[Federal Register Volume 64, Number 150 (Thursday, August 5, 1999)]
[Notices]
[Pages 42641-42651]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19095]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration
[Docket No.: 97-BXA-20]


Re: Aluminum Company of America

    On Friday, February 26, 1999, the Federal Register published the 
Decision and Order issued by the Under Secretary for Export 
Administration, Bureau of Export Administration, United States 
Department of Commerce (BXA) on February 19, 1999 (64 FR 9471). 
However, the Recommended Decision and Order of the Administration Law 
Judge (ALJ) was inadvertently not included with the Order of the Under 
Secretary. This notice is to hereby publish the December 21, 1998, 
Recommended and Decision Order of the ALJ.

    Dated: July 21, 1999.
William A. Reinsch,
Under Secretary for Export Administration.

Recommended Decision and Order

Appearance for Respondents: Edward L. Rubinoff, Esq, Samuel C. 
Straight, Esq., of Akin, Gump, Strauss, Hauer & Feld, L.L.P., 
Michael D. Scott, Aluminum Company of America.
Appearance for Agency: Jeffrey E.M. Joyner, Esq., Office of the 
Chief Counsel for Export Administration, U.S. Department of 
Commerce.

    Before: Hon. Parlen L. McKenna, United States Administrative Law 
Judge.

Preliminary Statement

    This is a civil penalty proceeding initiated pursuant to the 
legal authority contained under the Export Administration Act of 
1979, as amended (50. U.S.C.A. Secs. 2401-2420 (1991 & Supp. 1997) 
(hereinafter known as the ``ACT''). It was conducted in accordance 
with the procedural requirements as found in 15 CFR Parts 768-799 
(1991-1995). Those

[[Page 42642]]

Regulations were reorganized and restructured in 1997. The current 
Regulations are found at 15 CFR Parts 730-744 (1997) which govern 
these proceedings.
    On December 12, 1997, Aluminum Company of America (``ALCOA'') 
was issued a charging letter by the Office of Export Enforcement, 
Bureau of Export Administration, United States Department of 
Commerce (``BXA'') alleging that ALCOA committed 100 violations of 
the Export Administration Regulations (``EAR'') between 1991 and 
1995.\1\ The alleged violations are as follows:
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    \1\ Each of these alleged violations were the result of separate 
and distinct shipments over a desperate four and one-half year 
period and were not based upon a continuing violation concept. The 
alleged violations are defined in the charging letter with reference 
to the EAR that were in effect at the time of the alleged incidents 
(See 15 CFR Parts 768-799 (1991-1995). These Regulations were issued 
pursuant to the Export Administration Act of 1979 and define the 
violations that BXA alleges occurred and are referred to hereinafter 
as the former regulations. Since that time, the regulations have 
been reorganized and restructured; the restructured regulations 
establish the procedures that apply to this matter. The Act expired 
on August 20, 1994. Executive Order 12924 (3 F.R.R. 1994 Comp. 917 
(1995)), August 14, 1996 (3 CFR 1996 Comp. 298 (1997)), and August 
13, 1997 (62 FR 43629, August 15, 1997), continued the Regulations 
in effect under the International Emergency Economic Powers Act 
(currently codified at 50 U.S.C.A. Secs. 1701-1706 (1991 and Supp. 
1998)).
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    CHARGES 1-50: On 50 separate occasions between June 14, 1991, 
and December 7, 1995, ALCOA exported potassium fluoride and sodium 
fluoride from the United States to Jamaica and Suriniam, without 
obtaining from BXA the validated export licenses required by Section 
772.1(b) of the former regulations. 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, ALCOA violated Section 7878.6 of the 
former Regulations on 50 separate occasions, for a total of 50 
violations.
    CHARGES 51-100: In connection with the exports described in 
Charges 1-50 above, on 50 separate occasions between June 14, 1991, 
and December 7, 1995, ALCOA used Shipper's Export Declarations, as 
defined in Section 770.2 of the former regulations, on which it 
represented, potassium fluoride and sodium fluoride, qualified for 
exports from the United States to Jamaica and Surinam under general 
license G-DEST. These chemicals required a validated license for 
export from the United States to both of those destinations. 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, 
ALCOA violated Section 787.5(a) of the former Regulations in 
connection with each of the 50 exports, for a total of 50 additional 
violations.
    The maximum civil penalty assessment for each violation is 
$10,000 (See 15 CFR Sec. 764.3(a) (1)). In addition to the penalty 
assessment, a denial of export privileges could be imposed (see 
Section 764.3(a) (2)) and the exclusion from practice (See Section 
764.3(a) (3)). BXA proposed a civil penalty assessment of $7,500 for 
each of the 50 violations of Section 787.6 of the former Regulations 
and $7,500 for each of the 50 violations of Section 787.5(a) of the 
former Regulations, for a total civil penalty of $750.000.
    On February 9, 1998, a telephonic pre-hearing conference was 
held which included both parties and the undersigned. As a result of 
that conference, it was agreed by the parties that no hearing would 
be required since the facts of the case were not in dispute. 
Accordingly, a schedule was established for the submission of joint 
stipulations of fact and the filing of initial and reply briefs. 
Joint Stipulations were filed on March 27, 1998. ALCOA had 
previously filed its Answer to the Charging Letter on January 20, 
1998. BXA Replied to ALCOA's Answer on May 1, 1998. On May 7, 1998, 
the undersigned issued on order permitting ALCOA to submit a 
response to BXA's Reply which was filed on May 13, 1998. In that 
Reply, Counsel for ALCOA took exception to BXA's assertion that the 
parties agreed during the February 9, 1998 prehearing conference 
that this matter could be resolved without a hearing because the 
facts were not in dispute. Subsequently, another telephonic 
conference was heard between the parties and the undersigned. At 
that time, after listening to the arguments of counsel for ALCOA, it 
became clear to me that Mr. Rubinoff was only asking for Oral 
Argument and not an evidentiary hearing. Given the complex nature of 
this case and my desire to insure that ALCOA's due process rights 
were fully protected, I granted Oral Argument. Oral Argument in this 
matter was held in Washington, DC on Monday, July 20, 1998. A 
transcript of the Oral Argument was released thereafter and the 
matter is now ripe for decision.
    The findings of fact and conclusions of law which follow are 
prepared upon my analysis of the entire record, and applicable 
regulations, statutes, and case law. Each submission of the parties, 
although perhaps not specifically mentioned in this decision, has 
been carefully reviewed and given thoughtful consideration.\1\
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    \1\ A list of the record evidence in this case is set forth in 
Appendix A, attached hereto.
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Law and Regulation \2\

    The United States, like many other industrialized nations, 
restricts the export of goods and services for reasons of national 
security. The United States Congress, under the President's 
signature, statutorily defined the penalties for violating such 
restrictions in Title 50 of the United States Code--``War and 
National Defense'' as follows:
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    \2\ Because an evidentiary hearing was not held in this matter, 
a record was not developed which included exhibits that contained 
copies of each of the applicable laws and regulations. In order to 
aid the readers of this opinion, all applicable laws and regulations 
are set forth herein.
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Sec. 2410  Violations

(a) In general

    Except as provided in subsection (b) of this section, whoever 
knowingly violates or conspires to or attempts to violate any 
provision of this Act [section 2401 to 2420 of this Appendix] or any 
regulation, order, or license issued thereunder shall be fined not 
more than five times the value of the exports involved or $50,000, 
whichever is greater, or imprisoned not more than 5 years, or both.

(b) Willful violations

    (1) Whoever willfully violates or conspires to or attempts to 
violate any provision of this Act [sections 2401 to 2420 of this 
Appendix] for any regulation, order, or license issued thereunder, 
with knowledge that the exports involved will be used for the 
benefit of, or that the destination or intended destination of the 
goods or technology involved is, any controlled country or any 
country to which exports are controlled for foreign policy 
purposes--
    (A) Except in the case of an individual, shall be fined not more 
than five times the value of the exports involved or $1,000,000, 
whichever is greater; and
    (B) In the case of an individual, shall be fined not more than 
$250,000, or imprisoned not more than 10 years, or both.
    (2) Any person who is issued a validated license under this Act 
[sections 2401 to 2420 of this Appendix] for the export of any good 
or technology to a controlled country and who, with knowledge that 
such a good or technology is being used by such controlled country 
for military or intelligence gathering purposes contrary to the 
conditions under which the license was issued, willfully fails to 
report such use to the Secretary of Defense--
    (A) Except in the case of an individual, shall be fined not more 
than five times the value of the exports involved or $1,000,000, 
whichever is greater; and
    (B) In the case of an individual, shall be fined not more that 
$250,000, or imprisoned not more than 5 years, or both.
    (3) Any person who possesses any goods or technology--
    (A) With the intent to export such goods or technology in 
violation of an export control imposed under section 5 or 6 of this 
Act [section 2404 or 2405 of this Appendix] or any regulation, 
order, or license issued with respect to such control, or
    (B) Knowing or reason to believe that the goods or technology 
would be so exported,
    Shall, in the case of a violation of an export control imposed 
under section 5 [section 2404 of this Appendix] (or any regulation, 
order, or license issued with respect to such control), be subject 
to the penalties set forth in paragraph (1) of this subsection and 
shall, in the case of a violation of an export control imposed under 
section 6 [section 2405 of this Appendix] (or any regulation, order, 
or license issued with respect to such control), be subject to the 
penalties set forth in subsection (a).
    (4) Any person who takes any action with the intent to evade the 
provisions of this Act [sections 2401 to 2420 of this Appendix] or 
any regulation, order, or license issued under this Act [sections 
2401 to 2420 of this Appendix] shall be subject to the penalties set 
for in subsection (a), except that in the case of an evasion of an 
export control imposed under section 5 or 6 of this Act [section 
2404 or 2405 of this Appendix] (or

[[Page 42643]]

any regulation, order, or license issued with respect to such 
control), such person shall be subject to the penalties set forth in 
paragraph (1) of this subsection.
    (5) Nothing in this subsection or subsection (a) shall limit the 
power of the Secretary to define by regulations violations under 
this Act [sections 2401 to 2420 of this Appendix].

