[Federal Register Volume 88, Number 108 (Tuesday, June 6, 2023)]
[Notices]
[Pages 37007-37009]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12067]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


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; Order Renewing Temporary Denial of Export Privileges

    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 December 5, 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according to their terms until modified, superseded, set aside, or 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 766.24(a) of the 
Regulations and was effective upon issuance.\2\ This temporary denial 
order was subsequently renewed on December 5, 2022, in accordance with 
section 766.24(d) of the Regulations.\3\
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    \2\ The TDO was published in the Federal Register on June 15, 
2022 (87 FR 36104).
    \3\ The TDO was published in the Federal Register on December 9. 
2022 (87 FR 75587).
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    On May 10, 2023, BIS, through OEE, submitted a written request for 
renewal

[[Page 37008]]

of the TDO that was issued on December 5, 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 May 26, 2023, 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.\4\ ``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).\5\
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    \4\ 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.
    \5\ ``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 
submitted evidence that Respondents' export compliance failures were 
broader in scope than the investigation initially revealed, as well as 
evidence related to new concerns raised by actions taken after the 
issuance of the June 7, 2022 TDO. Specifically, BIS's evidence and 
further investigation 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 renewal request was also based upon 
concerns related to Respondents' initial attempts at compliance 
following the issuance of the June 7, 2022 TDO, including the provision 
of potentially inaccurate information to customers about the scope of 
items subject to the Regulations. In its November 10, 2022, BIS also 
submitted evidence that a China-based individual, known to operate 
[email protected] email address to facilitate Rapid Cut's business 
operations, may have violated the TDO shortly after its issuance by 
providing customer information on how to complete and fulfill pending 
orders, despite the issuance of the TDO. Such information included 
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.\6\
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    \6\ 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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    The May 10, 2023 request for renewal of the December 5, 2022 TDO is 
also based on evidence related to the nature and scope of BIS's 
continuing investigation. This includes the circumstances surrounding 
the access by China-based employees to Respondents' email accounts, as 
detailed above, which remain under investigation. The renewal request 
is also based on evidence provided by additional U.S. companies that 
engaged in business with Respondents involving the unlicensed export of 
technical specifications to China, including information received as 
recently as April 2023. In sum, and as detailed in the renewal request, 
BIS's investigation is ongoing, the entirety of Respondents' misconduct 
remains unknown, and a final written disclosure of prior violations has 
not yet been submitted.\7\
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    \7\ Respondents' May 26, 2023, submission to BIS provided 
updates on its efforts to review and submit a written disclosure to 
BIS detailing prior violations.
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    Additionally, BIS's request for renewal also includes a request to 
modify the TDO to exclude EAR99 commodities and technology from its 
scope of coverage. As also noted in the request, such items generally 
do not require a license to China and were not the basis for the 
violations currently under investigation.

III. Findings

    Under the applicable standard set forth in section 766.24 of the 
Regulations and my review of the entire record, including Respondents' 
May 26, 2023 submission, I find that the evidence presented by BIS 
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 remains a concern of imminent violations. 
Additionally, I have considered OEE's request to narrow the scope of 
the TDO going forward to only prohibit transactions involving items 
that are listed on the Commerce Control List. Based on the totality of 
circumstances, including Respondents' submissions regarding compliance 
remediation measures taken to date and a written disclosure to BIS that 
demonstrates a significant effort to provide a detailed account of past 
violations, I find OEE's recommendation to be both measured and 
appropriate. Accordingly, renewal of the TDO with modification 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 exports, reexports, and transfers (in-
country) involving items listed on the Commerce Control List.

[[Page 37009]]

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 listed on the Commerce Control List as set 
forth in Supplement No. 1 to 15 CFR part 774, or in any other activity 
involving an item listed on the Commerce Control List including, but 
not limited to:
    A. Applying for, obtaining, or using any license, license 
exception, or export control document involving an item listed on the 
Commerce Control List;
    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 listed on the Commerce Control List; or
    C. Benefitting in any way from any transaction involving any item 
exported or to be exported from the United States that is listed on the 
Commerce Control List.
    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 listed on the Commerce Control List;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by Respondents of the ownership, possession, or control of 
any item listed on the Commerce Control List 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 listed on the 
Commerce Control List that has been exported from the United States;
    D. Obtain from Respondents in the United States any item listed on 
the Commerce Control List, 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 listed on the 
Commerce Control List, 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 listed on the Commerce Control List, 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: June 1, 2023.
Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2023-12067 Filed 6-5-23; 8:45 am]
BILLING CODE 3510-DT-P