[Federal Register Volume 87, Number 236 (Friday, December 9, 2022)]
[Notices]
[Pages 75587-75589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-26737]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Order Renewing Temporary Denial of Export Privileges, Quicksilver 
Manufacturing, Inc., 8209 Market St. #A173, Wilmington, NC 28411; Rapid 
Cut LLC, 8209 Market St. #A173, Wilmington, NC 28411; US Prototype, 
Inc., 8209 Market St. #A173, Wilmington, NC 28411

    Pursuant to section 766.24 of the Export Administration 
Regulations, 15 CFR parts 730-774 (2021) (``EAR'' or ``the 
Regulations''),\1\ I hereby grant the request of the Office of Export 
Enforcement (``OEE'') to renew the temporary denial order (``TDO'') 
issued in this matter on June 7, 2022. I find that renewal of this 
order is necessary in the public interest to prevent an imminent 
violation of the Regulations.
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    \1\ On August 13, 2018, the President signed into law the John 
S. McCain National Defense Authorization Act for Fiscal Year 2019, 
which includes the Export Control Reform Act of 2018, 50 U.S.C. 
4801-4852 (``ECRA''). While Section 1766 of ECRA repeals the 
provisions of the Export Administration Act, 50 U.S.C. App. 2401 et 
seq. (``EAA''), (except for three sections which are inapplicable 
here), section 1768 of ECRA provides, in pertinent part, that all 
orders, rules, regulations, and other forms of administrative action 
that were made or issued under the EAA, including as continued in 
effect pursuant to the International Emergency Economic Powers Act, 
50 U.S.C. 1701 et seq. (``IEEPA''), and were in effect as of ECRA's 
date of enactment (August 13, 2018), shall continue in effect 
according to their terms until modified, superseded, set aside, or 
revoked through action undertaken pursuant to the authority provided 
under ECRA. Moreover, section 1761(a)(5) of ECRA authorizes the 
issuance of temporary denial orders. 50 U.S.C. 4820(a)(5).
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I. Procedural History

    On June 7, 2022, an order was issued denying the export privileges 
under the Regulations of Quicksilver Manufacturing, Inc. 
(``Quicksilver''), Rapid Cut LLC (``Rapid Cut''), and US Prototype, 
Inc. (``US Prototype'') (collectively Respondents) for a period of 180 
days on the ground that issuance of the order was necessary in the 
public interest to prevent an imminent violation of the Regulations. 
The order was issued ex parte pursuant to section

[[Page 75588]]

766.24(a) of the Regulations and was effective upon issuance.\2\
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    \2\ The TDO was published in the Federal Register on June 15, 
2022 (87 FR 36104).
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    On November 10, 2022, BIS, through OEE, submitted a written request 
for renewal of the TDO that was issued on June 7, 2022. The written 
request was made more than 20 days before the TDO's scheduled 
expiration. A copy of the renewal request was sent to Respondents in 
accordance with sections 766.5 and 766.24(d) of the Regulations. On 
November 29, 2022, Respondents made a written submission for 
consideration by BIS.

II. Renewal of the TDO

A. Legal Standard

    Pursuant to section 766.24, BIS may issue an order temporarily 
denying a respondent's export privileges upon a showing that the order 
is necessary in the public interest to prevent an ``imminent 
violation'' of the Regulations, or any order, license or authorization 
issued thereunder. 15 CFR 766.24(b)(1) and 766.24(d). ``A violation may 
be `imminent' either in time or degree of likelihood.'' 15 CFR 
766.24(b)(3). BIS may show ``either that a violation is about to occur, 
or that the general circumstances of the matter under investigation or 
case under criminal or administrative charges demonstrate a likelihood 
of future violations.'' Id. As to the likelihood of future violations, 
BIS may show that the violation under investigation or charge ``is 
significant, deliberate, covert and/or likely to occur again, rather 
than technical or negligent[.]'' Id. A ``lack of information 
establishing the precise time a violation may occur does not preclude a 
finding that a violation is imminent, so long as there is sufficient 
reason to believe the likelihood of a violation.'' Id.