(c) Civil penalties; administrative sanctions

    (1) The Secretary (and officers and employees of the Department 
of Commerce specifically designated by the Secretary) may impose a 
civil penalty not to exceed $10,000 for each violation of this Act 
[sections 2401 to 2420 of this Appendix] or any regulation, order or 
license issued under this Act [sections 2401 to 2420 of this 
Appendix], either in addition to or in lieu of any other liability 
or penalty which may be imposed, except that the civil penalty for 
each such violation involving national security controls imposed 
under section 5 of this Act [section 2404 of this Appendix] or 
controls imposed on the export of defense articles and defense 
services under section 38 of the Arms Export Control Act [22 
U.S.C.A. Sec. 2778] may not exceed $100,000.
    (2)(A) The authority under this Act [sections 2401 to 2420 of 
this Appendix] to suspend or revoke the authority of any United 
States person to export goods or technology may be used with respect 
to any violation of the regulations issued pursuant to section 8(a) 
of the Act [section 2407(a) of the Appendix].
    (B) Any administrative sanction (including any civil penalty or 
any suspension or revocation of authority to export) imposed under 
this Act [sections 2401 to 2420 of this Appendix] for a violation of 
the regulations issued pursuant to section 8(a) of this Act [section 
2407(a) of this Appendix] may be imposed only after notice and 
opportunity for an agency hearing on the record in accordance with 
sections 554 through 557 of title 5, United States Code [5 U.S.C.A. 
Secs. 554 to 557].
    (C) Any charging letter or other document initiating 
administrative proceedings for the imposition of sanctions for 
violations of the regulations issued pursuant to section 8(a) of the 
Act [section 2407(a) of the Appendix] shall be made available for 
public inspection and copying.
    (3) An exception may not be made to any order issued under this 
Act [sections 2401 to 2420 of this Appendix] which revokes the 
authority of a United States person to export goods or technology 
unless the Committee on Foreign Affairs of the House of 
Representatives and the Committee on Banking, Housing, and Urban 
Affairs of the Senate are first consulted concerning the exception.
    (4) The President may by regulation provide standards for 
establishing levels of civil penalty provided in this subsection 
based upon the seriousness of the violation, the culpability of the 
violator, and the violator's record of cooperation with the 
Government in disclosing the violation.

United States Department of Commerce Regulations

15 CFR 787--Enforcement

Sec. 787.1  Sanctions

    (a) Criminal (1) Violations of Export Administrative Act (i) 
General. Except as provided in paragraph (a)(1)(ii) of this section, 
whoever knowingly violates or conspires to or attempts to violate 
the Export Administration Act (``the Act'') or any regulation, 
order, or license issued under the Act is punishable for each 
violation by a fine of not more than five times the value of the 
exports involved or $50,000, whichever is greater, or by 
imprisonment for not more than five years, or both.
    (ii) Willful violations. (A) Whoever willfully violates or 
conspires to or attempts to violate any provision of this Act or any 
regulation, order, license issued thereunder, with knowledge that 
the exports involved will be used for the benefit of or that the 
destination or intended destination of the goods or technology 
involved is any controlled country or any country to which exports 
are controlled for foreign policy purposes, except in the case of an 
individual, shall be fined not more than five times the value of the 
export involved or $1,000,000 whichever is greater; and in the case 
of an individual shall be fined not more than $250,000, or 
imprisoned not more than 10 years, or both.
    (B) Any person who is issued a validated license under this Act 
for the export of any goods or technology to a controlled country 
and who with the knowledge that such export is being used by such 
controlled country for military or intelligence gathering purposes 
contrary to the conditions under which the license was issued, 
willfully fails to report such use to the Secretary of Defense, 
except in the case of an individual, shall be fined not more than 
five times the value of the exports involved or $1,000,000, 
whichever is greater; and in the case of an individual, shall be 
fined not more than $250,000, or imprisoned not more than five 
years, or both.
    (C) Any person who possesses any goods or technology with the 
intent to export such goods or technology in violation of an export 
control imposed under section 5 or 6 of the Act or any regulation, 
order, or license issued with respect to such control, or knowing or 
having reason to believe that the goods or technology would be so 
exported, shall, in the case of a violation of an export control 
imposed under section 5 of the Act (or any regulation, order, or 
license issued with respect to such control), be subject to the 
penalties set forth in paragraph (a)(1)(ii)(A) of this section and 
shall, in the case of a violation of an export control imposed under 
section 6 of the Act (or any regulation, order, or license issued 
with respect to such control), be subject to the penalties set forth 
in paragraph (a)(1)(I) of this section.
    (D) Any person who takes any action with the intent to evade the 
provisions of this Act or any regulation, order, or license issued 
under this Act shall be subject to the penalties set forth in 
paragraph (a)(1)(i) of this section, except that in the case of an 
evasion of an export control imposed under section 5 or 6 of the Act 
(or any regulation, order, or license issued with respect to such 
control), such person shall be subject to the penalties set forth in 
paragraph (a)(1)(ii)(A) of this section.
    (2) Violations of False Statements Act. The submission of false 
or misleading information or the concealment of material facts, 
whether in connection with license applications, boycott reports, 
Shipper's Export Declarations, Investigations, compliance 
proceedings, appeals, or otherwise, is also punishable by a fine of 
not more than $10,000 or by imprisonment for not more than five 
years, or both, for each violation (18 U.S.C. 1001).
    (b) Administrative \1\--(1) Denial of export privileges, Whoever 
violates any law, regulation, order, or license relating to export 
controls or restrictive trade practices and boycotts is also subject 
to administrative action which may result in suspension, revocation, 
or denial of export privileges conferred under the Export 
Administration Act (See Sec. 788.3 et seq).
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    \1\ Violations of the Act or regulations, or any order or 
license issued under the Act, may result in the imposition of 
administrative sanctions, and also or alternatively of a fine or 
imprisonment as described in paragraph (a) of this section, seizure 
or forfeiture of property under section 11(g) of this Act or 22 
U.S.C. 401, or any other liability or penalty imposed by law. The 
U.S. Department of Commerce may compromise and settle any 
administrative proceeding brought with respect to such violations.
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    (2) Exclusion from practice. Whoever violates any law, 
regulation, order, or license relating to export controls or 
restrictive trade practices and boycotts is further subject to 
administrative action which may result in exclusion from practice 
before the Bureau of Export Administration (See Sec. 790.2(a)).
    (3) Civil penalty. A civil penalty may be imposed for each 
violation of the Export Administration Act or any regulation, order 
or license issued under the Act either in addition to, or instead 
of, any other liability or penalty which may be imposed. The civil 
penalty may not exceed $10,000 for each violation except that the 
civil penalty for each violation involving national security 
controls imposed under section 5 of the Act may not exceed $100,000. 
The payment of such penalty may be deferred or suspended, in whole 
or in part, for a period of time that may exceed one year. Deferral 
or suspension shall not operate as a bar in the collection of the 
penalty in the event that the conditions of the suspension or 
deferral are not fulfilled. When any person fails to pay a penalty 
imposed under this paragraph (b)(3), civil action for the recovery 
of the penalty may be brought in the name of the United States, in 
which action the court shall determine de novo all issues necessary 
to establish liability. Once a penalty has been paid, no action for 
its refund may be maintained in any court.\1\
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    \1\ The U.S. Department of Commerce may refund the penalty at 
any time within two years of payment if it is found that there was a 
material error of fact or of law.
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    (4) Seizure. Commodities or technical data which have been, are 
being, or are intended to be, exported or shipped from or taken out 
of the United States in violation of the Export

[[Page 42644]]

Administration Act or of any regulation, order, or license issued 
the Act are subject to being seized and detained, as are the 
vessels, vehicles, and aircraft carrying such commodities or 
technical data are subject to forfeiture (50 U.S.C. app. 2411(g)) 
(22 U.S.C. 401, see Sec. 786.8(b)(6)).

15 CFR 772.1(b)--Exports Requiring Validated Licenses

    No commodity or technical data subject to the Export 
Administration Regulations may be exported to any destination 
without a validated license issued by the Office of Export 
Licensing, except where the export is authorized by a general 
license or other authorization by the Office of Export Licensing.

15 CFR 787.5--Misrepresentation and Concealment of Facts; Evasion

    (A)(1) Misrepresentation and Concealment. No person may make any 
false or misleading representation, statement, or certification, or 
falsify or conceal any material fact, whether directly to the Bureau 
of Export Administration, any Customs Office, or any official of any 
other United States agency, or indirectly to any of the foregoing 
through any other person or foreign government agency or official * 
* *

15 CFR 787.6--Export, Diversion, Reexport, Transshipment

    Except as specifically authorized by the Office of Export 
Licensing, in consultation with the Office of Export Enforcement, no 
person may export, dispose of, divert, direct, mail or otherwise 
ship, transship, or reexport commodities or technical data to any 
person or destination or for any use in violation of or contrary to 
the terms, provisions, or conditions of any export control document, 
any prior representation, any form of notification a prohibition 
against such action, or any provision of the Export Administration 
Act or any regulation, order, or license issued under the Act.

15 CFR 774.1--Reexport of U.S.-Made Equipment

    Unless the reexport of a commodity previously exported from the 
United States has been specifically authorized in writing by the 
Office of Export, Licensing prior to its reexport * * *, no person 
in a foreign country (including Canada) or in the United States may;
    (a) Reexport such commodity * * * from the authorized 
country(ies) of ultimate destination * * *.

