HR 6828 IH
110th CONGRESS
2d Session
H. R. 6828
To make improvements in the electronic filing of export data, to strengthen enforcement authorities under the Export Administration Act of 1979, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
August 1, 2008
Mr. SHERMAN (for himself, Mr. MANZULLO, and Mr. SMITH of Washington) introduced the following bill; which was referred to the Committee on Foreign Affairs, and in addition to the Committee on Homeland Security, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
A BILL
To make improvements in the electronic filing of export data, to strengthen enforcement authorities under the Export Administration Act of 1979, 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. Mandatory electronic filing of export data.
Sec. 103. Information sharing of Automated Export System data; conferences; automated export system licenses and filings.
Sec. 105. Conforming amendments.
Sec. 106. Authorization of appropriations.
TITLE II--EXPORT ENFORCEMENT ENHANCEMENT
Sec. 202. Declaration of policy.
Sec. 204. Authorization of appropriations.
Sec. 205. Termination date.
Sec. 206. Designation of destinations of diversion concern.
Sec. 207. Validated end-user program review.
Sec. 208. 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. MANDATORY ELECTRONIC FILING OF EXPORT DATA.
Section 1404(b) of the Foreign Relations Authorization Act, Fiscal Year 2003 (13 U.S.C. 301 note) is amended to read as follows:.
`(1) FILING THROUGH AES- The Secretary of Commerce shall maintain regulations that require that persons who are required to file Shipper's Export Declarations under chapter 9 of title 13, United States Code, file (either themselves or through their intermediaries) such Declarations through the Automated Export System before the items are exported from any United States port, unless the Secretary of Commerce, with the concurrence of the Secretary of State, the Secretary of Defense, the Secretary of the Treasury, and the Secretary of Homeland Security, determines that it is appropriate to grant an exception to this requirement. Such filing of data shall, at a minimum, include--
`(A) the name and address of the principal party-in-interest in the United States;
`(B) the name and address of the foreign principal party-in-interest;
`(C) the name and address of all intermediate consignees;
`(D) the name and address of the ultimate consignee;
`(E) the commodity classification of each item being exported;
`(F) when appropriate, the license number or regulatory authorization for the export; and
`(G) a declaration, under penalty of perjury under the laws of the United States, that the information filed under this paragraph is true and correct.
`(2) MODIFICATIONS TO REGULATIONS- Any modifications to the regulations referred to in paragraph (1) may be made only with the concurrence of the heads of the relevant departments and agencies.
`(3) INTERMEDIARY DEFINED- In this subsection, the term `intermediary' means a freight forwarder, a non-vessel operating common carrier (NVOCC), an ATA (Admission Temporaire/Temporary Admission) Carnet national guaranteeing association and its service providers, or any other similar entity as determined by the Secretary of Commerce, in consultation with the Secretary of Homeland Security.'.
SEC. 103. INFORMATION SHARING OF AUTOMATED EXPORT SYSTEM DATA; CONFERENCES; AUTOMATED EXPORT SYSTEM LICENSES AND FILINGS.
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 persons to file information in the Automated Export System, either on behalf of themselves or acting as an intermediary. 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 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--
`(A) holds a valid Automated Export System registration under paragraph (2);
`(B) is responsible for the supervision and control of filing Shipper's Export Declaration information in the Automated Export System; and
`(C) 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).
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. Blocking prohibited or restricted exports
`(a) In General- The Secretary, with the concurrence of the heads of the appropriate departments and agencies, shall issue regulations to 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 that the transaction cannot be completed, compliance alerts, and other warnings, as appropriate, 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. 104. 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) INTERMEDIARY- The term `intermediary' means a freight forwarder, a non-vessel operating common carrier (NVOCC), an ATA (Admission Temporaire/Temporary Admission) Carnet national guaranteeing association and its service providers, or any other similar entity as determined by the Secretary, in consultation with the Secretary of Homeland Security.
`(3) 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.
`(4) Shipper'S EXPORT DECLARATION- The term `Shipper's Export Declaration' means the export information filed under this chapter.'.
SEC. 105. CONFORMING AMENDMENTS.
(a) Collection and Publication- Section 301 of title 13, United States Code, is amended by striking subsection (g) and redesignating subsection (h) as subsection (g).
