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âAdministration€Regulations€by€incorporating€guidance€on€how€BIS€makes€penaltyÐ ‚Ò Ðdeterminations€when€settling€administrative€enforcement€cases€under€part€766€of€the€ExportÐ T¤ ÐAdministration€Regulations€(EAR),€15€CFR€ðððð€730„799€(2003).€This€guidance€also€addressesÐ & v Ðrelated€aspects€of€how€BIS€responds€to€violations€of€the€EAR,€such€as€charging€decisions.€ThisÐ ø H Ðrule€also€proposes€to€amend€parts€764€and€766€of€the€EAR€to€conform€to€this€guidance.Ð Ê   ÐÌDATES:€€Comments€must€be€received€by€November€17,€2003Ð n¾  ÐÌADDRESSES:€€Written€comments€should€be€addressed€to:€€Chief€Counsel€for€Industry€andÐ b ÐSecurity,€Attention:€Philip€D.€Golrick,€Room€H„3839,€United€States€Department€of€Commerce,Ð ä4 Ð14th€Street€and€Constitution€Avenue,€N.W.,€Washington,€D.C.€€20230.€€Please€mark€envelopesÐ ¶ Ðcontaining€comments€with€the€words€ð ðSettlement€Guidance.ðð€€Ð ˆØ ÐÌFOR€FURTHER€INFORMATION€CONTACT:€For€further€information€regarding€this€proposedÐ ,| Ðrule,€contact€Philip€D.€Golrick,€Office€of€Chief€Counsel€for€Industry€and€Security,€United€StatesÐ þN ÐDepartment€of€Commerce,€at€(202)€482-5301.Ð Ð!   ÐÌSUPPLEMENTARY€INFORMATION:Ð t%Ä $ ÐÌBackgroundÐ )h$( Ðâ âÔ‡©8$§XXÔÔ‡-©€ §§©8$ÔÐ ê*:&* ÐÔ#†©8$§§-©€ Z #ÔÔ#†X|îX§©8$; #Ôà  àAs€an€essential€part€of€its€administration€of€the€export€control€system,€BIS€bringsÐ ° Ðâ âadministrative€enforcement€actions€for€violations€of€the€Export€Administration€RegulationsÐ ‚Ò Ð(EAR).€€Many€administrative€enforcement€cases€are€resolved€through€settlements€between€BISÐ T¤ Ðand€the€respondent.€Ð & v ÐÌà  àThe€rule€proposes€to€incorporate€guidance€in€the€EAR€on€how€BIS€determines€whatÐ Ê   Ðpenalty€is€appropriate€for€the€settlement€of€an€administrative€enforcement€case.€€This€guidanceÐ œì  Ðwould€appear€in€a€new€Supplement€No.€1€to€part€766€of€the€EAR.€€The€proposed€guidanceÐ n¾  Ðidentifies€both€general€factors,€such€as€the€destination€for€the€export€and€degree€of€willfulnessÐ @ Ðinvolved€in€violations,€and€specific€mitigating€and€aggravating€factors€which€BIS€typically€takesÐ b Ðinto€account€in€determining€an€appropriate€penalty.€€The€proposed€guidance€also€describesÐ ä4 Ðfactors€that€BISððs€Office€of€Export€Enforcement€(OEE)€typically€considers€in€describing€whetherÐ ¶ Ða€violation€should€be€addressed€in€a€warning€letter,€rather€than€in€an€administrative€enforcementÐ ˆØ Ðcase.€€The€guidance€would€not€apply€to€antiboycott€matters€arising€under€part€760€of€the€EAR.Ð Zª ÐÌà  àIn€part€764,€the€rule€proposes€to€amend€section€764.5(e)€to€state€that€Ô‡/X|îXXX|îÔSupplement€No.€1€toÐ þN Ðpart€766€describes€how€BIS€typically€exercises€its€discretion€regarding€whether€to€pursue€anÐ Ð!   Ðadministrative€enforcement€case€regarding€violations€reported€in€a€voluntary€self„disclosureÐ ¢#ò" Ðunder€section€764.5,€and€what€administrative€sanctions€to€seek€in€settling€such€a€caseÔ#†X|îXX/X|îµ#Ô.€€Ð t%Ä $ ÐÌà  àIn€part€766,Ô‡/X|îXXX|îÔ€the€rule€proposes€to€amend€section€766.3(a)Ô#†X|îXX/X|îˆ#Ô€to€state€that€Ô‡/X|îXXX|îÔSupplement€No.€1€toÐ )h$( Ðpart€766€describes€how€BIS€typically€exercises€its€discretionÔ#†X|îXX/X|î#Ô€regarding€the€issuance€of€chargingÐ ê*:&* Ðletters,€other€than€in€antiboycott€matters€under€part€760.€€The€rule€proposes€to€amend€sectionÐ ° Ð766.18€to€add€a€new€paragraph€(f),€stating€that€Ô‡/X|îXXX|îÔSupplement€No.€1€to€part€766€Ô#†X|îXX/X|î‡#ÔÔ‡/X|îXXX|îÔdescribes€how€BISÐ ‚Ò Ðtypically€exercises€its€discretion€regarding€the€terms€under€which€it€is€willing€to€settle€particularÐ T¤ Ðcases,€other€than€antiboycott€matters€under€part€760Ô#†X|îXX/X|îæ#Ô.€Ð & v ÐÌà  àThis€guidance€is€consistent€with€the€objectives€of€section€223€of€the€Small€BusinessÐ Ê   ÐRegulatory€Enforcement€Fairness€Act€(Title€II,€Pub.€L.104„121).€€Ð œì  ÐÌò òRulemaking€Requirements:ó óÐ @ ÐÌÔ‡ X|îXXX|îÔà  à1.€€This€proposed€rule€has€been€determined€to€be€not€significant€for€purposes€of€E.O.Ð æ6 Ð12866.