[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)]
[Notices]
[Pages 40820-40821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19246]
[[Page 40820]]
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DEPARTMENT OF COMMERCE
Bureau of Export Administration
[Docket Number 98-BXA-09]
Action Affecting Export Privileges; Export Materials, Inc.;
Decision and Order
In the Matter of: Export Materials, Inc., 3227 Greenbrier Drive,
No. 108, Stafford, Texas 77477, Respondent.
On August 12, 1998, the Office of Export Enforcement, Bureau of
Export Administration, United States Department of Commerce
(hereinafter ``BXA''), issued a charging letter initiating an
administrative proceeding against Export Materials, Inc. (hereinafter
``Export Materials''). The charging letter alleged that Export
Materials committed 112 violations of the Export Administration
Regulations (currently codified at 15 CFR Parts 730-774 (1999))
(hereinafter the ``Regulations''),\1\ issued pursuant to the Export
Administration Act of 1979, as amended (50 U.S.C.A. app. Secs. 2401-
2420 (1991 & Supp. 1999)) (hereinafter the ``Act'').\2\
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\1\ The alleged violations occurred during 1994, 1995, and 1996.
The Regulations governing the violations at issue are found in the
1994, 1995 and 1996 versions of the Code of Federal Regulations (15
CFR Parts 786-799 (1994 and 1995) and 15 CFR Parts 768-799 (1996),
as amended (61 FR 12714, March 25, 1996)) (hereinafter the ``former
Regulations''). The March 25, 1996 Federal Register publication
redesignated, but did not republish, the existing Regulations as 15
CFR Parts 768A-799A. In addition, the March 25, 1996 Federal
Register publication restructured and reorganized the Regulations,
designating them as an interim rule at 15 CFR Parts 730-774,
effective Aprl 24, 1996. The former Regulations define the
violations that BXA alleges occurred. The reorganized and
restructured Regulations establish the procedures that apply to this
matter.
\2\ The Act expired on August 20, 1994. Executive Order 12924 (3
CFR., 1994 Comp. 917 (1995)), extended by Presidential Notices of
August 15, 1995 (3 CFR., 1995 Comp. 501 (1996)), August 14, 1996 (3
CFR., 1996 Comp. 298 (1997), August 13, 1997 (3 CFR., 1997 Comp. 306
(1998)), and August 13, 1998 (3 CFR., 1998 Comp. 294 (1999)),
continued the Regulations in effect under the International
Emergency Economic Powers Act (currently codified at 50 U.S.C.A.
Secs. 1701-1706 (1991 & Supp. 1999)).
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Specifically, the charging letter alleged that, beginning in June
1994 and continuing through about July 1996, Export Materials conspired
with Thane-Coat, Inc., Jerry Vernon Ford, Preston John Engebretson, and
TIC Ltd. to bring about acts that constituted violations of the Act, or
any regulation, order, or license issued thereunder. The purpose of the
conspiracy was for Export Materials and the others to export U.S.-
origin commodities to Libya, a country subject to a comprehensive
economic sanctions program. To accomplish their purpose, the
conspirators devised and employed a scheme to export U.S.-origin items
from the United States through the United Kingdom to Libya, without
applying for and obtaining the export authorizations that the
conspirators knew or had reason to know were required under U.S. law,
including the Regulations. See 15 CFR Sec. 746.4, previously codified
at 15 CFR Sec. 785.7 of the former Regulations, and 15 CFR Sec. 772.1
of the former Regulations. BXA alleged that, by conspiring or acting in
concert with one or more persons in any manner or for any purpose to
bring about or to do any act that constitutes a violation of the Act,
or any regulation, order or license issued thereunder, Export Materials
violated Section 787.3(b) (redesignated as Section 787A.3(b) on March
25, 1996) of the former Regulations.
BXA alleged that, in furtherance of the conspiracy described above,
on 37 separate occasions between on or about February 12, 1995 and on
or about April 25, 1996, Export Materials, as a co-conspirator,
exported polyurethane (isocyanate/polyol) and polyether polyurethane
(hereinafter collectively referred to as ``pipe coating materials'')
from the United States to Libya, without obtaining from the Department
the validated export licenses that Export Materials knew or had reason
to know were required under Section 772.1(b) (redesignated as Section
772A.1(b) on March 25, 1996) of the former Regulations. BXA alleged
that, by exporting U.S.-origin commodities to any person or to any
destination in violation of or contrary to the provisions of the Act,
or any regulation, order, or license issued thereunder, Export
Materials, as a co-conspirator, violated Section 787.6 or Section
787A.6 of the former Regulations in connection with each shipment.
Specifically, BXA alleged that Export Materials, as a co-conspirator,
committed 32 violations of Section 787.6 and five violations of Section
787A.6 of the former Regulations, for a total of 37 violations.
BXA also alleged that, by selling, transferring, or forwarding
commodities exported or to be exported from the United States with
knowledge or reason to know that a violation of the Act, or any
regulation, order, or license issued thereunder occurred, was about to
occur, or was intended to occur with respect to the transactions,
Export Materials, as a co-conspirator, violated Section 787.4(a) or
Section 787A.4(a) of the former Regulations in connection with each
shipment. Specifically, BXA alleged that Export Materials committed 32
violations of Section 787.4(a) and five violations of Section 787A.4(a)
of the former Regulations, for a total of 37 violations.