(b) Regulations, Orders, etc- Section 306 of title 13, United States Code, as redesignated by section 103(1) of this Act, is amended by striking the last sentence and inserting `The Secretary shall make rules, regulations, and orders, and amendments thereto, in consultation with the Secretary of Homeland Security.'.
(c) Cross References- Section 309 of title 13, United States Code, as redesignated by section 103(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'.
(d) 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. Blocking prohibited or restricted exports.
`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. 106. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as may be necessary to carry out the amendments made by this Act.
TITLE II--EXPORT ENFORCEMENT ENHANCEMENT
SEC. 201. SHORT TITLE.
This title may be cited as the `Export Enforcement Act of 2008'.
SEC. 202. 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. 203. ENFORCEMENT.
Section 12 of the Export Administration Act of 1979 (50 U.S.C. App. 2411) is amended as follows:
(1) Subsection (a) is amended by striking paragraphs (1), (2), (3), and (4) and inserting after `(a) General Authority- ' the following:
`(1) IN GENERAL- To the extent necessary or appropriate to the enforcement of this Act or to the imposition of any penalty, forfeiture, or liability arising under this Act--
`(A) the head of any department or agency exercising any function under this Act (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 Homeland Security (and officers or employees of U.S. Immigration and Customs Enforcement specifically designated by the Secretary of the Department of Homeland Security) and 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) may conduct investigations outside of the United States;
`(C) the head of any department or agency exercising any function under this Act (and such officers or employees) 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) such officers or employees 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 (and officers or employees of the Department of Commerce designated by the Secretary) may conduct, outside the United States, pre-license checks and post-shipment verifications of items licensed for export.
`(2) AUTHORITY OF IMMIGRATION AND CUSTOMS ENFORCEMENT AND CUSTOMS AND BORDER PROTECTION-
`(A) IN GENERAL- Subject to subparagraph (B), U.S. Immigration and Customs Enforcement and U.S. Customs and Border Protection are authorized, in the enforcement of this Act--
`(i) to search, detain (after search), and seize goods or technology at those places outside the United States where such entities are authorized, pursuant to agreements or other arrangements with other countries, to perform enforcement activities; and
`(ii) to conduct such activities at 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.
`(B) SEARCHES AND SEIZURES- An officer of U.S. Immigration and Customs Enforcement or U.S. Customs and Border Protection may do the following in carrying out enforcement authority under this Act:
`(i) Stop, search, and examine a vehicle, vessel, aircraft, person, package, or container on which or whom such officer has reasonable cause to suspect there are any goods or technology that has been, is being, or is about to be exported from the United States in violation of this Act.
`(ii) Detain (after search) or seize and secure for trial any goods or technology on or about such vehicle, vessel, aircraft, or person, or in such package or container, if such officer has probable cause to believe the goods or technology has been, is being, or is about to be exported from the United States in violation of this Act.
`(iii) Make arrests without warrant for any violation of this Act committed in the presence or view of the officer or if the officer has probable cause to believe that the person to be arrested has committed or is committing such a violation.
`(C) ARREST AUTHORITY- The arrest authority conferred by subparagraph (B)(iii) is in addition to any arrest authority under other laws.
`(D) DETENTION OF GOODS- U.S. Immigration and Customs Enforcement and U.S. Customs and Border Protection may not detain for more than 45 days any shipment of goods or technology that is eligible for export without prior authorization under this Act. In a case in which such detention is on account of a disagreement between the Secretary and the head of any other department or agency with export license authority under other provisions of law concerning the export license requirements for such goods or technology, such disagreement shall be resolved within that 45-day period. At the end of that 45-day period, U.S. Immigration and Customs Enforcement or U.S. Customs and Border Protection (as the case may be) shall either release the goods or technology, or seize the goods or technology as authorized by other provisions of law.
`(A) IN GENERAL- Subject to subparagraph (B)--
`(i) the Secretary shall have the responsibility for the enforcement of section 8;
`(ii) in the enforcement of the other provisions of this Act, the Secretary is authorized to search, detain (after search), and seize goods or technology--
`(I) at those places within the United States other than those ports specified in paragraph (2)(A); and
`(II) at those 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 those ports and places specified in paragraph (2)(A) may be conducted by officers or employees of the Department of Commerce designated by the Secretary, with the concurrence of the Secretary of Homeland Security; and
`(iv) enforcement activities conducted outside the United States, except for pre-license checks and post-shipment verifications, shall be undertaken with the concurrence of the Secretary of Homeland Security.