Joint Stipulations of Fact

    Aluminum Company of America (ALCOA) and the Office of Export 
Enforcement, Bureau of Export Administration, United States 
Department of Commerce (BXA) stipulated to the following facts:
    1. ALCOA is a corporation organized under the laws of 
Pennsylvania with its principal offices located at 425 Sixth Avenue, 
ALCOA Building, Pittsburgh, Pennsylvania 15219.
    2. ALCOA is one of the world's leading producers of aluminum and 
a primary participant in all segments of the industry mining, 
refining, smelting, fabricating, and recycling.
    3. ALCOA is one of the world's largest producers of alumina, 
which is both an intermediate product in the production of aluminum 
and an important chemical product in itself.
    4. During the period June 14, 1991 through December 7, 1995 
(``the review period''), ALCOA, through its subsidiary ALCOA 
Minerals of Jamaica (``AMJ''), and the Government of Jamaica, 
through its subsidiary Clarendon Alumina Productions (``CAP''), 
owned an alumina refinery in Clarendon Parish, Jamaica. CAP and AMJ 
each owned a 50% interest in the alumina refinery.
    5. Jamalco is a joint operation, located in Kingston, Jamaica, 
governed by a Joint Venture Agreement between AMJ and CAP dated 
March 1, 1988. The joint venture is governed by an eight member 
Executive Committee, four members each from CAP and AMJ. Article 5 
of the Joint Venture Agreement provides that the Executive Committee 
will appoint a manager who will have full rights and 
responsibilities to manage and control the day to day conduct of the 
operations of the joint venture. Article 5 further requires that AMJ 
be appointed as the Manager. AMJ has acted as Manager at all times 
since 1988.
    6. Prior to December 30, 1994, ALCOA operated mining, refining, 
and smelting operations in Suriname (Suralco). As of December 30, 
1994, all of ALCOA's bauxite, alumina and alumina-based chemicals 
businesses, including Suralco, were restructured and combined into 
ALCOA Alumina and Chemicals, L.L.C. Subsequently, Suralco has been 
owned 98% by ALCOA Alumina and Chemicals, L.L.C., and 2% by ALCOA 
Caribbean Alumina Holdings, L.L.C., each of which is owned 60% by 
ALCOA and 40% by WMC Limited, an Australian corporation.
    7. Since 1984, the alumina refinery in Paranarn, Suriname has 
been co-owned by Suralco and an affiliate of Billiton N.V., a Dutch 
corporation, and has been operated pursuant to a Refining Joint 
Venture Operating Agreement dated March 14, 1984, as amended. In 
accordance with Article 5.02 of the Refining Joint Venture Operating 
Agreement, Suralco was in 1984 appointed, and has since then acted 
as Manager of the Paranam refinery.
    8. During the review period, the refineries in Jamaica and 
Suriname used potassium fluoride as the key reagent for refining 
alumina from bauxite, the raw ore for aluminum.
    9. During the review period, the water treatment facility in 
Suriname used sodium fluoride to treat drinking water. Suralco's 
water treatment facility was located in the powerhouse which 
supplied electricity to and was located at Suralco's bauxite mine in 
Moengo, Suriname. In March 1994, Suralco sold its Moengo powerhouse 
and water treatment facility to Energie Bedrijven Suriname (EBS), a 
utility company owned by the government of Suriname. In conjunction 
with the sale of the powerhouse and water treatment facility, 
Suralco agreed to continue operating the water treatment facility 
for one year. Consequently, Suralco personnel were on-site at the 
water treatment facility at all times when ALCOA's Export Supply 
Division shipped sodium fluoride to Suralco. Also as part of the 
powerhouse sale agreement, Suralco agreed to provide the chemicals 
used in the water treatment facility for a period of two years 
following the sale.
    10. During the review period, logistical support for Jamalco and 
Suralco was provided by ALCOA's Export Supply Division (``ESD''), 
located in New Orleans, Louisiana.
    11. During the review period, Jamalco and Suralco purchased 
certain items from a scheduled buying list, while other times were 
purchased only as required in specific instances.
    12. During the review period, ESD received requisitions from 
Jamalco and Suralco, located suppliers, purchased products, and 
shipped the requested items to Jamalco and Suralco.
    13. During the review period, ESD prepared all export and 
shipping documentation for shipments to Jamalco and Suralco.
    14. ESD was responsible for determining the applicable export 
licensing requirements for items ordered by Jamalco and Suralco 
during the review period.
    15. For each shipment of specially-ordered items to Jamalco and 
Suralco during the review period, the export compliance procedures 
in place provided that ESD was to review the Export Administration 
Regulations to determine the applicable export licensing 
requirement.
    16. On several occasions during the review period, ESD obtained 
validated licenses from BXA to export specially-ordered items, such 
as computers, to Jamalco and Suralco.
    17. By contrast, once ESD made an initial determination of the 
export licensing requirements for items on the scheduled buying 
list, ESD did not thereafter review the Export Administration 
Regulations for each subsequent shipment of ``scheduled buying 
lists'' goods to Jamalco and Suralco.
    18. Both potassium fluoride and sodium fluoride were on ESD's 
scheduled buying list for Jamalco and Suralco both before and during 
the review period.
    19. Both potassium fluoride and sodium fluoride were routinely 
purchased against periodic requisitions regularly submitted by 
Jamalco and Suralco both before and during the review period.
    20. Under the export compliance procedures in place during the 
review period, ESD did not perform a complete export compliance 
check for each shipment of potassium fluoride and sodium fluoride to 
Jamalco and Suralco.
    21. Prior to March 13, 1991, exporters were not required to 
obtain from BXA a validated license to export potassium fluoride and 
sodium fluoride from the United States to Jamalco and Suralco.
    22. Prior to March 13, 1991, ESD lawfully exported potassium 
fluoride and sodium fluoride on a regular basis to Jamalco and 
Suralco under general license authority.
    23. On March 13, 1991, through a notice published in the Federal 
Register, entitled Expansion of Foreign policy Controls on Chemical 
Weapons Precursors (56 Fed. Reg 10756), the Department of Commerce

[[Page 42645]]

amended the Commerce Control List of the Export Administration 
Regulations (currently codified at 15 C.F.R. Parts 730-774 
(1997)),\2\ ``by expanding the number of countries for which a 
validated license is required for 39 precursor chemicals. Under the 
rule, the 39 chemicals will require a validated license for export 
to all destinations except NATO member countries, Australia, 
Austria, Ireland, Japan, New Zealand, and Switzerland.'' Potassium 
fluoride and sodium fluoride were included on the list of 39 
chemicals subject to the regulatory change.
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    \2\ At the time BXA promulgated this rule, the Export 
Administration Regulations were found at 15 CFR Parts 768-799 
(1991). Since that time, the Regulations have been reorganized and 
restructured.
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    24. As potassium fluoride and sodium fluoride were routinely 
ordered by Jamalco and Suralco, ESD failed to attach any 
significance to the March 1991 amendment, missed the regulatory 
change, and continued to export these commodities to the refineries 
during review period without first obtaining from BXA the validated 
export license required under the Regulations.
    25. During the review period, ESD made 47 shipments of potassium 
fluoride to Jamalco and Suralco without validated license. The total 
value of these shipments was $104,637.00.
    26. During the review period, ESD made three shipments of sodium 
fluoride to Suralco without validated licenses. The total value of 
these shipments was $6.603.00.
    27. During the review period, ESD used Shippers Export 
Declarations (``SEDs''), an export control document as defined in 
the Export Administration Regulations, to effect the export of 
potassium fluoride and sodium fluoride from the United States to 
Jamaica and Suriname.
    28. With eight exceptions, ALCOA identified the chemicals 
shipped to Jamalco and Suralco on the SEDs by their specific 
nomenclature.
    29. As a result of missing the March 1991 regulatory amendment, 
ALCOA, during the review period, indicated on each SED used for the 
export of the chemicals from the United States to Jamaica and 
Suriname that the goods qualified for export from the United States 
to Jamaica and Suriname under general license G-DEST, when in fact 
the chemicals required a validated license for export from the 
United States to both destinations.
    30. ESD had no intent to make any false or misleading statements 
on the SEDs accompanying the shipments of potassium fluoride and 
sodium fluoride to Jamalco and Suralco during the review period.
    31. The exports of potassium fluoride and sodium fluoride during 
the review period were made to countries that are not suspected of 
engaging in illicit weapons development.
    32. All of the potassium fluoride and sodium fluoride shipped by 
ESD to Jamalco and Suralco during the review period was completely 
consumed on the premises of the refinery and water treatment 
facilities in Jamaica and Suriname.
    33. Once BXA informed ALCOA that ESD had shipped potassium 
fluoride and sodium fluoride to Jamaica and Suriname during the 
review period without the required validated export license, ALCOA 
cooperated fully with BXA in its investigation.
    34. After BXA brought to ALCOA's attention the regulatory change 
imposing a validated licensing requirements on exports of potassium 
fluoride and sodium fluoride to Jamaica and Suriname, ALCOA applied 
for, and BXA granted, validated license for shipments of potassium 
fluoride to Jamaica and Suriname made after the review period.
    35. During the review period, there was a presumption of 
approval, on a case-by-case basis, for license to export potassium 
fluoride and sodium fluoride from the United States to Jamaica and 
Suriname.
    36. Prior to the initiation of the investigation by BXA, ALCOA 
retained outside counsel and experts to assist in improving and 
strengthening ALCOA's export compliance procedures.
    37. As a result of these efforts, ALCOA developed and 
implemented a new export compliance program that includes an export 
compliance manual (with specific procedures and policies applicable 
to all exports by ALCOA), training seminars, instructional videos, 
and other measures.
    38. 15 CFR 787.4(a) provides:
    (a) No person may order, buy, receive, conceal, store, use, 
sell, loan, dispose of, transfer, transport, finance, forward, or 
otherwise service, in whole or in part, any commodity or technical 
data exported or to be exported from the United States or which is 
otherwise subject to the Export Administration Regulations, with 
knowledge or reason to know that a violation of the Export 
Administration Act or any regulation order, or license has occurred, 
is about to occur, or is intended to occur with respect to any 
transaction.
    The parties stipulated at the Oral Argument that this regulation 
does not have a strict liability trigger since it contains a 
knowledge element (TR-33).
    39. 15 CFR Sec. 787.4(b) provides:
    (b) No person may possess any commodities or technical data, 
controlled for national security or foreign policy reasons under 
section 5 or 6 of the Act:
    (1) With the intent to export such commodities or technical data 
in violation of the Export Administration Act or any regulation, 
order, license or other authorization under the Act, or;
    (2) Knowing or having reason to believe that the commodities or 
technical data would be so exported.
    The parties stipulated at the Oral Argument that this regulation 
does not have a strict liability trigger since it contains a 
knowledge or intent element (TR-33).
    40. 15 CFR 787.5(b) provides:
    (b) Evasion. No person may engage in any transaction or take any 
other action, either independently or through any other person, with 
intent to evade the provision of the Act, or any regulation, order, 
license or other authorization issued under the Act.
    The parties stipulated at the Oral Argument that this regulation 
does not have a strict liability trigger since it contains a 
knowledge or intent element (TR-33).

