) section 6(j)(1)(A) of the Export Administration Act of 1979 (50 U.S.C. App. 2405(j)(1)(A)) (or any successor thereto);
(B) section 40(d) of the Arms Export Control Act (22 U.S.C. 2780(d)); or
(C) section 620A(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2371(a)).
(8) TRANSSHIPMENT, REEXPORTATION, OR DIVERSION- The term `transshipment, reexportation, or diversion' means the exportation, directly or indirectly, of items that originated in the United States to an end-user whose identity cannot be verified or to an entity owned or controlled by the Government of Iran in violation of the laws or regulations of the United States by any means, including by--
(A) shipping such items through one or more foreign countries; or
(B) using false information regarding the country of origin of such items.
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