`(B) AUTHORITY OF OFFICE OF EXPORT ENFORCEMENT- The Secretary may designate any employee of the Office of Export Enforcement of the Department of Commerce to do the following in carrying out the enforcement authority conferred by this Act:
`(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.
`(4) ATTORNEY GENERAL GUIDELINES- The authorities conferred by the Export Enforcement Act of 2008 under paragraph (3) shall be exercised consistent with guidelines approved by the Attorney General.'.
(2) Subsection (a) is further amended--
(A) by striking paragraphs (6), (7), and (8);
(i) by striking `(5) All' and inserting `(5) REFERRAL OF VIOLATIONS- All'; and
(ii) by moving the remaining text 2 ems to the right; and
(C) by inserting after paragraph (5) the following:
`(6) BEST PRACTICES GUIDELINES-
`(A) IN GENERAL- The Secretary, in consultation with the technical advisory committees established under section 5(h) and exporters, shippers, trade facilitators, freight forwarders, and reexporters representative of their respective industries, shall continue to publish and update `best practices' guidelines to help those industries develop and implement, on a voluntary basis, effective export control programs in compliance with this Act.
`(B) EXPORT COMPLIANCE PROGRAM- The existence of an effective export compliance program and high quality overall export compliance efforts are factors that ordinarily should be given weight as mitigating factors in civil penalty enforcement actions under this Act.
`(7) REFERENCE TO ENFORCEMENT- For purposes of this section, a reference to the enforcement of this Act or to a violation of this Act includes a reference to the enforcement or a violation of any regulation, order, or license issued under this Act, and the enforcement or violation of the Export Administration Regulations as maintained and amended under the authority of the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), or any order or license issued pursuant to those regulations.'.
(3) Subsection (c)(3) is amended by striking `Commissioner of Customs' each place it appears and inserting `Secretary of Homeland Security'.
(4) Section 12 is further amended by adding at the end the following new subsections:
`(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 carried out in accordance with the procedures set forth in chapter 46 of title 18, United States Code.
`(g) Undercover Investigation Operations-
`(1) USE OF FUNDS- With respect to 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 violations of this Act--
`(A) funds made available for export enforcement under this Act 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 Act 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 Act 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 certifies, in writing, that the action authorized by subparagraph (A), (B), or (C) 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 shall report the circumstances to the Comptroller General of the United States as much in advance of such disposition as the Secretary 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 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 shall submit to the Congress a report on the results of the audit.
`(B) REPORT- The Secretary shall submit annually to the Congress a report, which may be included in the annual report under section 14, including the following 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.
`(C) DEFINITIONS- In this paragraph:
`(i) 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.
`(ii) 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--
`(aa) in which the gross receipts (excluding interest earned) exceed $25,000, or expenditures (other than expenditures for salaries of employees) exceed $75,000; and
`(bb) which is exempt from section 3302 or 9102 of title 31, United States Code.
`(II) EXCEPTION- Items (aa) and (bb) of subclause (I) shall not apply with respect to the report to the Congress required by subparagraph (2)(B).
`(h) Authorization for Bureau of Industry and Security- The Secretary 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. 204. AUTHORIZATION OF APPROPRIATIONS.
Section 18 of the Export Administration Act of 1979 (50 U.S.C. App. 2417) is amended to read as follows:
`AUTHORIZATION OF APPROPRIATIONS
`Sec. 18. There are authorized to be appropriated to the Department of Commerce to carry out section 12 of this Act such sums as may be necessary for each fiscal year.'.
SEC. 205. TERMINATION DATE.
Section 20 of the Export Administration Act of 1979 (50 U.S.C. App. 2419) is amended by inserting before the period at the end the following: `, except that section 12 shall not terminate'.
SEC. 206. DESIGNATION OF DESTINATIONS OF DIVERSION CONCERN.
(a) Efforts With UAE- The Congress recognizes efforts taken by the United Arab Emirates, in coordination with the Secretary of Commerce, in response to international concerns over the diversion of dual-use items to prohibited destinations, parties, or uses, and urges the Secretary of Commerce to continue to work with the Government of the United Arab Emirates to ensure that such efforts are successful in stopping such diversion of dual-use items.