Findings of Fact \1\
---------------------------------------------------------------------------

    \1\ Neither Respondent nor Agency submitted Proposed Findings of 
Fact. As a result, no rulings are made thereon.
---------------------------------------------------------------------------

    1. The Respondent and BXA entered into forty (40) Joint 
Stipulations of Fact which are set forth above. Each and every one 
of those Joint Stipulations of Fact are hereby accepted by the 
undersigned and adopted as a Finding of Fact in this proceeding.
    2. Aluminum Company of America (ALCOA), the Respondent, was at 
all times herein a Corporation authorized to and doing business in 
the United States. As such, the Respondent clearly fails within the 
definition of ``person'' set forth in 15 CFR 770.2; currently 
codified at 15 Code of Federal Regulations, Parts 730-774 (1997), 
issued the Regulations 768-799) hereinafter known as the former 
Regulations (see Joint Stipulations of Fact Nos. 1, 2, and 3).
    3. Potassium fluoride is the key reagent used during the 
refining of alumina from its bauxite ore. Bauxite is crushed and 
mixed with a caustic soda solution. This solution dissolves the 
alumina present in the bauxite. Potassium fluoride is used to 
determine the level of dissolved alumina in the caustic solution. 
Only a small amount of potassium fluoride is used per metric ton of 
bauxite processed (see Respondent's Answer dated January 20, 1998, 
page 2).
    4. Sodium fluoride was used by the ALCOA facility in Suriname to 
treat drinking water for people living in the Suralco refinery area. 
All of the sodium fluoride exported from the United States to 
Suriname was used by this ALCOA subsidiary facility and was fully 
consumed in the water treatment process. ALCOA sold the water 
treatment facility to the government of Suriname in July 1994. 
Therefore, Suralco no longer uses any sodium fluoride (See 
Respondent's Answer dated January 20, 1998, page 3).
    5. All of the potassium fluoride and Sodium Fluoride exports at 
issue in this case were sent to ALCOA's refinery operations in 
Jamaica (Jamalco) and Suriname (Suralco). These refineries are 
located near bauxite mines. Bauxite is the raw ore for aluminum. The 
refineries process the bauxite so as to extract aluminum oride 
(alumina), which becomes the basic feedstock for ALCOA's metal and 
chemical businesses. Both refineries were directly controlled by 
ALCOA during the period June 14, 1991 through December 7, 1995 (See 
Respondent's Answer dated January 20, 1998, page 2).
    6. Prior to March 13, 1991, validated licenses were not required 
under the EAR for exports of potassium fluoride and sodium fluoride 
either to Jamaica or Suriname. Therefore, prior to that date, ESD 
had lawfully exported these products to the refineries under the EAR 
general license authority. However, on March 13, 1991, the 
Department of Commerce amended the Commerce Control List of the EAR 
by expanding the number of countries for which a validated license 
was required for exports of thirty-nine (39) commodities.
    7. Logistical support for the ALCOA refineries in Jamaica and 
Suriname was provided by ALCOA's Export Supply

[[Page 42646]]

Division (``ESD''), located in New Orleans, LA. Through ESD, the 
refineries regularly purchased certain items from a scheduled buying 
list, while other items were purchased only as required in specific 
instances. In this capacity, ESD purchased everything from office 
surplus and repaired parts to replacements for equipment and 
operating supplies. ESD received requisitions from the refineries, 
located U.S. suppliers for the requested product, purchased the 
products, and shipped them to the refineries. ESD prepared all 
export and shipping documentation for shipments to the refineries 
(See Respondent's Answer dated January 20, 1998, page 3).
    8. ESD's sole function was to support the Jamalco and Suralco 
refineries. It annually handled approximately 25,000 transactions 
involving 100,000 different items, with a total value of over $125 
million. Before, during and after the time periods in question, ESD 
was aware of the EAR, and sought and obtained validated export 
licenses for a variety of products, including computer systems and 
related equipment (See Respondent's Answer dated January 20, 1998, 
page 3).
    9. Both potassium fluoride and sodium fluoride were ESD's 
scheduled buying list for the refineries both before and during the 
time periods in question and were, in fact, purchased against 
requisitions submitted by Jamalco and Suralco. Indeed, during the 
time period in question, ESD made forty-seven (47) shipments of 
potassium fluoride to the Jamalco and Suralco refineries, and three 
(3) shipments of sodium fluoride to the Suralco refinery (See 
Respondent's Answer dated January 20, 1998, page 3).
    10. On 50 separate occasions between June 14, 1991, and December 
7, 1995, ALCOA exported potassium fluoride and sodium fluoride from 
the United States to Jamaica and Surinam, without obtaining from BXA 
the validated export licenses required by Section 772.1(b) of the 
former regulations. By exporting U.S.--origin commodities to any 
person or to any destination as set forth in Section 772.1(b) of the 
former regulations, ALCOA violated Section 787.6 of the former 
regulations on 50 separate occasions, for a total of 50 separate 
violations (See Respondent's plea of ``Admit'' to charges 1-50 in 
its January 1998 Answer, page 5).
    11. On 50 separate occasions between June 14, 1991, and December 
7, 1995. ALCOA used Shipper's Export Declarations as defined in 
Section 770.2 of the former Regulations, on which it represented 
that potassium fluoride and sodium fluoride, qualified for export 
from the United States to Jamaica and Surinam under general license 
G-DEST. Contrary to ALCOA's Shippers Export Declarations, the export 
of potassium fluoride and sodium fluoride to Jamaica and Surinam 
required a validated license to both of those destinations and did 
not qualify for export under general license G-DEST (See 
Respondent's plea of ``Admit'' to finding of Fact No. 9, above; and 
Joint Stipulation of Fact No. 29, above).
    12. Based on the Respondent's admitted actions set forth in 
Finding of Fact No. 10 above, ALCOA violated 15 CFR 787.5(a) of the 
former regulations by making ``false or misleading 
representations[s], statement[s], or certification[s]'' of material 
fact to a United States agency in connection with the use of export 
control documents required under 15 CFR 772.1(b) to effectuate the 
export of potassium fluoride and sodium fluoride from the United 
States to Jamaica and Suriname (See, legal discussion below).

Conclusions of Law

    1. That 15 CFR 787.5(a) of the former regulations does not 
require ``knowledge'' or ``intent'' in order for a finding that the 
Respondent violated said regulation. Liability and administrative 
sanctions are imposed on a strict liability basis once the 
Respondent commits the proscribed act;
    2. That the Respondent, Aluminum Company of America, committed 
50 violations of 15 CFR 787.5(a) during the period from June 14, 
1991 through December 7, 1995 when potassium fluoride and sodium 
fluoride were exported from the United States to Jamaica and 
Suriname without obtaining validated export licenses required by 15 
CFR 772.1(b);
    3. That the Respondent, Aluminum Company of America, committed 
50 violations of 15 CFR 787.6 during the period of June 14, 1991 
through December 7, 1995 by making false and misleading statements 
of material fact to a United States agency in connection with the 
use of export control documents;
    4. That based upon the entire record in this matter, the 
appropriate civil penalty for each of the 100 violations is $10,000 
for a total of $1,000,000. The record does not support the 
suspension of part of the civil penalty assessment on probation.

Discussion

    Based upon the stipulations of the parties, there are only two 
questions to be answered in this proceeding:
    (I) Is ``knowledge'' or ``intent'' a necessary element of a 
violation of Sec. 787.5(a) of the former regulations? and
    (II) What is the appropriate level of sanctions in this case?

I. SECTION 787.5(a) OF THE FORMER REGULATIONS DOES NOT REQUIRE 
``KNOWLEDGE'' OR ``INTENT'' IN ORDER FOR A FINDING THAT THE 
RESPONDANT VIOLATED SAID REGULATION. LIABILITY AND ADMINISTRATIVE 
SANCTIONS ARE IMPOSED ON A STRICT LIABILITY BASIS ONCE THE 
RESPONDANT COMMITS THE PROSCRIBED ACT.