Ð ¸ ÐÌà  à2.€€Notwithstanding€any€other€provision€of€law,€no€person€is€required€to€respond€to,€norÐ \¬ Ðshall€any€person€be€subject€to€a€penalty€for€failure€to€comply€with€a€collection€of€information,Ð .~ Ðsubject€to€the€requirements€of€the€Paperwork€Reduction€Act€(PRA),€unless€that€collection€ofÐ  P Ðinformation€displays€a€currently€valid€OMB€Control€Number.Ô#†X|îXX X|î#Ô€€This€rule€involves€a€collection€ofÐ Ò!"  Ðinformation€subject€to€the€requirements€of€the€Paperwork€Reduction€Act€of€1980€(44€U.S.C.Ð ¤#ô" Ð3501€et€seq.).€€This€collection€has€been€approved€by€the€Office€of€Management€and€BudgetÐ v%Æ $ Ðunder€Control€Number€0694„0058,€and€carries€an€annual€burden€hour€estimate€of€Ô€/X|îXXX|îÔ800€hours€andÐ H'˜"& Ða€cost€to€the€public€of€approximately€$32,000.€€€Ð )j$( ÐÐ ì*<&* ÐÔ‡ X|îXX/X|îÔà  à3.€€This€rule€does€not€contain€policies€with€Federalism€implications€as€this€term€is€definedÐ ° Ðin€Executive€Order€13132.Ð ‚Ò ÐÌà  à4.€Ô#†/X|îXX X|î~#ÔÔ‡.X|îXX/X|îÔPursuant€to€5€U.S.C.€553(b)(A),€the€provisions€of€the€Administrative€Procedure€ActÐ & v Ðrequiring€a€notice€of€proposed€rulemaking€and€the€opportunity€for€public€comment€are€waived,Ð ø H Ðbecause€this€regulation€involves€a€general€statement€of€policy€and€rule€of€agency€procedure.€€NoÐ Ê   Ðother€law€requires€that€a€notice€of€proposed€rulemaking€and€an€opportunity€for€public€commentÐ œì  Ðbe€given€for€this€rule.€€Because€a€notice€of€proposed€rulemaking€and€an€opportunity€for€publicÐ n¾  Ðcomment€are€not€required€to€be€given€for€this€rule€Ô#†/X|îXX.X|î{#Ôunder€the€Administrative€Procedure€Act€or€byÐ @ Ðany€other€law,€the€analytical€requirements€of€the€Regulatory€Flexibility€Act€(5€U.S.C.€601€òòetóóÐ b Ðòòseqóó.)€are€not€applicable.€€However,€in€view€of€the€importance€of€this€proposed€rule,€whichÐ ä4 Ðrepresents€the€first€comprehensive€statement€of€BISððs€approach€toward€these€issues,€BIS€isÐ ¶ Ðseeking€public€comments€before€the€proposed€rule€takes€effect.€€The€period€for€submission€ofÐ ˆØ Ðcomments€will€close€November€17,€2003.€€BIS€will€consider€all€comments€received€before€theÐ Zª Ðclose€of€the€comment€period€in€developing€a€final€rule.€€Comments€received€after€the€end€of€theÐ ,| Ðcomment€period€will€be€considered€if€possible,€but€their€consideration€cannot€be€assured.€€BISÐ þN Ðwill€not€accept€public€comments€accompanied€by€a€request€that€a€part€or€all€of€the€material€beÐ Ð!   Ðtreated€confidentially€because€of€its€business€proprietary€nature€or€for€any€other€reason.€€BIS€willÐ ¢#ò" Ðreturn€such€comments€and€materials€to€the€persons€submitting€the€comments€and€will€notÐ t%Ä $ Ðconsider€them€in€the€development€of€the€final€rule.€€All€public€comments€on€this€proposed€ruleÐ F'–"& Ðmust€be€in€writing€(including€fax€or€e„mail)€and€will€be€a€matter€of€public€record,€available€forÐ )h$( Ðpublic€inspection€and€copying.€€The€Office€of€Administration,€Bureau€of€Industry€and€Security,Ð ê*:&* ÐU.S.€Department€of€Commerce,€displays€these€public€comments€on€BIS's€Freedom€ofÐ ° ÐInformation€Act€(FOIA)€Web€site€at€http://www.bis.doc.gov/foia.€€This€office€does€not€maintainÐ ‚Ò Ða€separate€public€inspection€facility.€€If€you€have€technical€difficulties€accessing€this€web€site,Ð T¤ Ðplease€call€BIS's€Office€of€Administration€at€(202)€482„0637€for€assistance.Ð & v ÐÌò òList€of€Subjectsó óÐ Ê   ÐÌòò15€CFR€Part€764óóÐ pÀ  ÐÌà  àAdministrative€practice€and€procedure,€Exports,€Foreign€trade,€Law€enforcement,€Penalties.Ð d ÐÌòò15€CFR€Part€766óóÐ ¸ ÐÌà  àAdministrative€practice€and€procedure,€Confidential€business€information,€Exports,Ð \¬ ÐForeign€trade.Ð .~ ÐÓÓÔ‡ X|îXX/X|îÔÌà  àFor€the€reasons€discussed€in€the€preamble,€this€proposed€rule€would€amend€Parts€764€andÐ Ò!"  Ð766€of€the€EAR€as€follows:Ð ¤#ô" ÐÌà  à1.€€Ô#†/X|îXX X|î’'#ÔÔ‡ X|îXX/X|îÔThe€authority€citation€for€15€CFR€part€764€is€amended€to€read€as€follows:Ô#†/X|îXX X|î(#ÔÔ‡ X|îXX/X|îÔÐ H'˜"& Ðâ âÐ )j$( Ðà  àò òAuthority:Ô#†/X|îXX X|î)#ÔÔ‡ X|îXX/X|îÔó ó€50€U.S.C.