[Federal Register Volume 71, Number 92 (Friday, May 12, 2006)]
[Rules and Regulations]
[Pages 27604-27606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-4420]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 756 and 766

[Docket No. 060320077-6077-01]
RIN 0694-AD60


Revised Appeal Procedure for Persons Designated as Related 
Persons to Denial Orders

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: This rule revises Section 766.23(c) of the Export 
Administration Regulations (EAR) to make the appeal procedure for any 
person named as a related person to the respondent in an order denying 
export privileges identical to the appeal procedure for the respondent 
in that order.

DATES: This rule is effective May 12, 2006.

FOR FURTHER INFORMATION CONTACT: William Arvin, Regulatory Policy 
Division, Bureau of Industry and Security, e-mail [email protected], 
fax 202-484-3355, tel. 202-484-2440.

SUPPLEMENTARY INFORMATION:

Background

    Section 766.23 of the EAR sets forth the process for making 
applicable to a related person an order denying export privileges 
issued pursuant to any provision of part 766 of the EAR. Specifically, 
Section 766.23(a) provides that ``[i]n order to prevent evasion,'' 
orders denying export privileges may be made applicable to ``persons 
then or thereafter related to the respondent [in a denial order] by 
ownership, control, position of responsibility, affiliation, or other 
connection in the conduct of trade or business.'' Section 766.23 may be 
used to make applicable to a related person an order denying export 
privileges issued pursuant to any provision of part 766. Prior to 
publication of this rule, Section 766.23(c) provided that any person 
named by BIS as a related person ``may file an appeal with the 
administrative law judge.'' Section 766.23(c) further provided that 
``[t]he recommended decision and order of the administrative law judge 
shall be reviewed by the Under Secretary in accordance with the 
procedures set forth in Section 766.22 of this part.'' This rule amends 
Section 766.23(c) of the EAR to provide that an administrative law 
judge's decision pertaining to a related person to whom an order issued 
pursuant to Section 766.25 has been made applicable may be appealed to 
the Under Secretary for Industry and Security under part 756. This rule 
revises Section 766.23(c) to eliminate three procedural inconsistencies 
involving: Appeal by a related person of an order imposed under Section 
766.25 for violation of a specified statute; a decision by the 
administrative law judge that makes an order issued for a violation 
related to part 760 applicable to a related person; or an order issued 
pursuant to Section 766.24 to prevent an imminent violation of the 
Export Administration Act, the EAR, or any order, license or 
authorization issued thereunder.

Changes Made By This Rule

    Section 766.25 provides the procedure for imposing denials of 
export privileges for up to ten years for persons convicted of 
violations of statutes specified in Section 11(h) for the Export 
Administration Act. Prior to publication of this rule, a person named 
as a related person to an order issued pursuant to Section 766.25 had a 
right of appeal to the administrative law judge. In contrast, the 
respondent in such an order had a right of appeal to the Under 
Secretary under part 756 of the EAR. These separate and distinct 
appeals procedures could unnecessarily bifurcate administrative 
proceedings. Therefore, this rule amends Section 756.1 by including as 
a type of action appealable under part 756 appeals from actions making 
an order issued under Section 766.25 applicable to a related person.

[[Page 27605]]

    In addition, prior to publication of this rule, Section 766.23(c) 
provided that any recommended decision and order of the administrative 
law judge making an order applicable to a related person ``shall be 
reviewed by the Under Secretary in accordance with the procedures set 
forth in Section 766.22 * * *.'' (Emphasis added.) This mandatory 
review process is consistent with the procedure for respondents in 
orders issued for violations of the EAR that are not related to part 
760. However, procedures for the respondent to appeal the 
administrative law judge's order for a violation related to part 760 
(restrictive trade practices and boycotts) are set forth in Section 
766.21, which provides that the administrative law judge's decision 
``may'' be appealed to the Under Secretary. (Emphasis added.) This 
difference could create unnecessarily inconsistent and bifurcated 
proceedings because the administrative law judge decision making an 
order issued for a violation related to part 760 applicable to a 
related person would be subject to mandatory Under Secretary review, 
whereas the decision of the administrative law judge with respect to 
the respondent in that same order would become the final agency action 
absent an appeal to the Under Secretary. Therefore, this rule revises 
Section 766.23 to provide that a decision of the administrative law 
judge making an order issued for a violation related to part 760 to the 
EAR applicable to a related person may be appealed pursuant to the 
procedures in Section 766.21 and that the recommended decision of the 
administrative law judge making an order issued pursuant to Section 
766.24 applicable to a related person shall be reviewed by the Under 
Secretary in accordance with the procedures set forth in Section 
766.24(e).
    Finally, prior to publication of this rule, Section 
766.24(d)(3)(ii) provided that a person designated as a related person 
to a temporary denial order issued pursuant to Section 766.24 may file 
an appeal in accordance with Section 766.2(3)(c) (sic). Section 
766.23(c) provided that recommended decisions of the administrative law 
judge be reviewed in accordance with the procedures set forth in 
Section 766.22. The procedures set forth in Section 766.22 differ from 
the procedures for review of recommended decisions by the 
administrative law judge with respect to orders issued pursuant to 
Section 766.24. Therefore, this rule makes a necessary technical 
correction to Section 766.24(d)(3)(ii).