    Contrary to the arguments of the Respondent, the answer to this 
issue is clearly set forth in Iran air v. Kugelman, 996 F.2d 1253 
(D.C. Cir. 1993). In that case, then-Judge Ruth Bader Ginsburg found 
that the ``essential question is whether the agency, in its reading 
of the current regulations, reasonably construed the statute, 50 
U.S.C.A. App. Sec. 2410, to allow the imposition of civil sanctions 
on a strict liability basis.'' The answer in Iran Air was clearly 
yes. Therein, the Acting Under Secretary of Commerce for Export 
Administration determined that an exporter's knowledge need not be 
shown as a prerequisite to the imposition of civil penalties under 
the Export Administration Act of 1979, Sec. 11(c), 50 U.S.C.A. App. 
Sec. 2410(c).\1\
---------------------------------------------------------------------------

    \1\ In the Iran Air, case, Id., the court specifically found 
that 15 CFR Sec. 774.1 of the regulations had a strict liability 
trigger.
---------------------------------------------------------------------------

    The court in the Iran Air case stated:

It is not unusual for Congress to provide for both criminal and 
administrative penalties in the same statute and to permit the 
imposition of civil sanctions without proof of the violator's 
knowledge. Here, the agency maintains, Congress has allowed for an 
array of penalties for violations of the Export Act: criminal fine 
and/or imprisonment for the knowing violator; more severe criminal 
fine and/or longer prison terms for the willful violator; and civil 
penalties against any violator. Supporting the agency's position 
that subsection (a)'s knowledge requirement need not be read into 
subsection (c), Congress expressly provided that nothing in 
subsection (a) or (b) ``limits the power of the Secretary to define 
by regulations violations under this Act.'' 50 U.S.C. App. 
Sec. 2410(b)(5). Furthermore, Congress specifically authorized the 
executive to establish ``levels of civil penalty * * * based upon 
the seriousness of the violation, the culpability of the violator, 
and the violator's record of cooperation with the Government in 
disclosing the violation.'' Id. At 2420(c)(4). The provisions appear 
to leave room for civil penalty regulations that include a knowledge 
requirement * * * or that allow * * * the imposition of strict 
liability. Id. At 1258.

    Therefore, there can be no question that the United States 
Congress authorized the Secretary of Commerce to promulgate 
regulations on a strict liability basis pursuant to Sec. 2410 of the 
Export Administration Act. In order to determine if the Secretary 
intended to impose a civil sanction for an unwitting violation of 
the Act (i.e., strict liability), we must look at the regulation 
that ALCOA was charged with violating:

15 CFR 787.5  Misrepresentation and Concealment of Facts; Evasion

    (a)(1) Misrepresentation and Concealment. No person may make any 
false or misleading representation, statement, or certification, or 
falsify or conceal any material fact, whether directly to the Bureau 
of Export Administration, any Bureau of Export Administration, any 
Customs Office, or an official of any other United States agency, or 
indirectly to any of the foregoing through any other person or 
foreign government agency or official. * * *
    The drafting of agency regulations has evolved into an art form 
since the passage of the Administrative Procedure Act (5 U.S.C. 
Sec. 551 et seq.) in 1946. As the Court noted in the Iran Air case, 
Id. at 1256, the answer to whether a regulation has a strict 
liability trigger is determined by whether the Secretary, in 
drafting the regulation, included a ``state of mind'' requirement. A 
clear and unbiased reading of this regulation reveals no such 
requirement and therefore liability attaches on a strict liability 
basis.
    The Respondent acknowledges that this regulation does not 
contain a ``state of mind'' element such as ``knowledge to cause'' 
(Sec. 787.2), with ``knowledge or reason to

[[Page 42647]]

know'' (Sec. 787.4(a)), ``with intent'' or ``knowing or having 
reason to believe'' (Sec. 787.4(b)), and ``with intent to evade'' 
(Sec. 787.5(b) (See Joint Stipulations of Fact Nos. 38, 39 and 40). 
However, the Respondent argues that since neither the statute nor 
the regulations define ``false or misleading statements'', the judge 
must use the ``accumulated settled meaning'' of these terms as 
defined in Black's Law Dictionary and the legal precedent applicable 
thereto. The Respondent argues that Black's Law Dictionary defines a 
``false statement'' as one that is made with knowedge that it is 
false. The word ``misleading'' is defined as delusive--calculated to 
lead astray or lead into error. The Respondent cites Feld v. Mans, 
116 S. Ct. 437, 445-46 (1995) for the proposition that it is 
established practice to find meaning in the generally shared common-
law when common-law terms are used without further specification.\1\
---------------------------------------------------------------------------

    \1\ In support of its argument, the Respondent cites NLRB v. 
Amax Coal Co., 453 U.S. 322, 329 (1981). In that case, the court 
held that ``where Congress uses terms that have accumulated settled 
meaning under either equity or the common law, a court must infer, 
unless the statute otherwise dictates, that Congress meant to 
incorporate the established meaning of these terms.''
---------------------------------------------------------------------------

    The government disagrees with what it calls the Respondent's 
``attenuated lexicographical-based arguments''. The government 
argues that as to the federal statute issue, had the Congress 
intended to include a ``knowledge'' element in the civil penalty 
provision, it would have explicitly done so (See e.g., False Claims 
Act, 31 U.S.C. Sec. 3729(a). I agree. 50 U.S.C. App. Sec. 2410(c)(1) 
does not include a ``knowledge'' element and it is clear in the Iran 
Air case, Id at 1258, that Congress explicitly left the issue of 
strict liability vs. knowledge/intent with the Secretary of 
Commerce. Indeed, the Secretary promulgated a regulatory scheme that 
included both types of regulations. Thus, where the Secretary 
intended that a regulation include a ``knowledge'' or ``intent'' 
element, the regulation contained explicit language (See e.g., 
Secs. 787.4(a), 787.4(b), 787.5(b), Sec. 387.2 (1980) and joint 
stipulations of fact Nos. 38, 39, and 40). Conversely, where the 
Secretary intended no such ``knowledge'' or ``intent'' element, the 
regulations did not include such a trigger (See e.g. Secs. 774.1(a), 
787.2, 787.5(a)).
    The case of People v. Chevron Chemical Co., 191 Cal.Rptr 537 
(App. 1983) is very informative on the issue at hand. The fact that 
it is a California criminal case rather than a federal civil penalty 
case is even more compelling. In that case, the state brought an 
action against Chevron, charging it with violating the Fish and Game 
Code for depositing substances deleterious to fish, plant or bird 
life into state waters--a criminal misdemeanor penalty. The sole 
issue presented in that case was whether the offense should be 
construed as a strict liability offense, or one that requires proof 
of criminal negligence or criminal intent.\1\ In ruling on that 
issue, the Court stated;

    \1\ Fish and Game Code Sec. 5650(f) provides that ``It is 
unlawful to deposit in, permit to pass into or place where it can 
pass into waters of this State any of the following: * * * (f) any 
substances or material deleterious to fish, plant life or bird 
life.''
---------------------------------------------------------------------------

In more recent times, the California Supreme Court found mens rea 
unnecessary and upheld the conviction of a meat market proprietor 
for ``short-weighting'' in the sale of meat by his employee. The 
court noted that ``where qualifying words such as knowingly, 
intentionally, or fraudulently are omitted from provisions creating 
the offense, it is held that guilty knowledge and intent are not 
elements of the offense''. The court went on to quote from an Ohio 
case which stated the basic principle: `There are many acts that are 
so destructive of the social order, or where the ability of the 
state to establish the element of criminal intent would be so 
extremely difficult if not impossible of proof, that in the interest 
of justice the legislature has provided that the doing of the act 
constitutes a crime, regardless of knowledge or criminal intent on 
the part of the defendant'. (In re Marley (1946) 29 Cal.2d 525, 529, 
175 P. 2d 832).
    In the Chevron case, supra at 539, the court discusses the well 
recognized public welfare offenses exception to the mens rea 
requirement in criminal prosecution. While not a criminal case, nor 
the traditional public welfare offense (e.g., water pollution, use 
of unlicensed poison, sale of improperly branded motor oil, and 
liability of pharmacist for compounding of prescriptions by 
unlicensed persons), the regulatory violation herein involves 
materials that could be used for weapons of mass destruction and the 
injury or death of untold numbers of people. Accordingly, since 
these regulations deal with the most profound public welfare/
national defense issues, the public interest demands that they be 
strictly construed in the absence of express ``knowledge'' or 
``intent'' language.
    The Respondent asserts that the case of Ceasar Electronics, 
Inc., 55 Fed. Reg. 53016 (Dept Commerce 1990) supports it's position 
that 15 CFR Sec. 787.5(a) requires that liability is imposed only 
when there exists a relatively high level of knowledge and intent to 
make false statements. I disagree. The factual circumstances 
involved therein proceeded on two tracks--a criminal indictment and 
conviction for violating 15 CFR Sec. 787.5(a)(3) of the Regulations 
by one of the Respondent's Vice-Presidents and a subsequent 
administrative proceeding against the Corporation for violation of 
15 CFR Sec. 787.5(a)(1)(ii)(1984). The Order from the United States 
District Court in criminal case served as the underlying factual 
basis for the joint stipulations of the parties in the 
administrative case against the corporation. Thus, while the 
decision and order in the administrative case discussed knowledge 
and intent in relation to a Sec. 787.5(a) violation, such predicates 
were not necessary to a finding of a violation. Indeed, both counsel 
stipulated at the oral argument in this case that the issue of 
strict liability for Sec. 787.5(a) has never been decided (TR-36, 
lines 15-19).\1\
---------------------------------------------------------------------------