€app.€2401€òòet€seqóó.;€50€U.S.C.€1701€òòet€seqóó.;Ô#†/X|îXX X|î§)#ÔÔ‡X|îXX/X|îÔ€E.O.€13222,€66€FRÐ ° Ðâ â44025,€Ô#†/X|îXXX|î-*#Ô€3€CFR.,€2001€Comp.,€p.€783;€Notice€of€August€7,€2003€(68€FR€47833,€August€11,€2003).Ô‡ X|îXX/X|îÔò òÐ ˆØ Ðó óÔ#†/X|îXX X|îü*#ÔÔ‡ X|îXX/X|îÔÌò òPART€764€ð!ð€[AMENDED]ó óÐ , | ÐÌà  à2.€€Section€764.5,€paragraph€(e)€is€revised€to€read€as€follows:Ô#†/X|îXX X|îY+#ÔÔ‡ X|îXX/X|îÔÐ Ò "  ÐÔ#†/X|îXX X|î,#Ôò òó óÌò òðð€764.5€Voluntary€self„disclosure.ó óÐ vÆ  ÐÌÔ‡ X|îXX/X|îÔà  àà ` àà ¸ àà  à*€€€*€€€*€€€*€€€*Ô#†/X|îXX X|î¹,#ÔÐ l ÐÌà  à(e)€òòCriteriaóó.€€Supplement€No.€1€to€part€766€describes€how€BIS€typically€exercises€itsÐ À Ðdiscretion€regarding€whether€to€pursue€an€administrative€enforcement€case€under€part€766€andÐ ’â Ðwhat€administrative€sanctions€to€seek€in€settling€such€a€case.Ð d´ ÐÌà  à3.€€Ô‡ X|îXX/X|îÔThe€authority€citation€for€15€CFR€part€766€continues€to€read€as€follows:Ô#†/X|îXX X|î£.#ÔÔ‡ X|îXX/X|îÔÐ  X ÐÌà  àò òAuthority:Ô#†/X|îXX X|î-/#ÔÔ‡ X|îXX/X|îÔó ó€50€U.S.C.€app.€2401€òòet€seqóó.;€50€U.S.C.€1701€òòet€seqóó.;Ô#†/X|îXX X|îž/#ÔÔ‡X|îXX/X|îÔ€E.O.€13222,€66€FRÐ ¬#ü" Ð44025,€Ô#†/X|îXXX|î$0#Ô€3€CFR.,€2001€Comp.,€p.€783;€Notice€of€August€7,€2003€(68€FR€47833,€August€11,€2003).Ô‡ X|îXX/X|îÔÐ „%Ô $ ÐÔ#†/X|îXX X|îé0#ÔÔ‡ X|îXX/X|îÔò òÌÔ#†/X|îXX X|î@1#ÔÔ‡ X|îXX/X|îÔPART€766€ð!ð€[AMENDED]ó óÔ#†/X|îXX X|î†1#ÔÐ *)z$( ÐÐ þ*N&* Ðà  à4.€€Section€766.3,€paragraph€(a)€is€revised€to€read€as€follows:€€Ð ° ÐÌò òðð766.3€Institution€of€administrative€enforcement€proceedings.ó óÐ T¤ ÐÌòòà  àóó(a)€€òòCharging€lettersóó.€€Ô‡ X|îXX/X|îÔThe€Director€of€the€Office€of€Export€Enforcement€(OEE)Ô#†/X|îXX X|îû2#Ô€or€theÐ ú J ÐDirector€of€the€Office€of€Antiboycott€Compliance€(OAC),€as€appropriate,€or€such€otherÐ Ì   ÐDepartment€of€Commerce€official€as€may€be€designated€by€the€Assistant€Secretary€of€CommerceÐ žî  Ðfor€Export€Enforcement,€may€begin€administrative€enforcement€proceedings€under€this€part€byÐ pÀ  Ðissuing€a€charging€letter€in€the€name€of€BIS.€€Supplement€No.€1€to€this€part€describes€how€BISÐ B’ Ðtypically€exercises€its€discretion€regarding€the€issuance€of€charging€letters,€other€than€inÐ d Ðantiboycott€matters€under€part€760.€€The€charging€letter€shall€constitute€the€formal€complaint€andÐ æ6 Ðwill€state€that€there€is€reason€to€believe€that€a€violation€of€the€EAA,€the€EAR,€or€any€order,Ð ¸ Ðlicense€or€authorization€issued€thereunder,€has€occurred.€€It€will€set€forth€the€essential€facts€aboutÐ ŠÚ Ðthe€alleged€violation,€refer€to€the€specific€regulatory€or€other€provisions€involved,€and€giveÐ \¬ Ðnotice€of€the€sanctions€available€under€part€764€of€the€EAR.€€The€charging€letter€will€inform€theÐ .~ Ðrespondent€that€failure€to€answer€the€charges€as€provided€in€ðð766.6€of€this€part€will€be€treated€asÐ  P Ða€default€under€ðð766.7€of€this€part,€that€the€respondent€is€entitled€to€a€hearing€if€a€written€demandÐ Ò!"  Ðfor€one€is€requested€with€the€answer,€and€that€the€respondent€may€be€represented€by€counsel,€orÐ ¤#ô" Ðby€other€authorized€representative€who€has€a€power€of€attorney€to€represent€the€respondent.€€AÐ v%Æ $ Ðcopy€of€the€charging€letter€shall€be€filed€with€the€administrative€law€judge,€which€filing€shall€tollÐ H'˜"& Ðthe€running€of€the€applicable€statute€of€limitations.€€Charg‚ing€letters€may€be€amended€or€suppleƒÐ )j$( Ðmented€at€any€time€before€an€answer€is€filed,€or,€with€permission€of€the€administrative€law€judge,Ð ì*<&* Ðafterwards.€€BIS€may€unilaterally€withdraw€charging€letters€at€any€time,€by€notifying€theÐ ° Ðrespondent€and€the€administrative€law€judge.Ð ‚Ò ÐÌà  à5.€€Section€766.18€is€amended€to€add€a€new€paragraph€(f)€to€read€as€follows:Ð & v ÐÌò òðð766.18€Settlement.ó óÐ Ê   ÐÌÔ‡ X|îXX/X|îÔà  àà ` àà ¸ àà  à*€€€*€€€*€€€*€€€*Ô#†/X|îXX X|î£<#ÔÔ‡ X|îXX/X|îÔÐ pÀ  ÐÌà  à(f)€Ô#†/X|îXX X|î&=#Ô€Supplement€No.€1€to€this€part€describes€how€BIS€typically€exercises€its€discretionÐ d Ðregarding€the€terms€under€which€it€is€willing€to€settle€particular€cases,€other€than€antiboycottÐ æ6 Ðmatters€under€Part€760.