[Federal Register Volume 72, Number 102 (Tuesday, May 29, 2007)]
[Notices]
[Pages 29483-29484]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-2629]


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

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Action Affecting Export Privileges; Data Physics Corporation; In the 
Matter of: Data Physics Corporation; 2025 Gateway Place, Suite 260, San 
Jose, CA 95110, Respondent.


Order Relating to Data Physics Corporation

    The Bureau of Industry and Security, U.S. Department of Commerce 
(``BIS'') has initiated an administrative proceeding against Data 
Physics Corporation (hereinafter referred to as ``Data Physics''), case 
number 06-BIS-21, through the issuance of a charging letter, pursuant 
to Section 766.3 of the Export Administration Regulations (currently 
codified as 15 CFR parts 730-774 (2007)) (``Regulations'') \1\ and 
Section 13(c) of the Export Administration Act of 1979, as amended (50 
U.S.C. app. 2401-2420 (2000)) (``Act'').\2\ BIS and Data Physics have 
agreed to settle case 06-BIS-21 based on the following five alleged 
violations of the Regulations. Specifically, the charges are:

    \1\ The violations charged occurred in 2001-2002. The 
Regulations governing the violations at issue are found in the 2001-
2002 versions of the Code of Federal Regulations (15 CFR Parts 730-
774 (2001-2002)). The 2007 Regulations govern the procedural aspect 
of the case.
    \2\ 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 2, 2006 
(71 Fed. Reg. 44,551 (Aug. 7, 2006)), has continued the Regulations 
in effect under the International Emergency Economic Powers Act (50 
U.S.C. 1701-1706 (2000)) (``IEEPA'').
---------------------------------------------------------------------------

Charge 1 15 CFR 764.2(a)--Unlicensed Export to Listed Entity in China

    On or about December 20, 2001, Data Physics engaged in conduct 
prohibited by the Regulations when it exported a DP 550 Vibration 
Controller, an item subject to the Regulations, to the Chines 
Academy of Launch Vehicle Technology (``CALT'') in the People's 
Republic of China (``China''), an organization on BIS's Entity 
List,\3\ without the license required by the Department of Commerce. 
A licensee was required for this export under Section 744.1 and 
Supplement No. 4 to Part 744 of the Regulations. In so doing, Data 
Physics committed one violation of Section 764.2(a) of the 
Regulations.
---------------------------------------------------------------------------

    \3\ 15 CFR Supplemental No. 4 to Part 744.
---------------------------------------------------------------------------

Charge 2 15 CFR 764.2(e)--Acting With Knowledge of a Violation

    On or about December 20, 2001, in connection with the 
transaction described in Charge 1 above, Data Physics sold and/or 
forwarded a DP 550 Vibration Controller with knowledge that a 
violation of the Regulations would occur in connection with the 
item. At all times relevant hereto, Data Physics knew or should have 
known that an export license was required to ship a DP 550 Vibration 
Controller, an item subject to the Regulation, from the United 
States to CALT, an entity on BIS's Entity List. Data Physics had 
reason to know that a license was required for this export since, 
inter ali[aacute] Office of Export Enforcement (``OEE'') special 
agents visited Data Physics in May 1999 where they informed Data 
Physics' Chief Technology Officer and the Director of Manufacturing 
and Quality Systems, on the rules and requirements regarding exports 
to organizations on the BIS Entity list. The Chief Technology 
Officer then sent an e-mail to Sri Welaratna, company president, 
explaining the rules and included a link to BIS's Entity List. In so 
doing, Data Physics committed one violation of Section 764.2(e) of 
the Regulations.

Charge 3 15 CFR 764.2(a)--Unlicensed Export to Listed Entity in China

    On or abut March 15, 2002, Data Physics engaged in conduct 
prohibited by the Regulations when it exported a Signalstar Vector 
(DP 560) vibration controller, an item subject to the Regulations, 
to the Beijing Automation Equipment Institute (``BACEI'') in China, 
an organization on BIS's Entity List,\4\ without the license 
required by the Department of Commerce. A license was required for 
this export under Section 744.1 and Supplement No. 4 to Part 744 of 
the Regulations. In so doing, Data Physics committed one violation 
of Section 764.2(a) of the Regulations.
---------------------------------------------------------------------------

    \4\ Id.
---------------------------------------------------------------------------

Charge 4 15 CFR 764.2(e)--Acting With Knowledge of a Violation

    On or about March 15, 2002, in connection with the transaction 
described in Charge 3 above, Data Physics sold and/or forwarded a 
Signalstar Vector (DP 560) vibration controller with knowledge that 
a violation of the Regulations would occur in connection with the 
item. At all times relevant hereto, Data Physics knew or should have 
known hereto, Data Physics knew or should have known that an export 
license was required to ship a Signalstar Vector (DP 560) vibration 
controller, an item subject to the Regulations, from the United 
States to BACEI, an entity on BIS's Entity List. Data Physics had 
reason to know that a license was required for this export since, 
inter alia, OEE special agents visited Data Physics in may 1999 
where they informed Data Physics' Chief Technology Officer and the 
Director of Manufacturing and Quality Systems, on the rules and 
requirements regarding exports to organizations on the BIS Entity 
List. The Chief Technology Officer then sent an e-mail to Sri 
Welaratna, company president, explaining the rules and included a 
link to BIS's Entity List. In so doing, Data Physics committed one 
violation of Section 764.2(e) of the Regulations.