    \1\ 50 U.S.C. App.Sec. 2412(c). (Also see, Sparvr Optical 
Research, Inc. v. Baldrige, 649 Supp, 1366 (D.C. Cir. 1986). This 
case was reversed, in part, in the Iran Air case, note No. 8 finding 
that a civil penalty may be imposed absent knowledge.); Dart v. 
United States, 848 F.2d 217 (D.C. Cir. 1988); and Harrisiades v. 
Shavgnessy, 342 U.S. 580, 589, 725, Ct. 512, 519, 96 L.Ed. 586 
(1952). The William A. Roessel, d/b/a Enigma Industries,  62 Fed. 
Reg 4031 (Dep't Commerce 1997) and Herman Kluever, 56 FR 14916 
(Dep't Commerce 1991) are similarly not dispositive of the issue 
since both cases also involved the aggravating factor of 
``knowledge'' or ``intentional conduct''.
---------------------------------------------------------------------------

    The Respondent cities Section 523(a)(2)(A) of the Bankruptcy 
Code as support for its position that knowledge and intent to 
deceive is a prerequisite to any violation of Sec. 787.5(a). I 
disagree. The Iran Air  case, supra, clearly spells out that 
Congress authorized the Secretary of Commerce to promulgate strict 
liability and knowledge/intent based regulations. The Secretary 
differentiated between the two types of regulations by using ``state 
of mind'' language for violations which were not intended to employ 
a strict liability standard and eliminated such triggering language 
where strict liability was intended. Under this circumstance, any 
caselaw dealing with Sec. 523(a)(2)(A) requiring knowledge and 
intent to deceive as a predicate to liability where the regulation 
is silent as to the issue of ``state of mind'' is simply 
inapplicable. Moreover, the legislative history, purpose, and 
construction of the Bankruptcy Code concerns a fresh start for the 
debtor while the Export Administration Act concerns regulations 
exports for reasons of national security and foreign policy.
    Importantly, an agency has the power to authoritatively 
interpret its own regulations as a component of it's delegated 
rulemaking powers (See Martin v. OSHRC,  499 U.S. 144, 113 L.Ed. 2d 
117, 11 S. Ct. 1171.) This delegation of interpretive authority is 
ordinarily subject to full judicial review. However, because of the 
national security and/or foreign policy issues involved in 
regulations exports that could become component parts of weapons, 
the United States Congress made these Secretarial determinations 
final and only subject to limited judicial review (See, 50 U.S.C. 
App. Sec. 2412(c)(1) and (3).

II What Is the Appropriate Level of Sanctions in This Case?

    The Respondent has been found to have 50 separate violations of 
15 CFR 787.6 of the former Regulations and 50 separate violations of 
15 CFR 787.5(a) of the former regulations for a total of 100 
violations.
    Congress has provided for an array of penalties for violations 
of the Export Administration Act and the regulations promulgated 
thereunder. These penalties include a criminal fine and/or 
imprisonment for knowing violators, more severe criminal fines and/
or longer prison terms for willful violators and civil penalties 
against any violator. Since the government apparently did not have 
proof of willful or intentional acts by the Respondent, criminal 
charges were not filed (TR-47). Thus, the government commenced this 
civil penalty action against the Respondent.
    The maximum civil penalty assessment for each violation is 
$10,000 (See 15 CFR 764.3(a)(1)). In addition to the penalty 
assessment, the government could have requested a denial of export 
privileges (Sec. 764.3(a)(2)) and/or the exclusion from

[[Page 42648]]

practice (Sec. 764.3(a)(3)). However, after investigating this case, 
the government determined that it would only seek $7,500 per 
violation and would not seek the denial of its export privileges or 
its exclusion from practice.
    15 CFR 766.17(b)(2) requires that the presiding judge, after a 
de novo review of the entire record, recommend the appropriate 
administrative sanction or such other action as he or she deems 
appropriate.\1\ 15 CFR 766.17(c) provides that any such penalty, or 
part thereof, may be suspended for a reasonable period of probation 
and remitted if no further violations occur during said probationary 
period. The Respondent argues that no administrative sanctions be 
imposed in this case or alternatively, that only a modest civil 
penalty be levied. ALCOA further argues that if the judge decides on 
the latter approach, that said penalty be suspended on probation.
---------------------------------------------------------------------------

    \1\ Importantly, BXA does not have a standard table of orders 
which lists offenses with a recommended penalty range (e.g., 
misconduct: 1-3 month suspension) which provides guidance to the 
judge such as in United States Coast Guard license suspension and 
revocation cases (46 CFR Sec. 5.569) or a penalty schedule for 
United States Department of Commerce, National Oceanic and 
Atmospheric Administration cases where the proposed penalty is based 
on a published penalty schedule promulgated by the NOAA general 
counsel and which carries a presumption as to reasonableness (See In 
the Matter of William J. Verna, 4 O.R.W. 64 (NOAA App. 1985)). In 
that case, the Acting Administrator of NOAA found that the published 
penalty schedule represents a reasonable starting point and if the 
judge substantially increases or decreases the amount, good reason 
for such departures should be stated (Also see, In the Matter of 
Kuhnle, 5 O.R.W. 514, (NOAA App. 1989).
---------------------------------------------------------------------------

    In support of its position, the Respondent argues that any 
violations that occurred were not intentional or willful, that said 
violations resulted from its failure to comprehend the fact that the 
March 1991 Federal Register Notice added thirty-nine (39) chemicals 
to the list of chemicals that were identified as precursors for 
chemical weapons; that there was no risk that the chemicals would be 
diverted to chemical weapons use; that had the Respondent applied to 
BXA for the necessary validated licenses, they surely would have 
been granted; that the exports were entirely consumed at the 
refineries of the Respondent's subsidiary companies in Jamaica and 
Suriname; \1\ that prior to the initiation of the government's 
investigation of this matter, the Respondent began developing and 
implementing an expanded and more comprehensive export compliance 
program, and that the Respondent has fully cooperated with the 
government in it's investigation of this matter.
---------------------------------------------------------------------------

    \1\ The Respondent notes that neither of these designations were 
included in Court Group D: 3, which identifies those designations of 
particular concern with respect to chemical weapons proliferation 
(i.e., Iran, Syria, Libya. North Korea, and Cuba) See CFR 
para.799.1, Supp. 1 (See 15 CFR Sec. 799.1, Supp.1 (1995)).
---------------------------------------------------------------------------

    In the government's reply to the Respondent's Answer, it argues 
that the retaining of outside counsel and experts to assist in 
improving its export compliance procedures prior to the initiation 
of the investigation is an aggravating rather than a mitigating 
factor; that the violations alleged herein are derived from errors 
that go to the very core of ALCOA's export compliance procedures; 
that ALCOA's methodology did not involve a periodic review of the 
Regulations for shipment of ``scheduled buying list goods'' after an 
initial determination was made concerning the export licensing of 
items on that list or a thorough monitoring of pertinent regulatory 
amendments published in the Federal Register; that outside counsel 
and experts retained by ALCOA should have revamped this system 
immediately upon being retained; that such changes in procedures 
were not implemented until after the commencement of the 
investigation; that this investigation did not arise in the context 
of a voluntary self-disclosure pursuant to Sec. 764.4 of the 
Regulations; and that given this, the favorable weight accorded such 
self-disclosures in determining appropriate sanctions is not a 
factor to be considered.
    The government goes on to argue that an ``exporter cannot 
reasonably `fail to attach significance' to a regulatory change, 
bemoan the fact that he/she has been `tripped-up' by changes in the 
law, and them argue that, by some stretch of the imagination, he/she 
should not be penalized for `inadvertently' violating the law''; 
that ignorance of the law is no excuse; that the fact that the total 
value of the 50 shipments was under $112,000 is of no consequence in 
determining the proper amount of the civil penalty; and that the 
lack of intent to make false or misleading statements is irrelevant 
since liability attaches on a strict liability basis. Finally, the 
government notes that since the March 13, 1991 amendments were 
properly published in The Federal Register, the Respondent was 
charged with notice of the contents of the changes (See 44 U.S.C.A. 
Sec. 1507 (1991)).
    In ALCOA's response to the government's arguments, it states 
that there are numerous undisputed mitigating circumstances in this 
case and no aggravating factors; that under the circumstances, it is 
appropriated to waive or suspend sanctions; that included within the 
mitigating factors are that the Respondent has no prior violations; 
that the chemicals were shipped to countries that are not suspected 
of illegal weapons development; that there was a presumption of 
approval, on a case by case basis, for licenses to export these 
chemicals from the United States to Jamaica and Suriname; that the 
failure of the Respondent to obtain validated licenses should be 
viewed as technical violations; that the government's logic is 
distorted since it implies that it is somehow more appropriate to 
impose a civil penalty on the Respondent because its compliance 
program was imperfect rather than if ALCOA had had no export 
compliance program at all; that while the Act and Regulations may 
not mention the value of exports as a standard for Administrative 
sanctions, the Judge may consider that issue as a factor in his 
determination; that the government's proposed penalties are nearly 
seven (7) times larger than the value of the shipments in this case; 
that given the lack of harm to U.S. national security or foreign 
policy interests as a result of these exports, this huge multiple 
illustrates that the proposed penalty is excessive and overly 
punitive; that recent government settlement agreements in other 
cases demonstrate that the proposed penalty is unreasonable; that 
the Respondent has no prior violations; and that there are numerous 
cases with similar or even more egregious facts in which the 
settlement proposal ranged from $2,000 to $5,000 per violation, 
large portions of which were suspended.
    After fully considering the arguments of the parties as to the 
appropriate sanction in this case, I find that the Respondent's 
civil penalty shall be $10,000 for each of the 100 violations for a 
total of $1,000,000. While this assessment exceeds that requested by 
the government, I find that it is warranted under the facts of this 
case. The passage of the Export Administration Act of 1979 had one 
main purpose--to control exports from the United States to other 
countries. As was noted in the Legislative history of this Act 
referring to S 737:

Exports contribute significantly to U.S. production and employment, 
and improved export performance helps pay for expanding U.S. imports 
of oil and other commodities. There are circumstances, however, in 
which the economic benefits and the presumption against government 
interference with participation in international commerce by United 
States citizens are outweighed by the potential adverse effect of 
particular exports on the national security * * * of the United 
States.\1\

    \1\ See Export Administrative Act, P.L. 96-92, 93 Stat. 503, 
Legislative History at 1148 (Purpose of the Legislation) which is 
part of the record herein.