Ð ¸ ÐÌà  à6.€€Part€766€is€amended€by€adding€Supplement€No.€1€to€read€as€follows:Ð \¬ ÐÌÔ& ¨ Ôò òSupplement€No.€1€to€Part€766€ð!ð€Guidance€on€Charging€and€Penalty€Determinations€inÐ  P ÐSettlement€of€Administrative€Enforcement€Casesó óÔ'¨ ?ÔÐ Ô!$  Ðò òÌIntroductionó óÐ |%Ì $ Ðà  àÌà  àThis€Supplement€describes€how€BIS€responds€to€violations€of€the€Export€AdministrationÐ ")r$( ÐRegulations€(EAR),€and€specifically€how€BIS€makes€penalty€determinations€in€the€settlement€ofÐ ô*D&* Ðcivil€administrative€enforcement€cases€under€part€764€of€the€EAR.€This€guidance€does€not€applyÐ ° Ðto€enforcement€cases€for€antiboycott€violations€under€part€760€of€the€EAR.Ð ‚Ò ÐÌà  àBecause€many€administrative€enforcement€cases€are€resolved€through€settlement,€theÐ & v Ðprocess€of€settling€such€cases€is€integral€to€the€enforcement€program.€€BIS€carefully€considersÐ ø H Ðeach€settlement€offer€in€light€of€the€facts€and€circumstances€of€the€case,€relevant€precedent,€andÐ Ê   ÐBISððs€objective€to€achieve€in€each€case€an€appropriate€level€of€penalty€and€deterrent€effect.€€InÐ œì  Ðsettlement€negotiations,€BIS€encourages€parties€to€provide,€and€will€give€serious€considerationÐ n¾  Ðto,€information€and€evidence€that€parties€believe€is€relevant€to€the€application€of€this€guidance€toÐ @ Ðtheir€cases,€to€whether€a€violation€has€in€fact€occurred,€or€to€whether€they€have€an€affirmativeÐ b Ðdefense€to€potential€charges.Ð ä4 ÐÌà  àThis€guidance€does€not€confer€any€right€or€impose€any€obligation€regarding€whatÐ ˆØ Ðpenalties€BIS€may€seek€in€litigating€a€case€or€what€posture€BIS€may€take€toward€settling€a€case.€Ð Zª ÐParties€do€not€have€a€right€to€a€settlement€offer,€or€particular€settlement€terms,€from€BIS,Ð ,| Ðregardless€of€settlement€postures€BIS€has€taken€in€other€cases.à È àà  àÐ þN ÐÌòòI.€€Responding€to€ViolationsóóÐ ¢#ò" ÐÌà  àThe€Office€of€Export€Enforcement€(OEE),€among€other€responsibilities,€investigatesÐ F'–"& Ðpossible€violations€of€the€Export€Administration€Act€of€1979,€as€amended,€the€EAR,€or€anyÐ )h$( Ðorder,€license€or€authorization€issued€thereunder.€€When€it€appears€that€such€a€violation€hasÐ ê*:&* Ðoccurred,€OEE€investigations€may€lead€to€òòóóa€warning€letter€or€a€civil€enforcement€proceeding.€€AÐ ° Ðviolation€may€also€be€referred€to€the€Department€of€Justice€for€criminal€prosecution.€€The€type€ofÐ ‚Ò Ðenforcement€action€initiated€by€OEE€will€depend€primarily€on€the€nature€of€the€violation.€Ð T¤ ÐÌà  àA.€€òòIssuing€a€warning€letteróó:€€Warning€letters€represent€OEEððs€conclusion€that€an€apparentÐ ø H Ðviolation€has€occurred.€€In€the€exercise€of€its€discretion,€OEE€may€determine€in€certain€instancesÐ Ê   Ðthat€issuing€a€warning€letter,€instead€of€bringing€an€administrative€enforcement€proceeding,€willÐ œì  Ðachieve€the€appropriate€enforcement€result.€€A€warning€letter€will€fully€explain€the€apparentÐ n¾  Ðviolation€and€urge€compliance.€€OEE€often€issues€warning€letters€to€first„time€offenders€for€anÐ @ Ðapparent€violation€based€on€technicalities;€where€good€faith€efforts€to€comply€with€the€law€andÐ b Ðcooperate€with€the€investigation€are€present;€where€the€investigation€commenced€as€a€result€of€aÐ ä4 Ðvoluntary€self„disclosure€satisfying€the€requirements€of€ðð764.5;€and€where€no€aggravating€factorsÐ ¶ Ðexist.€€A€warning€letter€does€not€constitute€a€final€agency€determination€that€a€violation€hasÐ ˆØ Ðoccurred.Ð Zª ÐÌà  àB.€€òòPursuing€an€administrative€enforcement€caseóó:€€The€issuance€of€a€charging€letter€underÐ þN Ððð766.3€initiates€an€administrative€enforcement€proceeding.€€Charging€letters€may€be€issued€whenÐ Ð!   Ðthere€is€reason€to€believe€that€a€violation€has€occurred.€€Cases€may€be€settled€before€or€after€theÐ ¢#ò" Ðissuance€of€a€charging€letter.€€òòSeeóó€ðð766.18.€€ò òó óBIS€prepares€a€proposed€charging€letter€when€a€caseÐ t%Ä $ Ðis€settled€before€issuance€of€an€actual€charging€letter.