(b) Country of Diversion Concern- Not later than 60 days after the date of the enactment of this Act, the Secretary of Commerce shall amend the Export Administration Regulations by--
(1) creating a designation of a country as a `country of diversion concern' based on criteria that include, but are not limited to--
(A) volume of dual-use items transshipped through the country;
(B) volume and proportion of trade by the country with countries of concern for proliferation or terrorism;
(C) inadequate export or reexport controls in the country;
(D) demonstrated inability to control diversion activities in the country; and
(E) unwillingness or inability of the government of the country to cooperate with the United States in efforts to stop illegal transfers of dual-use items; and
(2) requiring the imposition of additional restrictions on exports of dual-use items to a country of diversion concern, including, but not limited to, some or all of the following:
(A) Implementing more stringent review policies.
(B) Imposing additional license restrictions.
(C) Requiring more frequent and more thorough end-user and end-use checks.
(c) Report- Not later than 90 days after the date of the enactment of this Act, the Secretary of Commerce shall submit to the appropriate congressional committees a report describing in detail past, current, and future efforts undertaken or planned by the Governments of the United Arab Emirates, Malaysia, and the United States to ensure that dual-use items are not diverted to countries, entities, or uses of concern for proliferation or terrorism from the territory or jurisdiction of Malaysia or the United Arab Emirates.
(d) Restrictions- Unless the Secretary of Commerce makes the certification described in subsection (e) with respect to a country listed in that subsection, the Secretary shall by regulation impose the following measures with respect to that country:
(1) The Secretary shall designate the country as a country of diversion concern under subsection (b).
(2) The Secretary shall impose additional restrictions on exports of dual-use items to the country, including restrictions on nuclear dual-use items.
(e) Certification- The certification under this subsection is a certification by the Secretary of Commerce to the appropriate congressional committees, not later than 180 days after the date of the enactment of this Act, and not later than the end of each of the next 5 1-year periods, with respect to each of the countries of the United Arab Emirates and Malaysia that the Government of such country--
(1) has adopted and is vigorously implementing effective national laws and regulations controlling the export and transshipment of dual-use items; and
(2) is taking all reasonable steps to ensure that dual-use items within its territory and jurisdiction are not diverted to countries, entities, or uses of concern for proliferation or terrorism.
(f) Subsequent Certifications- If the Secretary is unable to make a certification with respect to a country under subsection (e), the Secretary may at any time thereafter make such a certification with respect to that country.
(g) Authorization of Appropriations-
(1) IN GENERAL- There are authorized to appropriated for each fiscal year such sums as may be necessary to carry out this section.
(2) FUNDS FOR ADDITIONAL PERSONNEL- There are authorized to be appropriated for each fiscal year $10,000,000 for additional personnel in the Department of Commerce to conduct end-use checks and export control compliance in the United Arab Emirates and Malaysia.
SEC. 207. VALIDATED END-USER PROGRAM REVIEW.
(a) Audit- The Comptroller General shall conduct, and report to the appropriate congressional committees the results of, an audit of the Validated End-User program operated by the Department of Commerce. In doing so, the Comptroller General shall examine whether the national security of the United States is sufficiently protected by Validated End-User program procedures as they are designed and carried out, including those related to selecting, reviewing, and approving candidates for Validated End-User status, monitoring compliance by Validated End-Users with export control laws and regulations of the United States, and monitoring individual exports under the Validated End-User program.
(b) Restriction on Designation of Additional Validated End-Users- The Secretary of Commerce may not designate additional Validated End-Users until the end of the 6-month period beginning on the date on which the report on the audit required under subsection (a) is submitted to the appropriate congressional committees.
(c) Consultation Prior to Designation- The Secretary of Commerce shall consult with the appropriate congressional committees at least 30 days before designating any Validated End-User.
SEC. 208. 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 2009, 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 Director of National Intelligence 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 Secretary of Defense, in consultation with the Joint Chiefs of Staff and the Director of National Intelligence, 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 the Director of National Intelligence and the Director of the Federal Bureau of Investigation, 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 and the Inspector General of the Central Intelligence Agency 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- As used in this section, the term `countries and entities of concern' means--
(1) any country the government of which the Secretary of State has determined, for purposes of section 6(j) of the Export Administration Act of 1979 or other applicable law, to have repeatedly provided support for acts of international 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. 209. DEFINITION.
In this title, 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.
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