[Federal Register Volume 72, Number 41 (Friday, March 2, 2007)]
[Notices]
[Pages 9503-9505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-949]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 04-BIS-15]


In the Matter of: S.P. Equipamentos de Prote[ccedil][atilde]o ao 
Trabalho Ltda., Rua Visconde de Inha[uacute]ma 386-Sa[uacute]de, 04146-
030 S[atilde]o Paulo, Brazil, Respondent; Final Decision and Order

    This matter is before me upon a Recommended Decision and Order 
(``RDO'') of an Administrative Law Judge (``ALJ''), as further 
described below.
    In a charging letter filed on September 13, 2004, the Bureau of 
Industry and Security (``BIS'') alleged that Respondent, S.P. 
Equipamentos de Prote[ccedil][atilde]o ao Trabalho Ltda. (``S.P. 
Equipamentos''), committed two violations of the Export Administration 
Regulations (``Regulations'') \1\, issued under the Export 
Administration Act of 1979, as amended (50 U.S.C. app. sections 2401-
2420 (2000)) (the ``Act'').\2\ Specifically, the charging letter 
alleged that S.P. Equipamentos engaged in conduct prohibited by the 
Regulations by transferring one thermal imaging camera classified under 
Export Control Classification Number (``ECCN'') 6A003.b.4 to the State 
Secretariet of Civil Defense (Military Police of the State of Rio de 
Janeiro) in violation of condition 4 of license D274828, which forbade 
the resale, reexport, or transfer of the thermal imaging camera to any 
part other than that listed on the license without the prior approval 
of the United States Government. In transferring the thermal imaging 
camera to a non-approved end-user without prior U.S. Government 
authorization, S.P. Equipamentos committed one violation of Section 
764.2(a) of the Regulations.
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    \1\ The violations charged occurred in 2002. The Regulations 
governing the violations at issues are found in the 2002 version of 
the Code of Federal Regulations (15 CFR Parts 730-774 (2002)). The 
2006 Regulations establish the procedures that apply to this matter.
    \2\ From August 21, 1994 through November 12, 2000, the Act was 
in lapse. During that period, the President, through Executive Order 
12924, which had been extended by successive Presidential Notices, 
the last of which was August 3, 2000 (3 CFR, 2000 Comp. 397 (2001)), 
continued the Regulations in effect under the International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706 (2000)) 
(``IEEPA''). On November 13, 2000, the Act was preauthorized and it 
remained in effect through August 20, 2001. Since August 21, 2001, 
the Act has been in lapse and the President, through Executive Order 
13222 of August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), which has 
been extended by successive Presidential Notices, the most recent 
being that of August 3, 2006 (71 FR 44,551 (August 7, 2006)), has 
continued the Regulations in effect under IEEPA.
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    The charging letter further alleged that S.P. Equipamentos sold one 
thermal imaging camera classified under ECCN 6A003.b.4 to the State 
Secretariet of Civil Defense (Military Police of the State of Rio 
Janeiro) with the knowledge that doing so was a violation of condition 
4 of license D274828, which forbade the resale, reexport, or transfer 
of the thermal imaging camera to any party other than that listed on 
the license without the prior approval of the United States Government. 
In transferring the thermal imaging camera with such knowledge, S.P. 
Equipamentos committed one violation of Section 764.2(e) of the 
Regulations.
    In accordance with Section 766.3(b)(1) of the Regulations, on 
September 13, 2004, BIS mailed the notice of issuance of the charging 
letter by registered mail to S.P. Equipamentos at its last known 
address. The record