€€òòSeeóó€ðð766.18(a).€€In€some€cases,€BIS€alsoÐ F'–"& Ðâ âsends€a€proposed€charging€letter€to€a€party€in€the€absence€of€a€settlement€agreement,€therebyÐ )h$( Ðinforming€the€party€of€the€violations€that€BIS€has€reason€to€believe€occurred€and€how€BISÐ ° Ðexpects€that€those€violations€would€be€charged.€€Ð ‚Ò Ðâ âÌà  àC.€€òòReferring€for€criminal€prosecutionóó:€€In€appropriate€cases,€BIS€may€refer€a€case€to€theÐ & v ÐDepartment€of€Justice€for€criminal€prosecution,€in€addition€to€pursuing€an€administrativeÐ ø H Ðenforcement€action.€€€Ð Ê   ÐÌòòII.€€Types€of€Administrative€SanctionsóóÐ n¾  ÐÌà  àThere€are€three€types€of€administrative€sanctions€under€ðð764.3(a)€of€the€EAR:€a€civilÐ b Ðpenalty,€a€denial€of€export€privileges,€and€an€exclusion€from€practice€before€BIS.€€AdministrativeÐ ä4 Ðenforcement€cases€are€generally€settled€on€terms€that€include€one€or€more€of€these€sanctions.€€Ð ¶ ÐÌà  àA.€€òòCivil€penaltyóó:€A€monetary€penalty€may€be€assessed€for€each€violation.€€The€maximumÐ Zª Ðamount€of€such€a€penalty€per€violation€is€stated€in€section764.3(a)(1),€subject€to€adjustmentsÐ ,| Ðunder€the€Ô‡X|îXX/X|îÔFederal€Civil€Penalties€Adjustment€Act€of€1990€(28€U.S.C.€2461,€note€(2000)),€whichÐ þN Ðare€codified€at€15€CFR€6.4.€€Ð Ð!   ÐÌà  àB.€€òòDenial€of€export€privilegesóó:€An€order€denying€a€partyððs€export€privileges€may€beÐ t%Ä $ Ðissued,€as€described€in€ðð764.3(a)(2).€€Such€a€denial€may€extend€to€all€export€privileges,€as€set€outÐ F'–"& Ðin€the€standard€terms€for€denial€orders€in€Supplement€No.€1€to€part€764,€or€may€be€narrower€inÐ )h$( Ðscope€Ô#†/X|îXXX|î“U#Ô(òòe.g.óó,€limited€to€exports€of€specified€items€or€to€specified€destinations€or€customers)Ô‡X|îXX/X|îÔ.€€Ð ê*:&* Їà  àC.€€òòExclusion€from€practiceóó:€Under€ðð764.3(a)(3),€any€person€acting€as€an€attorney,Ð ° Ðaccountant,€consultant,€freight€forwarder€or€other€person€who€acts€in€a€representative€capacity€inÐ ‚Ò Ðany€matter€before€BIS€Ô#†/X|îXXX|î@X#Ômay€be€excluded€from€practicing€before€BIS.€€€€€€€€€€€€Ð T¤ ÐÌòòIII.€€How€BIS€Determines€What€Sanctions€Are€Appropriate€in€a€SettlementóóÐ ø H ÐÌà  àA.€€òòGeneral€Factorsóó:€€BIS€usually€looks€to€the€following€basic€factors€in€determining€whatÐ œì  Ðadministrative€sanctions€are€appropriate€in€each€settlement:€€Ð n¾  ÐÌà  àòòDegree€of€Willfulnessóó:€Many€violations€involve€no€more€than€simple€negligence€orÐ b Ðcarelessness.€€In€most€such€cases,€BIS€typically€will€seek€a€settlement€for€payment€of€a€civilÐ ä4 Ðpenalty€(unless€the€matter€is€resolved€with€a€warning€letter).€€In€cases€involving€grossÐ ¶ Ðnegligence,€willful€blindness€to€the€requirements€of€the€EAR,€or€knowing€or€willful€violations,Ð ˆØ ÐBIS€is€more€likely€to€seek€a€denial€of€export€privileges€or€an€exclusion€from€practice,€and/or€aÐ Zª Ðgreater€monetary€penalty€than€BIS€would€otherwise€typically€seek.€€While€some€violations€of€theÐ ,| ÐEAR€have€a€degree€of€knowledge€or€intent€as€an€element€of€the€offense,€òòseeóó,€òòe.g.óó,€ðð764.2(e)Ð þN Ð(acting€with€knowledge€of€a€violation)€and€ðð764.2(f)€(possession€with€intent€to€export€illegally),Ð Ð!   ÐBIS€may€regard€a€violation€of€any€provision€of€the€EAR€as€knowing€or€willful€if€the€facts€andÐ ¢#ò" Ðcircumstances€of€the€case€support€that€conclusion.€€In€deciding€whether€a€knowing€violation€hasÐ t%Ä $ Ðoccurred,€BIS€will€consider,€in€accordance€with€Supplement€No.€3€to€part€732,€the€presence€ofÐ F'–"& Ðany€red€flags€and€the€nature€and€result€of€any€inquiry€made€by€the€party.€€A€denial€or€exclusionÐ )h$( Ðorder€may€also€be€considered€even€in€matters€involving€simple€negligence€or€carelessness,Ð ê*:&* Ðparticularly€if€the€violations(s)€involved€harm€to€national€security€or€other€essential€interestsÐ ° Ðprotected€by€the€export€control€system,€if€the€violations€are€of€such€a€nature€and€extent€that€aÐ ‚Ò Ðmonetary€fine€alone€represents€an€insufficient€penalty€or€if€the€nature€and€extent€of€theÐ T¤ Ðviolation(s)€indicate€that€a€denial€or€exclusion€order€is€necessary€to€prevent€future€violations€ofÐ & v Ðthe€EAR.