Charge 5 CFR 764.2(g)--False Statement on Shipper's Export Declaration

    On or about March 15, 2002, in connection with the transaction 
described in Charges 3 and 4 above, Data Physics made a false 
statement to the U.S. Government in connection with the submission 
of an export control document. Specifically, Data Physics filed a 
Shipper's Export Declaration (``SED'') with the U.S. Government 
stating that the items that were the subject of the SED qualified 
for export as ``NLR,'' i.e., that no license was required.This 
representation was false, as a license was required for the 
Signalstar Vector (DP 560) vibration controller to be exported to 
the Beijing Automation Control Equipment Institute. In so doing, 
Data Physics committed one violation of Section 764.2(g) of the 
Regulations.

    BIS and Data Physics having entered into a Settlement Agreement 
pursuant to Section 766.18(b) of the Regulations whereby they agreed to 
settle this matter in accordance with the terms and conditions set 
forth therein, and the terms of the Settlement Agreement having been 
approved by me;
    It is Therefore Ordered:
    First, that Data Physics shall pay a civil penalty of $55,000 to 
the U.S. Department of Commerce to be paid within 30 days from the date 
of entry of the Order. Payment shall be made in the manner specified in 
the attached instructions. Additionally:
    A. Pursuant to the Debt Collection Act of 1982, as amended 931 
U.S.C. 3701-3720E (1983 and Supp. 2000)), the civil penalty owed under 
this Order accrues interest as more fully described in the attached 
Notice, and, if payment is not made by the due date specified herein, 
Data Physics will be assessed, in addition to the full amount of the 
civil penalty and interest, a penalty charge and an administrative 
charge, as more fully described in the attached Notice.
    B. The timely payment of the civil penalty set forth above is 
hereby made a condition to the granting, restoration, or continuing 
validity of any export license, license exception, permission, or 
privilege granted, or to be granted, to Data Physics. Accordingly, if 
Data Physics should fail to pay the civil penalty in a timely manner, 
the undersigned may enter an Order

[[Page 29484]]

denying all of Data Physics' export privileges for a period of one year 
from the date of entry of this Order.
    C. Data Physics shall perform an audit of its internal compliance 
program within 12 months from the date of entry of this Order. Said 
audit shall be in substantial compliance with the Export management 
Systems audit module, which is available from the BIS Web site at 
http://www.bis.doc.gov/complianceandenforcement/ExportManagementSystems.htm, which is incorporated by reference. A copy 
of said audit shall be transmitted to the Office of Export Enforcement, 
96 North Third Street, Suite 250, San Jose, California 95112 no later 
than 13 months from the date of entry of the Order.
    Second, that for a period of five years from the date of entry of 
the Temporary Denial Order against Data Physics on May 23, 2006, Data 
Physics Corporation, 2025 Gateway Place, Suite 260, San Jose, CA 95110, 
its subsidiaries, successors or assigns, and, when acting for or on 
behalf of Data Physics, its officers, representatives, agents or 
employees (``Denied Person(s)'') may not, directly or indirectly, 
participate in any way in any transaction involving any commodity, 
software, or technology (hereinafter collectively referred to as 
``item'') that is subject to the Regulations and that is exported or to 
be exported from the United States to the People's Republic of China 
(``China''), or in any other activity subject to the Regulations that 
involves China, including, but not limited to:
    A. Applying for, obtaining, or using any license, License 
Exception, or export control document that involves export to China;
    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 that is subject to the Regulations 
and that is exported or to be exported from the United States to China, 
or in any other activity subject to the Regulations that involves 
China; or
    C. Benefiting in any way from any transaction involving any item 
exported or to be exported from the United States to China that is 
subject to the Regulations, or in any other activity subject to the 
Regulations that involves China.
    Third, that no person may, directly or indirectly, do any of the 
actions described below with respect to an item that is subject to the 
Regulations and that has been, will be, or is intended to be exported 
or reexported to China:
    A. Export or reexport to or on behalf of a Denied Person any item 
subject to the Regulations to China;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by a 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 to China, including financing or other 
support activities related to a transaction whereby a 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 a denied person of any item subject to 
the Regulations that has been exported from the United States to China;
    D. Obtain from a 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 to 
China; 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 to 
China and that is owned, possessed or controlled by a Denied person, or 
service any item, of whatever origin, that is owned, possessed or 
controlled by a 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 to China. For purposes of this paragraph, servicing 
means installation, maintenance, repair, modification or testing.
    F. 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.
    Fourth, that, after notice and opportunity for coment as provided 
in Section 766.23 of the Regulations, any person, firm, corporation, or 
business orgnaization related to Data Physics by affiliation, 
ownership, control, or postiion of responsibility in the conduct of 
trade or related services may also be made subject to the provisions of 
the Order
    Fifth, that the charging letter, amended charging letter, the 
Settlement Agreement, and this Order, and the record of the cases as 
defined by Section 766.20 of the Regulations shall be made available to 
the public. BIS shall notify the administrative law judge that case 06-
BIS-21 is withdrawn from adjudication.
    Sixth, that this Order shall be served on the Denied Person and on 
BIS, and shall be pub lished in the Federal Register.
    This Order, which constitutes the final agency action in this 
matter, is effective immedicately.

    Entered this 15th day osf May 2007.
Darryl W. Jackson,
Assistant Secretary of Commerce for Export Enforement.
[FR Doc. 07-2629 Filed 5-25-07; 8:45 am]
BILLING CODE 3510-DT-M