[[Page 9504]]

establishes that the notice of issuance of a charging letter was 
received by S.P. Equipamentos on September 24, 2004. Counsel for S.P. 
Equipamentos filed a Notice of Appearance in this matter of February 7, 
2005. To date, however, S.P. Equipamentos has not filed an answer to 
the charging letter with the ALJ, as required by the Regulations.
    In accordance with Section 766.7 of the Regulations, BIS filed a 
Motion for Default Order on or about November 11, 2006. This Motion for 
Default Order recommended that S.P. Equipamentos be denied export 
privileges for a period of ten years. Under Section 766.7(a) of the 
Regulations, ``[f]ailure of the respondents to file an answer within 
the time provided constitutes a waiver of the respondent's right to 
appear,'' and ``on BIS's motion and without further notice to the 
respondent, [the ALJ] shall find the facts to be as alleged in the 
charging letter.'' The ALJ has found S.P. Equipamentos in default.
    On January 31, 2007, based on the record before him, the ALJ issued 
an RDO in which he found that S.P. Equipamentos committed one violation 
of Section 764.2(a) and one violation of Section 764.2(e). The ALJ also 
recommended the penalty of denial of S.P. Equipamentos' export 
privileges under the Regulations for ten years.
    The ALJ's RDO, together with the entire record in this case, has 
been referred to me for final action under Section 766.22 of the 
Regulations. I find that the record supports the ALJ's findings of fact 
and conclusions of law. I also find that the penalty recommended by the 
ALJ is appropriate, given the nature of the violations and the facts of 
this case, and the importance of preventing future unauthorized 
exports.
    Based on my review of the entire record, I affirm the findings of 
fact and conclusions of law as recommended by the ALJ.
    Accordingly, it is therefore ordered,
    FIRST, that for a period of ten years from the date of this Order, 
S.P. Equipamentos de Prote[ccedil][atilde]o ao Trabalho Ltda., Rua 
Visconde de Inha[uacute]ma, 386-Sa[uacute]de, 04146-030 S[atilde]o 
Paulo, Brazil, its successors and assigns, and when acting for or on 
behalf of S.P. Equipamentos, its representatives, agents and employees 
(hereinafter collectively referred to as the ``Denied Person''), may 
not, directly or indirectly, participate in any way in any transaction 
involving any commodity, software or technology (hereinafter 
collectively referred to as ``item'') exported or to be exported from 
the United States that is subject to the Regulations, or in any other 
activity subject to the Regulations, including, but not limited to:
    A. Applying for, obtaining, or using any license, License 
Exception, or export control document;
    B. Carrying on negotiations concerning, or ordering, buying, 
receiving, using, selling, delivering, storing, disposing of, 
forwarding, transporting, financing, or otherwise servicing in any way, 
any transaction involving any item exported or to be exported from the 
United States that is subject to the Regulations, or in any other 
activity subject to the Regulations; or
    C. Benefitting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the Regulations, or in any other activity subject to the Regulations.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of the Denied Person any item 
subject to the Regulations;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by the Denied Person of the ownership, possession, or 
control of any item subject to the Regulations that has been or will be 
exported from the United States, including financing or other support 
activities related to a transaction whereby the Denied Person acquires 
or attempts to acquire such ownership, possession or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from the Denied Person of any item subject to 
the Regulations that has been exported from the United States;
    D. Obtain from the Denied Person in the United States any item 
subject to the Regulations with knowledge or reason to know that the 
item will be, or is intended to be, exported from the United States; or
    E. Engage in any transaction to service any item subject to the 
Regulations that has been or will be exported from the United States 
and that is owned, possessed or controlled by the Denied Person, or 
service any item, of whatever origin, that is owned, possessed or 
controlled by the Denied Person if such service involves the use of any 
item subject to the Regulations that has been or will be exported from 
the United States. For purposes of this paragraph, servicing means 
installation, maintenance, repair, modification or testing.
    Third, that after notice and opportunity for comment as provided in 
Section 766.23 of the Regulations, any person, firm, corporation, or 
business organization related to the Denied Person by affiliation, 
ownership, control, or position of responsibility in the conduct of 
trade or related services may also be made subject to the provisions of 
this Order.
    Fourth, that this Order does not prohibit any export, reexport, or 
other transaction subject to the Regulations where the only items 
involved that are subject to the Regulations are the foreign-produced 
direct product of U.S.-origin technology.
    Fifth, that this Order shall be served on the Denied Person and on 
BIS, and shall be published in the Federal Register. In addition, the 
ALJ's Recommended Decision and Order, except for the section related to 
the Recommended Order, shall be published in the Federal Register.
    This Order, which constitutes the final agency action in this 
matter, is effective immediately.