Finally, BXA also alleged that, in furtherance of the conspiracy
described above and to effect the 37 exports described above, on 37
separate occasions between on or about February 12, 1995 and on or
about April 25, 1996, Export Materials used Shipper's Export
Declarations or Bills of Lading, export control documents as defined in
Section 770.2 (redesignated as Section 770A.2 on March 25, 1996) of the
former Regulations, on which it represented that the commodities
described thereon, pipe coating materials, were destined for ultimate
end-use in the United Kingdom. In fact, the pipe coating materials were
ultimately destined for Libya. BXA alleged that, by making false or
misleading statements of material fact directly or indirectly to a
United States agency in connection with the use of export control
documents to effect exports from the United States, Export Materials,
as a co-conspirator, violated Section 787.5(a) or Section 787A.5(a) of
the former Regulations in connection with each shipment. Specifically,
BXA alleged that Export Materials committed 32 violations of Section
787.5(a) and five violations of Section 787A.5(a) \3\ of the former
Regulations, for a total of 37 violations.
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\3\ BXA noted in its motion that, because of a typographical
error, the charging letter incorrectly cites to Section 785A.4(a)
and requested that the ALJ authorize an amendment to the charging
letter to provide the correct citation to the regulatory provision
that spells out the false statement violation, Section 787A.5(a).
The ALJ granted BXA's request and amended the charging letter to
correct the citation to Section 787A.5(a).
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Thus, BXA alleged that Export Materials committed one violation of
Section 787.3(b) (redesignated as Section 787A.3(b) on March 25, 1996);
32 violations of Section 787.4(a), five violations of Section
787A.4(a), 32 violations of Section 787.5(a); five violations of
Section 787A.5(a), 32 violations of Section 787.6, and five violations
of Section 787A.6, for a total of 112 violations of the former
Regulations.
BXA presented evidence that the charging letter was served on
Export Materials in accordance with Section 766.3 of the Regulations
but that Export Materials failed to answer it, as required by 766.7 of
the Regulations, and is therefore in default. Thus, pursuant to Section
766.7 of the Regulations, BXA moved that the Administrative Law Judge
(hereinafter the ALJ) find the facts to be as alleged in the charging
letter and render a Recommended Decision and Order.
[[Page 40821]]
Following BXA's motion, the ALJ issued a Recommended Decision and
Order in which he found the facts to be as alleged in the charging
letter, and concluded that those facts constitute one violation of
Section 787.3(b) (redesignated as Section 787A.3(b) March 25, 1996); 32
violations of Section 787.4(a); five violations of Section 787A.4(a);
32 violations of Section 787.5(a); five violations of Section
787A.5(a); violations of Section 787.6, and five violations of Section
787A.6, for a total of 112 violations of the former Regulations by
Export Materials, as BXA alleged. The ALJ also agreed with BXA's
recommendation that the appropriate penalty to be imposed for that
violation is a denial, for a period of 20 years, of all of Export
Materials's export privileges. As provided by Section 766.22 of the
Regulations, the Recommended Decision and Order has been referred to me
for final action.
Based on my review of the entire record, I affirm the findings of
fact and conclusions of law in the Recommended Decision and Order of
the ALJ.
Accordingly, it is therefore ordered,
First, that, for a period of 20 years from the date of this Order,
Export Materials Inc., 3727 Greenbrier Drive, No. 108, Stafford, Texas
77477, and all of its successors or assigns, officers, representatives,
agents, and employees when acting for or on behalf of Export Materials
may not, directly or indirectly, participate in any way in any
transaction involving any commodity, software or technology
(hereinafter collectively referred to as ``item'') exported or to be
exported from the United States that is subject to the Regulations, or
in any other activity subject to the Regulations, including, but not
limited to:
A. Applying for, obtaining, or using any license, License
Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying,
receiving, using, selling, delivering, storing, disposing of,
forwarding, transporting, financing, or otherwise servicing in any way,
any transaction involving any item exported or to be exported from the
United States that is subject to the Regulations, or in any other
activity subject to the Regulations; or
C. Benefiting in any way from any transaction involving any item
exported or to be exported from the United States that is subject to
the Regulations, or in any other activity subject to the Regulations.
Second, that no person may, directly or indirectly, do any of the
following:
A. Export or reexport to or on behalf of the denied person any item
subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted
acquisition by the denied person of the ownership, possession, or
control of any item subject to the Regulations that has been or will be
exported from the United States, including financing or other support
activities related to a transaction whereby the denied person acquires
or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition
or attempted acquisition from the denied person of any item subject to
the Regulations that has been exported from the United States;
D. Obtain from the denied person in the United States any item
subject to the Regulations with knowledge or reason to know that the
item will be, or is intended to be from the United States; or
E. Engage in any transaction to service any item subject to the
Regulations that has been or will be exported from the United States
and that is owned, possessed or controlled by the denied person, or
service any item, of whatever origin, that is owned, possessed or
controlled by the denied person if such service involves the use of any
item subject to the Regulations that has been or will be exported from
the United States. For purposes of this paragraph, servicing means
installation, maintenance, repair, modification or testing.
Third, that, after notice and opportunity for comment as provided
in Section 766.23 of the Regulations, any person, firm, corporation, or
business organization related to the denied person by affiliation,
ownership, control, or position of responsibility in the conduct of
trade or related services may also be made subject to the provisions of
this Order.
Fourth, that this Order does not prohibit any export, reexport, or
other transaction subject to the Regulations where the only items
involved that are subject to the Regulations are the foreign-produced
direct product of U.S.-origin technology.
Fifth, that this Order shall be served on Export Materials and on
BXA, and shall be published in the Federal Register.
This Order, which constitutes the final agency action in this
matter, is effective immediately.
Dated: July 12, 1999.
William A. Reinsch,
Under Secretary for Export Administration.
[FR Doc. 99-19246 Filed 7-27-99; 8;45 am]
BILLING CODE 3510-DT-M