€Ð ø H ÐÌà  àòòDestination€Involvedóó:€€BIS€is€more€likely€to€seek€a€greater€monetary€penalty€and/orÐ œì  Ðdenial€of€export€privileges€or€exclusion€from€practice€in€cases€involving:Ð n¾  ÐÌà0  à(1)€exports€or€reexports€to€countries€subject€to€anti„terrorism€controls,€as€described€atÐ b Ððð742.1(d).€Ðä4(#(# ÐÌà0  à(2)€exports€or€reexports€to€destinations€particularly€implicated€by€the€type€of€control€thatÐ ˆØ Ðapplies€to€the€item€in€question€ð!ð€for€example,€export€of€items€subject€to€nuclear€controlsÐ Zª Ðto€a€country€with€a€poor€record€of€nuclear€non„proliferation.Ð,|(#(# ÐÌViolations€involving€exports€or€reexports€to€other€destinations€may€also€warrant€consideration€ofÐ Ð!   Ðsuch€sanctions,€depending€on€factors€such€as€the€degree€of€willfulness€involved,€the€nature€andÐ ¢#ò" Ðextent€of€harm€to€national€security€or€other€essential€interests€protected€by€the€export€controlÐ t%Ä $ Ðsystem,€and€what€level€of€sanctions€are€determined€to€be€necessary€to€deter€or€prevent€futureÐ F'–"& Ðviolations€of€the€EAR.€€€€€€€€€€€€Ð )h$( ÐÐ ê*:&* Ðà  àòòRelated€Violationsóó:€€Frequently,€a€single€export€transaction€can€give€rise€to€multipleÐ ° Ðviolations.€€For€example,€an€exporter€who€mis„classifies€an€item€on€the€Commerce€Control€ListÐ ‚Ò Ðmay,€as€a€result€of€that€error,€export€the€item€without€the€required€export€license€and€submit€aÐ T¤ ÐShipperððs€Export€Declaration€(SED)€that€both€misstates€the€applicable€Export€ControlÐ & v ÐClassification€Number€(ECCN)€and€erroneously€identifies€the€export€as€qualifying€for€theÐ ø H Ðdesignation€ð ðNLRðð€(no€license€required).€€In€so€doing,€the€exporter€committed€three€violations:Ð Ê   Ðone€violation€of€ðð764.2(a)€for€the€unauthorized€export€and€two€violations€of€ðð764.2(g)€for€theÐ œì  Ðtwo€false€statements€on€the€SED.€€It€is€within€the€discretion€of€BIS€to€charge€three€separateÐ n¾  Ðviolations€and€settle€the€case€for€a€penalty€that€is€less€than€would€be€appropriate€for€threeÐ @ Ðunrelated€violations€under€otherwise€similar€circumstances,€or€to€charge€fewer€than€threeÐ b Ðviolations€and€pursue€settlement€in€accordance€with€that€charging€decision.€€In€exercising€suchÐ ä4 Ðdiscretion,€BIS€typically€looks€to€factors€such€as€whether€the€violations€resulted€from€knowing€orÐ ¶ Ðwillful€conduct,€willful€blindness€to€the€requirements€of€the€EAR,€or€gross€negligence;€whetherÐ ˆØ Ðthey€stemmed€from€the€same€underlying€error€or€omission;€and€whether€they€resulted€inÐ Zª Ðdistinguishable€or€separate€harm.€Ð ,| ÐÌà  àòòMultiple€Unrelated€Violationsóó:€In€cases€involving€multiple€unrelated€violations,€BIS€isÐ Ð!   Ðmore€likely€to€seek€a€denial€of€export€privileges,€an€exclusion€from€practice,€and/or€a€greaterÐ ¢#ò" Ðmonetary€penalty€than€BIS€would€otherwise€typically€seek.€€For€example,€repeated€unauthorizedÐ t%Ä $ Ðexports€could€warrant€a€denial€order,€even€if€a€single€export€of€the€same€item€to€the€sameÐ F'–"& Ðdestination€under€similar€circumstances€might€warrant€just€a€monetary€penalty.€€BIS€takes€thisÐ )h$( Ðapproach€because€multiple€violations€may€indicate€serious€compliance€problems€and€a€resultingÐ ê*:&* Ðrisk€of€future€violations.€€BIS€may€consider€whether€a€party€has€taken€effective€steps€to€addressÐ ° Ðcompliance€concerns€in€determining€whether€multiple€violations€warrant€a€denial€or€exclusionÐ ‚Ò Ðorder€in€a€particular€case.€€€Ð T¤ ÐÌà  àòòTiming€of€Settlementóó:€Under€ðð766.18,€settlement€can€occur€before€a€charging€letter€isÐ ø H Ðserved,€while€a€case€is€before€an€administrative€law€judge,€or€while€a€case€is€before€the€UnderÐ Ê   ÐSecretary€for€Industry€and€Security€under€ðð766.22.€€However,€early€settlement€ð!ð€for€example,Ð œì  Ðbefore€a€charging€letter€has€been€served€ð!ð€has€the€benefit€of€freeing€resources€for€BIS€to€deployÐ n¾  Ðin€other€matters.€€In€contrast,€for€example,€the€BIS€resources€saved€by€settlement€on€the€eve€of€anÐ @ Ðadversary€hearing€under€ðð766.13€are€fewer,€insofar€as€BIS€has€already€expended€significantÐ b Ðresources€on€discovery,€motions€practice,€and€trial€preparation.