Effect of This Rule

    This rule removes potential causes of unnecessarily bifurcated 
proceedings by revising: (1) The appeal procedures for related persons 
to orders issued under Section 766.25; (2) orders issued for violations 
related to part 760 of the EAR; and (3) orders issued pursuant to 
Section 766.24 to prevent imminent violations to make each related 
person appeal procedure match the appeal procedure for the respondent 
in the underlying proceeding. Upon publication of this rule, the appeal 
procedure for a related person to any denial order is identical to that 
of the respondent(s) in that same order. This rule does not change the 
substantive grounds for making an order applicable to a related person, 
nor does it change the issues to be decided on appeal of such an 
action.

Rulemaking Requirements

    1. This rule has been determined to be not significant for the 
purposes of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to nor be subject to a penalty for failure to 
comply with a collection of information, subject to the requirements of 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), 
unless that collection of information displays a currently valid Office 
of Management and Budget (OMB) Control Number. This rule does not 
involve any collections of information that are subject to the 
Paperwork Reduction Act.
    3. This rule does not contain policies with Federalism implications 
as this term is defined in Executive Order 13132.
    4. Pursuant to 5 U.S.C. 553, the provisions of the Administrative 
Procedure Act requiring a notice of proposed rulemaking and the 
opportunity for public comment are waived, because this regulation 
involves a rule of agency procedure. No other law requires that a 
notice of proposed rulemaking and an opportunity for public comment be 
given for this rule. Because a notice of proposed rulemaking and an 
opportunity for public comment are not required to be given for this 
rule under the Administrative Procedure Act or by any other law, the 
analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 
et seq.) are not applicable.

List of Subjects

15 CFR Part 756

    Administrative practice and procedure, Exports, Penalties.

15 CFR Part 766

    Administrative practice and procedure, Confidential business 
information, Exports, Law enforcement, Penalties.


0
Accordingly, parts 756 and 766 of the Export Administration Regulations 
(15 CFR parts 730-799) are amended as follows:

PART 756--[AMENDED]

0
1. The authority citation for 15 CFR part 756 is revised to read:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
2, 2005, 70 FR 45273 (August 5, 2005).


0
2. Section 756.1(a)(2) is revised to read as follows:


Sec.  756.1  Introduction.

    (a) * * *
    (2) Denial or probation orders, civil penalties, sanctions, or 
other actions under parts 764 and 766 of the EAR, except that, any 
appeal from an action taken under Sec.  766.25 and any appeal from an 
action taken in accordance with Sec.  766.23 to make an action taken 
under Sec.  766.25 applicable to a related person shall be subject to 
the appeals procedures described in this part 756.
* * * * *

PART 766--[AMENDED]

0
3. 1. The authority citation for 15 CFR Part 766 is revised to read:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
2, 2005, 70 FR 45273 (August 5, 2005).


0
4. Section 766.23(c) is revised to read as follows:


Sec.  766.23  Related persons.

* * * * *
    (c) Appeals. Any person named by BIS in an order as related to the 
respondent may appeal that action. The sole issues to be raised and 
ruled on in any such appeal are whether the person so named is related 
to the respondent and whether the order is justified in order to 
prevent evasion.
    (1) A person named as related to the respondent in an order issued 
pursuant to Sec.  766.25 may file an appeal with the Under Secretary 
for Industry and Security pursuant to part 756 of the EAR.
    (2) A person named as related to the respondent in an order issued 
pursuant to other provisions of this part may file an appeal with the 
administrative law judge.
    (i) If the order made applicable to the related person is for a 
violation related

[[Page 27606]]

to part 760 of the EAR, the related person may file an appeal with the 
administrative law judge. The related person may appeal the initial 
decision and order of the administrative law judge to the Under 
Secretary in accordance with the procedures set forth in Sec.  766.21.
    (ii) If the order made applicable to the related person is issued 
pursuant to Sec.  766.24 of this part to prevent an imminent violation, 
the recommended decision and order of the administrative law judge 
shall be reviewed by the Under Secretary in accordance with the 
procedures set forth in Sec.  766.24(e) of this part.
    (iii) If the order made applicable to the related person is for a 
violation of the EAR not related to part 760 of the EAR and not issued 
pursuant to Sec.  766.24 of this part, the recommended decision and 
order of the administrative law judge shall be reviewed by the Under 
Secretary in accordance with the procedures set forth in Sec.  766.22 
of this part.

0
5. In Sec.  766.24 paragraph (d)(3)(ii) is revised to read as follows:


Sec.  766.24  Temporary denials.

* * * * *
    (d) * * *
    (3) * * *
    (ii) Any person designated as a related person may not oppose the 
issuance or renewal of the temporary denial order, but may file an 
appeal in accordance with Sec.  766.23(c) of this part.
* * * * *

    Dated: May 2, 2006.
Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 06-4420 Filed 5-11-06; 8:45 am]
BILLING CODE 3510-33-P