    Dated: February 26, 2007.
Mark Foulon,
Acting Under Secretary of Commerce, for Industry and Security.

Certificate of Service

    I hereby certify that on February 26, 2007, I caused a copy of 
the foregoing Decision and Order signed by Mark Foulon, Acting Under 
Secretary of Commerce for Industry and Security, in the matter of 
S.P. Equipamentos de Prote[ccedil][atilde]o ao Trabalho Ltda. 
(Docket No.: 04-BIS-15), to be sent via FedEx or mailed first-class, 
postage prepaid to:

S.P. Equipamentos de Prote[ccedil][atilde]o ao Trabalho Ltda., Rua 
Visconde de Inha[uacute]ma, 386-Sa[uacute]de, 04146-030 S[atilde]o 
Paulo, Brazil.
ALJ Docketing Center, Attn: Jenny L. Collins, United States Coast 
Guard, 40 S. Gay Street, Room 412, Baltimore, MD 21202-4022.

    I hereby also certify that on February 26, 2007, a copy of the 
same foregoing Decision and Order was delivered to Melissa B. 
Mannino, Esq., Office of Chief Counsel for Industry and Security, 
U.S. Department of Commerce, Room H-3839, 14th and Constitution 
Avenue, NW., Washington, DC 20030.

Catherine J. Parker,
Executive Secretariat.

Recommended Decision and Order

    On September 13, 2004, the Bureau of Industry and Security 
(``BIS''), U.S. Department of Commerce, issued a Charging Letter 
initiating this administrative enforcement proceeding against S.P. 
Equipmantos de Prote[ccedil][atilde]o ao Trabalho Ltda. (``S.P. 
Equipamentos''). The Charging Letter alleged that S.P. Equipamentos 
committed one violation of Sec.  764.2(a) and one violation of Sec.  
764.2(e) of the Export Administration Regulations (currently codified 
at 15 CFR Parts 730-774 (2006))

[[Page 9505]]

(``Regulations''),\1\ issued under the Export Administration Act of 
1979, as amended (50 U.S.C. app. 2401-2420 (2000)) (``Act'').\2\ In 
accordance with Sec.  766.7 of Regulations, BIS moved for the issuance 
of an Order of Default against S.P. Equipamentos as S.P. Equipamentos 
failed to file an answer to the allegations in the Charging Letter 
issued by BIS within the time period required by law.
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    \1\ The charged violations occurred during 2002. The Regulations 
governing the violations at issue are found in the 2002 version of 
the Code of Federal Regulations (15 CFR Parts 730-774 (2002)). The 
2006 Regulations establish the procedures that apply to this matter.
    \2\ Since August 21, 2001, the Act has been in lapse and the 
President, through Executive Order 13,222 of August 17, 2001, 3 CFR, 
2001 Comp. 783 (2002), as extended by the Notice of August 3, 2006 
(71 FR 44,551 (August 7, 2006)), has continued the Regulations in 
effect under the International Emergency Economic Powers Act (50 
U.S.C. Sec. Sec.  1701-1706 (2000)).
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A. Legal Authority for Issuing an Order of Default

    Section 776.7 of the Regulations states that BIS may file a motion 
for an order of default if a respondent fails to file a timely answer 
to a charging letter. That section, entitled Default, provides in 
pertinent part:

Failure of the respondent to file an answer within the time provided 
constitutes a waiver of the respondent's right to appear and contest 
the allegations in the charging letter. In such event, the 
administrative law judge, on BIS's motion and without further notice 
to the respondent, shall find the facts to be as alleged in the 
charging letter and render an initial or recommended decision 
containing findings of fact and appropriate conclusions of law and 
issue or recommend an order imposing appropriate sanctions.