€€Because€the€effectiveÐ ä4 Ðimplementation€of€the€U.S.€export€control€system€depends€on€the€efficient€use€of€BIS€resources,Ð ¶ ÐBIS€has€an€interest€in€encouraging€early€settlement€and€may€take€this€interest€into€account€inÐ ˆØ Ðdetermining€settlement€terms.€€€Ð Zª ÐÌà  àòòRelated€Criminal€or€Civil€Violationsóó:€Where€an€administrative€enforcement€matter€underÐ þN Ðthe€EAR€involves€conduct€giving€rise€to€related€criminal€or€civil€charges,€BIS€may€take€intoÐ Ð!   Ðaccount€the€related€violations,€and€their€resolution,€in€determining€what€administrative€sanctionsÐ ¢#ò" Ðare€appropriate€under€part€766.€€A€criminal€conviction€indicates€serious,€willful€misconduct€andÐ t%Ä $ Ðan€accordingly€high€risk€of€future€violations,€absent€effective€administrative€sanctions.€Ð F'–"& ÐHowever,€entry€of€a€guilty€plea€can€be€a€sign€that€a€party€accepts€responsibility€for€complyingÐ )h$( Ðwith€the€EAR€and€will€take€greater€care€to€do€so€in€the€future.€€In€appropriate€cases€where€a€partyÐ ê*:&* Ðis€receiving€substantial€criminal€penalties,€BIS€may€find€that€sufficient€deterrence€may€beÐ ° Ðachieved€by€lesser€administrative€sanctions€than€would€be€appropriate€in€the€absence€of€criminalÐ ‚Ò Ðpenalties.€€€Conversely,€BIS€might€seek€greater€administrative€sanctions€in€an€otherwise€similarÐ T¤ Ðcase€where€a€party€is€not€subjected€to€criminal€penalties.€€The€presence€of€a€related€criminal€orÐ & v Ðcivil€disposition€may€distinguish€settlements€among€civil€penalty€cases€that€appear€otherwise€toÐ ø H Ðbe€similar.€€As€a€result,€the€factors€set€forth€for€consideration€in€civil€penalty€settlements€willÐ Ê   Ðoften€be€applied€differently€in€the€context€of€a€ð ðglobal€settlementðð€of€both€civil€and€criminalÐ œì  Ðcases,€or€multiple€civil€cases,€and€may€therefore€be€of€limited€utility€as€precedent€for€futureÐ n¾  Ðcases,€particularly€those€not€involving€a€global€settlement.€€€€€Ð @ ÐÌà  àB.€€òòSpecific€Mitigating€and€Aggravating€Factorsóó:€€In€addition€to€the€general€factorsÐ ä4 Ðdescribed€above,€BIS€also€generally€looks€to€the€presence€or€absence€of€the€following€mitigatingÐ ¶ Ðand€aggravating€factors€in€determining€what€sanctions€should€apply€in€a€given€settlement.€Ð ˆØ ÐWhere€a€factor€admits€of€degrees,€it€should€accordingly€be€given€more€or€less€weight.€€Thus,€forÐ Zª Ðexample,€one€prior€violation€should€be€given€less€weight€than€a€history€of€multiple€violations,Ð ,| Ðand€a€previous€violation€reported€in€a€voluntary€self€disclosure€by€an€exporter€whose€overallÐ þN Ðexport€compliance€efforts€are€of€high€quality€should€be€given€less€weight€than€previousÐ Ð!   Ðviolation(s)€not€involving€such€mitigating€factors.Ð ¢#ò" ÐÌà  àSome€of€the€factors€listed€below€are€designated€as€having€ð ðgreat€weight.ðð€€When€present,Ð F'–"& Ðsuch€a€factor€should€ordinarily€be€given€considerably€more€weight€than€a€factor€that€is€not€soÐ )h$( Ðdesignated.€€€€€€€€Ð ê*:&* ЇòòMitigating€Factorsóó:Ð ° ÐÌà0  à1.€€The€party€made€a€voluntary€self„disclosure€of€the€violation,€satisfying€theÐ T¤ Ðrequirements€of€ðð764.5.€€(GREAT€WEIGHT)Ð& v(#(# ÐÌà0  à2.€€The€party€has€an€effective€export€compliance€program€and€its€overall€exportÐ Ê   Ðcompliance€efforts€have€been€of€high€quality.€€In€determining€the€presence€of€this€factor,Ð œì  ÐBIS€will€take€account€of€the€extent€to€which€a€party€complies€with€the€principles€set€forthÐ n¾  Ðin€BISððs€Export€Management€System€(EMS)€Guidelines.€€Information€about€the€EMSÐ @ ÐGuidelines€can€be€accessed€through€the€BIS€Web€site€at€òòhttp://www.bis.doc.govóó.€€In€thisÐ b Ðcontext,€BIS€will€also€consider€whether€a€partyððs€export€compliance€program€uncovered€aÐ ä4 Ðproblem,€thereby€preventing€further€violations.€€€(GREAT€WEIGHT)ж(#(# ÐÌà0  à3.€€The€violation€was€an€isolated€occurrence€or€the€result€of€a€good„faithÐ Zª Ðmisinterpretation.€Ð,|(#(# ÐÌà0  à4.