B. The TDO and BIS's Request for Renewal

    OEE's request for renewal is based upon the facts underlying the 
issuance of the initial TDO, as well as evidence developed over the 
continuing course of this investigation. The initial TDO, issued on 
June 7, 2022, was based on evidence that Respondents engaged in conduct 
prohibited by the Regulations by exporting or causing the export from 
the United States of technology controlled on national security and/or 
missile technology grounds to China for 3D printing without the 
required U.S. government authorization.\3\ ``Export'' is defined in the 
EAR as an ``actual shipment or transmission out of the United States, 
including the sending or taking of an item out of the United States, in 
any manner.'' 15 CFR 734.13(a)(1).\4\
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    \3\ The June 7, 2022 TDO also detailed the export of technical 
specifications to China controlled under United States Munitions 
List Category XX (Submersible Vessels and Related Articles), section 
(d), without the required U.S. Department of State authorization.
    \4\ ``Item'' means ``commodities, software, and technology.'' 15 
CFR 772.1. Further, ``technology'' may be in any tangible or 
intangible form, such as written or oral communications, blueprints, 
drawings, photographs, plans, diagrams, models, formulae, tables, 
engineering designs and specifications, computer-aided design files, 
manuals or documentation, electronic media or information revealed 
through visual inspection. Id.
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    In its November 10, 2022, request for renewal of the TDO, BIS has 
submitted evidence that Respondents' export compliance failures are 
broader in scope than the initial investigation revealed along with new 
concerns raised by actions taken after the issuance of the June 7, 2022 
TDO. Specifically, BIS's evidence and further investigation has 
identified additional U.S. companies that engaged in business with 
Respondents involving the unlicensed export of technical specifications 
to China related to firearm components (ECCN 0E501.a) and space-rated 
items (ECCN 9E515.a), both of which are controlled on national security 
and regional stability grounds, as well as numerous additional 
suspected export control-related violations between 2017 and 2022. 
BIS's evidence also indicates that Respondents' apparent attempts at 
compliance since the issuance of the June 7, 2022 TDO at best continue 
to fall short by providing inaccurate information to customers about 
the scope of items subject to the Regulations.
    Moreover, BIS has submitted evidence that a China-based individual 
who is known to operate an @rapidcut.com email address to facilitate 
Rapid Cut's business operations, may have violated the TDO shortly 
after its issuance by providing customers information on how to 
complete and fulfill pending orders, despite the issuance of the TDO. 
Such information includes instructions to cancel existing Rapid Cut 
orders and reissue purchase orders to China Company No. 1, in an 
apparent attempt to avoid the restrictions of the TDO.\5\
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    \5\ Respondents' November 29, 2022 submission asserts that the 
individual who sent the above-described emails was not an employee 
of Rapid Cut but rather an employee of China Company No. 1, a 
separate legal entity. Rapid Cut markets and sells China Company No. 
1's manufacturing capabilities in North America, and China Company 
No. 1 pays Rapid Cut commissions on these sales.
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III. Findings

    Under the applicable standard set forth in section 766.24 of the 
Regulations and my review of the entire record, including Respondents' 
November 29, 2022 submission, I find that the evidence presented by BIS 
convincingly demonstrates that Respondents have acted in violation of 
the Regulations; that such violations have been significant, deliberate 
and covert; and that given the foregoing and the nature of the matters 
under investigation, there is a likelihood of imminent violations. 
Therefore, renewal of the TDO is necessary in the public interest to 
prevent imminent violation of the Regulations and to give notice to 
companies and individuals in the United States and abroad that they 
should avoid dealing with Respondents, in connection with export and 
reexport transactions involving items subject to the Regulations and in 
connection with any other activity subject to the Regulations.

IV. Order

    It is therefore ordered:
    First, that Quicksilver Manufacturing, Inc., with an address at 
8209 Market St. #A173, Wilmington, NC 28411; Rapid Cut LLC, with an 
address at 8209 Market St. #A173, Wilmington, NC 28411; and US 
Prototype, Inc., with an address at 8209 Market St. #A173, Wilmington, 
NC 28411 (collectively Respondents), when acting for or on their 
behalf, any successors or assigns, agents, or employees 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 EAR, or in any other activity 
subject to the EAR 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 EAR, or engaging in any other 
activity subject to the EAR; 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 EAR, or from any other activity subject to the EAR.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export, reexport, or transfer (in-country) to or on behalf of 
Respondents any item subject to the EAR;

[[Page 75589]]

    B. Take any action that facilitates the acquisition or attempted 
acquisition by Respondents of the ownership, possession, or control of 
any item subject to the EAR that has been or will be exported from the 
United States, including financing or other support activities related 
to a transaction whereby Respondents 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 Respondents of any item subject to the 
EAR that has been exported from the United States;
    D. Obtain from Respondents in the United States any item subject to 
the EAR 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 EAR 
that has been or will be exported from the United States and which is 
owned, possessed or controlled by Respondents or service any item, of 
whatever origin, that is owned, possessed or controlled by Respondents 
if such service involves the use of any item subject to the EAR 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 EAR, any other person, firm, corporation, or 
business organization related to Respondents by ownership, control, 
position of responsibility, affiliation, or other connection in the 
conduct of trade or business may also be made subject to the provisions 
of this Order.
    In accordance with the provisions of sections 766.24(e) of the EAR, 
Respondents may, at any time, appeal this Order by filing a full 
written statement in support of the appeal with the Office of the 
Administrative Law Judge, U.S. Coast Guard ALJ Docketing Center, 40 
South Gay Street, Baltimore, Maryland 21202-4022.
    In accordance with the provisions of section 766.24(d) of the EAR, 
BIS may seek renewal of this Order by filing a written request not 
later than 20 days before the expiration date. A renewal request may be 
opposed by Respondents as provided in section 766.24(d), by filing a 
written submission with the Assistant Secretary of Commerce for Export 
Enforcement, which must be received not later than seven days before 
the expiration date of the Order.
    A copy of this Order shall be provided to Respondents and shall be 
published in the Federal Register.
    This Order is effective immediately and shall remain in effect for 
180 days.

    Dated: December 5, 2022.
Kevin J. Kurland,
Deputy Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2022-26737 Filed 12-8-22; 8:45 am]
BILLING CODE 3510-DT-P