15 CFR 766.7 (2005).
    Pursuant to Sec.  766.6 of the Regulations, a respondent must file 
an answer to the charging letter ``within 30 days after being served 
with notice of the issuance of the charging letter * * *'' initiating 
the proceeding.

B. Service of the Notice of Issuance of Charging Letter

    In this case, BIS served notice of issuance of the Charging Letter 
in accordance with Sec.  766.3(b)(1) of the Regulations when it sent a 
copy of the Charging Letter by registered mail to S.P. Equipamentos at 
its last known address on September 13, 2004. BIS submitted evidence 
that established the Charging letter was received by S.P. Equipamentos 
on or about September 24, 2004. Counsel for S.P. Equipamentos filed a 
Notice of Appearance in this matter on February 7, 2005. To date, 
however, S.P. Equipamentos has failed to file an answer or otherwise 
file a response to the Charging Letter. Accordingly, because S.P. 
Equipamentos failed to file an answer to the Charging Letter within 
thirty (30) days from the time it received notice of issuance of the 
Charging Letter, as required by Sec.  766.6 of the Regulations, the 
undersigned finds S.P. Equipamentos to be in default.

C. Summary of Violations Charged

    The Charging Letter issued by BIS included a total of two (2) 
charges. Specifically, the Charging letter alleged that on one 
occasion, on or about February 25, 2002, S.P. Equipamentos engaged in 
conduct prohibited by the Regulations by transferring one thermal 
imaging camera classified under Export Control Classification Number 
(``ECCN'') 6A003.b.4 to State Secretariet of Civil Defense (Military 
Police of the State of Rio de Janeiro) in violation of condition 4 of 
license D274828, which forbade the resale, reexport, or transfer of the 
thermal imaging camera to any party other than that listed on the 
license without the prior approval of the United States Government. In 
transferring the thermal imaging camera to a non-approved end-user 
without prior U.S. Government authorization, S.P. Equipamentos 
committed one violation of Sec.  764.2(a) of the Regulations. (Charge 
1).
    The Charging Letter further alleged that S.P. Equipamentos sold one 
thermal imaging camera classified under ECCN 6A003.b.4 to the State 
Secretariet of Civil Defense (Military Police of the State of Rio de 
Janeiro) with the knowledge that doing so was a violation of condition 
4 license D274828, which forbade the resale, reexport, or transfer of 
the thermal imaging camera to any party other than that listed on the 
license without the prior approval of the United States Government. In 
transferring the thermal imaging camera with such knowledge, S.P. 
Equipamentos committed one violation of Sec.  764.2(e) of the 
Regulations.

D. Penalty Recommendation

[REDACTED SECTION]

E. Conclusion

    Accordingly, I am referring this Recommended Decision and Order to 
the Under Secretary of Commerce for Industry and Security for review 
and final action for the agency, without further notice to the 
Respondent, as provided in Sec.  766.7 of the Regulations. Within 
thirty (30) days after receipt of this Recommended Decision and Order, 
the Under Secretary shall issue a written order affirming, modifying, 
or vacating the Recommended Decision and Order. See 15 CFR 766.22(c).

Dated: January 31, 2007.

The Honorable Joseph N. Ingolia,

Chief Administrative Law Judge.
CERTIFICATE OF SERVICE
    I hereby certify that I have served the foregoing RECOMMENDED 
DECISION AND ORDER by First Class Mail, Postage Prepaid to the 
following person:

Peter R. Klason, Esq., Office of Chief Counsel for Industry and 
Security, U.S. Department of Commerce, Room H-3839, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230, Telephone: (202) 482-
5301, Facsimile: (202) 482-0085.


Jenny L. Collins,

Hearing Docket Clerk.

    Done and dated this 2nd day of February, 2007, Baltimore, 
Maryland.

[FR Doc. 07-949 Filed 3-1-07; 8:45 am]
BILLING CODE 3510-DT-M