    By Federal Register Notice (Volume 56, No. 49, dated March 13, 
1991), the Department of Commerce expanded export control of certain 
chemical weapons precursors (i.e., chemicals that can be used in the 
manufacture of chemical weapons). The Notice amended the extant 
Commodity Control List, by expanding the number of countries for 
which a validated license was required for 39 precursor chemicals. 
In issuing this Notice, the Department of Commerce underscored its 
concern about chemical and biological weapons indicating that 
serious consideration is being given to eliminating the then-
existing contract sanctity provisions of the regulations (See 
Respondent's July 27, 1998 submission, Tab 6). Thus, as the world 
was becoming a more dangerous place subject to terrorist attacks, 
the United States Government responded by significantly increasing 
its regulation of specific chemicals and biological precursors.
    In this regard, the government noted in it's May 1, 1998 Reply 
at page 10:

International trade has been regulated from the earliest days of the 
republic. While particular aspects or areas of regulations have 
varied, the fact of the matter is that those engaged in an industry 
in which government regulation is likely must be presumed to be 
aware of, and practitioners in the industry are charged with 
knowledge of as well as the responsibility to comply with, the duly 
promulgated regulations. [Citing United States v. International 
Minerals and Chemical Corporation, 402 U.S. 558 at 563 & 565, 29 
L.Ed. 178(1971)].


[[Page 42649]]


    In the Matter of Core Laboratories, Inc., ITA-AB-2-80, Initial 
Decision and Order on Remand of Administrative Law Judge Huge J. 
Dolan (May 4, 1982) aff'd, In the Matter of Core Laboratories, Inc., 
ITA-AB-2-80, Decision on Appeal and Order (March 14, 1983), remanded 
on other grounds, United States v. Core Laboratories, Inc., 759 F.2d 
480 (5th Cir. 1985).
    Of all the aggravating factors in this case, one is particularly 
damming--that the Respondent, over a period of four and one-half 
(4.5) years, made 50 separate exports of potassium fluoride and/or 
sodium fluoride in violation of the Export Administration 
Regulations (emphasis added). Importantly, ALCOA is not a new or 
small company that doesn't understand the foreign export regulatory 
process. Quite to the contrary, the Respondent is a large 
multinational corporation which had a separate division (Export 
Supply Division) specifically dedicated to receiving requisitions, 
locating suppliers, purchasing products, and shipping the requested 
items in accordance with applicable export licensing requirements. 
Thus, ALCOA's conduct, under this backdrop, was flatly inexcusable 
and the fact that the violations were not intentional or willful is 
only relevant to the fact that a federal criminal indictment was not 
handed down. Respondent's failure to comprehend the change in the 
Federal Register Notice, given the existence of its Export Supply 
Division, is also particularly troubling.\1\ Moreover, the fact that 
the unlawful shipments consisted of precursors for chemical weapons, 
regardless of the lack of any potential diversion in these 
instances, is not something that should be viewed as a technical 
oversight and is clearly an aggravating factor.
---------------------------------------------------------------------------

    \1\ As noted above, 44 U.S.C.A. Sec. 1507 (1991) imputes 
knowledge of these changes to the Respondent.
---------------------------------------------------------------------------

    In mitigation, ALCOA argues that had it applied for the 
necessary validated licenses, they would have been presumptively 
granted. This argument misses the point. Over the past 20 years, a 
terrorist threat has developed to our Republic and our interests 
aboard. In order to protect our country and our interests, laws and 
regulations were passed/implemented to allow the government to 
monitor and regulate the export of precursor chemicals and if 
necessary, prevent any such exports that pose a clear and present 
danger. Given the huge number of exports from the United States, how 
is the government suppose to monitor the export of precursor 
chemicals if it doesn't know that the shipments were being made over 
a four and one-half year period? ALCOA responds that it filed under 
general license G-DEST and implies that the government was aware of 
these 50 separate exports over a four and one-half year period (See 
Respondent's Answer dated January 20, 1998, page 8). I disagree. The 
Respondent did not submit any evidence to support this position. The 
Respondent cannot shift its responsibility to the government to do 
that which it is legally required to do. Given the volume of such 
exports and the limited public resources to regulate these 
shipments, the government placed a legal duty on the exporter to 
file the specific applications with the office charged with such 
oversight responsibility. The Respondent breached that duty and in 
so doing, deprived the government of the opportunity to monitor its 
export of precursor chemicals.
    The Respondent also argues that all of the precursor chemicals 
were entirely consumed at the refineries of the Respondent's 
subsidiary companies in Jamaica and Suriname. Once again, ALCOA 
misses the point. The crucial point here is that the government was 
deprived of possible vital information in its fight to control 
terrorism. In other words, if the world-wide export of chemicals/
biological agents were a puzzle being put together by a U.S. 
Department of Commerce security team, this information constituted 
50 pieces of that puzzle that the government did not have. While it 
turned out that there was no problem, the fact remains that the 
government did not have the whole picture. Without the whole 
picture, or in this case, all of the information about precursor 
chemical exports, catastrophic errors in preventative decision-
making could have occurred.
    The Respondent argues that prior to the initiation of the 
investigation into this matter, it began developing and implementing 
an expanded and more comprehensive export compliance program. The 
Respondent notes that it developed export control matrices for each 
U.S. business unit to identify export control issues on a product-
by-product basis; produced a video to increase awareness of export 
control requirements to be used in conjunction with on-site training 
for each business unit; appointed export liaison's for each of its 
business units including the Export Supply Division, who is 
responsible for disseminating export compliance information; that 
it's legal department now monitors the Federal Register daily for 
changes to the EAR effecting the Respondent's products and 
operations, and disseminates this information to the export 
liaisons; that the Respondent is also developing a Denial List 
search application on its new company-wide intranet; and that all 
key Exports Supply Division employees have attended export 
compliance training seminars.
    While the Respondent's January 20, 1998 Answer details the 
above-recited improvements to its export compliance program, there 
is no record evidence submitted by the Respondent in Tab 2 of its 
January 20, 1998 Answer specifying when these improvements were 
implemented. The EAR amendment occurred on March 13, 1991. The 
violations occurred between June 14, 1991 and December 7, 1995. 
During this period of time, the Respondent's export compliance 
procedures did not involve a periodic review of the requirements for 
shipments of ``scheduled buying list goods'' or a through monitoring 
of pertinent regulatory amendments published in the Federal Register 
(See Stipulation of Fact No. 17). Thus, the record is void of any 
meaningful evidence as to what policies and procedures were in 
effect between March 13, 1991 and December 7, 1995.
    Moreover, subsequent to December 7, 1995, the record does not 
indicate when the above-recited improvements were implemented and in 
what form those improvements were made. Indeed, the first memorandum 
from the Legal Department to the Export Supply Division is dated May 
9, 1996. Interestingly, the only time this issue is discussed during 
this time period is set forth in the Joint Stipulations. However, as 
one can see from reading joint Stipulation of Fact Nos. 17, 20, 27, 
and 29, these factual recitations only recite what the Respondent 
did not do as opposed to what program it had in effect and what 
changes were made.
    The Respondent states that anything more than a nominal fine in 
this case is unreasonable. In support of this position, ALCOA argues 
that recent BXA enforcement orders based on settlement agreements 
establish a range from $2,000 per violation to $5,000 per violation, 
large portions of which were suspended. The Respondent cites the 
following settlements in support of it's argument that the 
government's proposed $7,500 per violation is excessive and 
inconsistent with past BXA practice:
    1. Gateway 2000 case--This case involved the unlawful export of 
U.S.--origin computer equipment without a license in violation of 
Sec. 787.4(a), Sec. 787.5(a) and Sec. 787.6 for a total of 87 
violations. The agreed upon fine was $402,000 or $4,620 per 
violation.
    2. Allergan, Inc. case--The Respondent was charged with 412 
violations of Sec. 787.6 for violating export controls on biological 
agents. the fine was $824,000 or $2,000 per violation.
    3. Sierra Rutil America, Inc. case--The Respondent was charged 
with eight unlicensed exports of sodium fluoride to Sierra Leone 
over a two year period in violation of Sec. 787.6. The settlement 
resulted in a $30,000 fine or $3,750 per violation with half of the 
fine remitted on probation. This case did not involve exports to 
controlled or affiliated entities.
    4. Herb Kimiatck and Kimson Chemical Inc. case--The Respondent 
was charged with two counts of exporting sodium cyanide without a 
validated license in violation of Sec. 787.6 and Sec. 787.4(a) of 
the regulations. The fine was $20,000 or $10,000 per violation.
    5. Snytex case--The Respondent was charged with 13 violations of 
unlawfully exporting hydrogen fluoride in violation of Sec. 787.2. 
The fine was $65,000 or $5,000 per violation. One half of the fine 
was remitted for 2 years and then waived if there were no further 
violations.
    6. Palmeros Forwarding case--The Respondent was charged with 10 
violations wherein it used export control documents which 
represented that the Syntex hydrogen fluoride did not need export 
licenses. The fine was $50,000 or $5,000 per violation with a two 
year denial of export privileges. The fine was export privilege 
denial were suspended on probation.
    7. Villasana case--This case also arose out of the Syntex case, 
The Respondent was charged with one count and fined $2500 and the 
denial of export privileges. The fine and export privilege denial 
were suspended on probation.
    8. Chemicals Export Company of Boston case--The Respondent was 
charged with four counts of exporting sodium cyanide without

[[Page 42650]]

a valid export permit in violation of Sec. 787.6. The fine was 
$16,000 or $4,000 per violation.
    9. Southern Information Systems case--The Respondent was charged 
with five counts for the unlawful export of digital microwave 
systems in violation of Sec. 787.6. The fine was $25,000 or $5,000 
per violation.
    10. Advanced Technology case--The Respondent was charged with 
two counts of re-exporting electronic equipment from Belgium to 
Russia without a permit in violation of Sec. 787.6. The fine was 
$10,000 or $5,000 per violation.
    11. LEP Profit International, Inc.--The Respondent were charged 
with twelve counts of preparing shipping documents that contained 
false information in violation of Sec. 0787.5(a). The fine was 
$60,000 or $5,000 per violation. A portion of the penalty, $15,000, 
was suspended for two years, then waived so long as LEP complies 
with the export control regulations.
    12. NF&M International Inc.--The Respondent were charged with 
thirty-three violations for exporting titanium alloy products 
without the necessary export licenses in violation of Sec. 787.6. 
The fine was $82,500 or $42,500 per violation. The Department agreed 
to suspend payment of $42,500 for one year and then to waive that 
payment provided NF&M complies with export control regulations.
    13. DATRAC AG--The Respondent was charged with one count for re-
exporting U.S.-origin data communications equipment from Switzerland 
to Singapore without obtaining the required export license in 
violation of Sec. 787.6. The fine was $2,500.
    14. Lasertechnics Inc.--The Respondent in this case was charged 
with thirty-six violations for exporting U.S.-origin thyratrons from 
the United States to Hong Kong, Ireland, Malaysia, and Singapore 
without obtaining the individual validated export licenses in 
violation of Sec. 787.6. The fine was $180,000 or $5,000 per 
violation. Pursuant to Sec. 766.18(c), the remaining balance of 
$80,000 was suspended for three years and shall thereafter be 
waived, provided that, during the period of suspension, the 
Respondent has committed no violation of the Act, or any regulation, 
order, or license issued thereunder.
    15. President Titanium--The Respondent was charged with twenty-
five violations for exporting U.S.-origin titanium bars to various 
countries without obtaining the required validate licenses in 
violation of 787.6. The fine was $125,000 or $5,000 per violation. 
Pursuant to Sec. 766.18(c), the remaining balance of $50,000 was 
suspended for one year provided that, during the period of 
suspension, the Respondent commit no violation of the Act, or any 
regulation, order, or license issued thereunder.
    16. Allvac--The Respondent was charged with forty-eight counts 
for exporting titanium alloy solid cylindrical forms with diameters 
greater than three inches from the United States to various 
countries and exported maraging steel to Germany without the 
required validated license in violation of Sec. 787.6. The fine was 
$122,500 or $2,552 per violation. Pursuant to Sec. 766,18(c) payment 
of the remaining balance of $47,500 was suspended for one year 
provided that, during the period of suspension, the Respondent 
commit no violation of the Act, or any regulation, order, or license 
issued thereunder.
    17. EC Company--The Respondent was charged with four violations 
of making false or misleading statements on an export control 
document; exported U.S.--origin spare parts from the United States 
to Vietnam without validated license in violation of Sec. 787.6; and 
two counts for exporting spare parts from the United States to 
Singapore that Respondent knew would be re-exported from Singapore 
to Vietnam in violation of Sec. 787.4(a). The fine was $8,000 or 
$2,000 per violation.
    I find the Respondent's argument regarding the previous 
settlement of cases by BXA with lower civil penalty assessments to 
be unpersuasive. Settlements are reached based upon the facts of 
each case. These facts include the relative strengths and weaknesses 
of each party's case; the desires of one or both sides to extricate 
themselves from the litigation for whatever reason; and a 
determination that such a settlement is a good business decision in 
the case of a Respondent or satisfies the public interest in the 
case of the government. Moreover, the reasons behind each party's 
decision to enter into a settlement are rarely, if ever, made public 
where foreign policy and/or national security issues are involved. 
As the government points out, this phenomenon is especially true in 
export cases (TR. 42).
    During the Oral Argument in this matter, Counsel for the 
government stated:

All parties in this courtroom know that citing a series of case 
names and corresponding settlement figures knowing nothing of the 
details of what actually transpired during the settlement 
negotiations, much less any internal discussions of litigation 
strategy or what not, is really not particularly helpful.

BXA does not maintain a rubric. It does not have a penalty matrix or 
a cookie cutter into which to force every case it prosecutes. 
Rather, each case is individually evaluated, and considerations that 
apply in one, may not apply in another, or may not be given the same 
impact depending on the facts of each case.

    The Respondent argues in mitigation that it has no prior record 
of violations. I find this argument is entitled to little or no 
weight given the fact that for four and one-half years, the 
Respondent committed one hundred violations of the EAR. Indeed, It 
is not the prior record that is important here, but the aggravating 
factor of 100 violations and the continuing course of conduct over 
such a long period. Under this circumstance, I find that the 
Respondent's actions constitute a gross and long standing neglect of 
it's undisputed legal duty which totally outweighs the lack of a 
prior record of violations.
    As noted above, the government recommends a $7,500 civil penalty 
assessment for each of the 100 violations. The Respondent argues for 
a zero level of civil penalty. However, the Respondent states that 
it would accept a nominal fine per violation under the suspension on 
probation procedures. The Respondent also states that the 
government's recommended sanction is close to the $10,000 maximum 
and is therefore unreasonable. Indeed, it argues that if you look at 
the cited cases that were settled, the maximum range should not 
exceed $2,000 to $5,000. I disagree. Congress established a 
statutory scheme which provided for a full panoply of penalties 
ranging from federal prison time and/or severe monetary fines to 
mere administrative action which could involve civil penalties, 
denial of export privileges, exclusion from practice or any 
combination thereof. When viewed in this context, it becomes readily 
apparent that the government has recommended an unreasonably low 
sanction  (emphasis added).
    Indeed, the government might well have opted to argue in a 
criminal forum that ALCOA's conduct was so grossly negligent as to 
constitute a willful disregard of federal law. In this case, the 
amount of care demanded by the standard of reasonable conduct on the 
part of the Respondent must be in proportion to the apparent risk. 
As the danger becomes greater, the Respondent is required to 
exercise caution commensurate with that increased risk. Since the 
Respondent was dealing with precursors for chemical weapons, the 
March 13, 1991 Federal Register Notice constructively put it on 
notice that it must exercise a great amount of care because the risk 
is great. It failed to do so.
    Importantly, the government voluntarily lowered the sanction bar 
all the way down to the level of an administrative civil penalty in 
this case. That having been done, the Respondent argues that the 
government is being harsh and should lower the bar further. In 
effect, the Respondent is attempting to have the government 
negotiate with itself. This is wrong. Based upon the detailed 
discussion set forth above, I find the appropriate sanction for each 
of these unlawful shipments is $10,000. The Respondent is a huge 
multi-national corporation. As such, a $10,000 penalty per violation 
is minuscule for ALCOA who describes itself as ``one of the world's 
leading producers of aluminum.* * *''. At no time during this 
proceeding, did ALCOA's counsel raise financial hardships for 
mitigating any civil penalty. At some point, ALCOA has to stand up 
and take responsibility for it's gross and long-standing breach of 
legal duty. Conversely, the United States government must set its 
civil penalties at a high enough level to insure that large multi-
national corporations don't ignore the law and if they get caught, 
merely consider the fine as a cost of doing business.
    Accordingly, it is ordered that Aluminum Company of America, 
having been found by preponderant evidence to have one hundred 
violations of the Export Administration Regulations, pay a civil 
penalty in the amount of $10,000 per violation for a total of 
$1,000,000. \1\
---------------------------------------------------------------------------

    \1\ In addition to the arguments made herein as to the 
appropriate amount of the monetary penalty for each violation in 
this case, I hereby accept the arguments of the government as 
reasonable to the extent they are not inconsistent with the rational 
set forth in Section II, above. To the extent that the Respondent's 
arguments as to sanction are inconsistent with the Recommended 
Decision and Order, they are specifically rejected.

---------------------------------------------------------------------------

[[Page 42651]]

    It is Further Ordered that a copy of this Recommended Decision 
and Order shall be served on Aluminum Company of America and the 
Department of Commerce in accordance with Sec. 778.16(b)(2) of the 
Regulations.
    Done and Dated on this 21sth day of December 1998, Alameda, 
California.
Hon. Parlen L. McKenna,
United States Administrative Law Judge.

    To be considered in the thirty (30) day statutory review process 
which is mandated by 50 U.S.C.A. Sec. 2412(c) of the Act, 
submissions must be received in the Office of the Under Secretary 
for Export Administration, Bureau of Export Administration, U.S. 
Department of Commerce, 14th & Constitution Ave., NW., Room H-3898, 
Washington, DC 20230, within twelve (12) days. Replies to the other 
party's submission are to be made within the following eight (8) 
days (See 15 CFR 766.22(b) and 50 Fed. Reg. 53134 (1985)). Pursuant 
to 50 U.S.C.A. Sec. 2412(c)(3) of the Act and 15 CFR 766.22(e) of 
the Final Order of the Under Secretary may be appealed to the U.S. 
Court of Appeals for the District of Columbia within fifteen (15) 
days of its issuance.
[FR Doc. 99-19095 Filed 8-4-99; 8:45 am]
BILLING CODE 3510-DT-M