€€Based€on€the€facts€of€a€case€and€under€the€applicable€licensing€policy,€requiredÐ Ð!   Ðauthorization€for€the€export€transaction€in€question€would€likely€have€been€granted€uponÐ ¢#ò" Ðrequest.Ðt%Ä $(#(# ÐÌà0  à5.€€Other€than€with€respect€to€antiboycott€matters€under€part€760:€€Ð)h$((#(# ÐÐ ê*:&* Ðà0  àà0` (#(#àa.€the€party€has€never€been€convicted€of€an€export„related€criminal€violation;а` (#` (# Ðà0  àà0` (#(#àb.€in€the€past€five€years,€the€party€has€not€entered€into€a€settlement€of€an€export„Ð ‚Ò Ðrelated€administrative€enforcement€case€with€BIS€or€another€U.S.€GovernmentÐ T¤ Ðagency€or€been€found€liable€in€an€export„related€administrative€enforcement€caseÐ & v Ðbrought€by€BIS€or€another€U.S.€Government€agency;€Ðø H` (#` (# ÐÌà0  àà0` (#(#àc.€in€the€past€three€years,€the€party€has€not€received€a€warning€letter€from€BIS;€andМì ` (#` (# ÐÌà0  àà0` (#(#àd.€in€the€past€five€years,€the€party€has€not€otherwise€violated€the€EAR.Ð@` (#` (# ÐÌà0  àWhere€necessary€to€effective€enforcement,€the€prior€involvement€in€export€violations€of€aÐ ä4 Ðpartyððs€owners,€directors,€officers,€partners,€or€other€related€persons€may€be€imputed€to€aÐ ¶ Ðparty€in€determining€whether€these€criteria€are€satisfied.€ÐˆØ(#(# ÐÌà0  à6.€€The€party€has€cooperated€to€an€exceptional€degree€with€BIS€efforts€to€investigate€theÐ ,| Ðpartyððs€conduct.ÐþN(#(# ÐÌà0  à7.€€The€party€has€provided€substantial€assistance€in€BIS€investigation€of€another€personÐ ¢#ò" Ðwho€may€have€violated€the€EAR.€€Ðt%Ä $(#(# ÐÌà0  à8.€€The€violation€was€not€likely€to€involve€harm€of€the€nature€that€the€applicableÐ )h$( Ðprovisions€of€the€EAA,€EAR€or€other€authority€(òòòòe.g.óóóó,€a€license€condition)€were€intendedÐ ê*:&* Ðto€protect€against;€for€example,òòóó€a€false€statement€on€an€SED€that€an€export€was€ð ðNLR,ððÐ ° Ðwhen€in€fact€a€license€requirement€was€applicable,€but€a€license€exception€was€available.ЂÒ(#(# ÐÌà0  à9.€€At€the€time€of€the€violation,€the€party:€(1)€Had€little€or€no€previous€export€experience;Ð & v Ðand€(2)€was€not€familiar€with€export€practices€and€requirements.€€(Note:€The€presence€ofÐ ø H Ðonly€one€of€these€elements€will€not€generally€be€considered€a€mitigating€factor.)€ÐÊ  (#(# Ðà0  àÐ (#(# ÐòòAggravating€Factorsóó:€€Ð n¾  ÐÌà0  à1.€€The€party€made€a€deliberate€effort€to€hide€or€conceal€the€violation(s).€€(GREATÐ b ÐWEIGHT)Ðä4(#(# ÐÌà0  à2.€€The€partyððs€conduct€demonstrated€a€serious€disregard€for€export€complianceÐ ˆØ Ðresponsibilities.€€(GREAT€WEIGHT)ÐZª(#(# ÐÌà0  à3.€€The€violation€was€significant€in€view€of€the€sensitivity€of€the€items€involved€and/orÐ þN Ðthe€reason€for€controlling€them€to€the€destination€in€question.€€This€factor€would€beÐ Ð!   Ðpresent€where€the€conduct€in€question,€in€purpose€or€effect,€substantially€implicatedÐ ¢#ò" Ðnational€security€or€other€essential€interests€protected€by€the€U.S.€export€control€system,Ð t%Ä $ Ðin€view€of€such€factors€as€the€destination€and€sensitivity€of€the€items€involved.€€€SuchÐ F'–"& Ðâ âconduct€might€include,€for€example,€violations€of€controls€based€on€nuclear,€biological,Ð )h$( Ðand€chemical€weapon€proliferation,€missile€technology€proliferation,€and€nationalÐ ° Ðsecurity€concerns,€and€exports€proscribed€in€part€744.€€€(GREAT€WEIGHT)€€€€€Ð‚Ò(#(# Ðâ âÌà0  à4.€€The€violation€was€likely€to€involve€harm€of€the€nature€that€the€applicable€provisions€of€Ð & v Ðthe€EAA,€EAR€or€other€authority€(òòe.g.óó,€a€license€condition)€are€principally€intended€toÐ ø H Ðprotect€against,€òòe.g.óó,€a€false€statement€on€an€SED€that€an€export€was€destined€for€a€non„Ð Ê   Ðembargoed€country,€when€in€fact€it€was€destined€for€an€embargoed€country.Мì (#(# ÐÌà0  à5.€€The€quantity€and/or€value€of€the€exports€was€high,€such€that€a€greater€penalty€may€beÐ @ Ðnecessary€to€serve€as€an€adequate€penalty€for€the€violation€or€deterrence€of€futureÐ b Ðviolations,€or€to€make€the€penalty€proportionate€to€those€for€otherwise€comparableÐ ä4 Ðviolations€involving€exports€of€lower€quantity€or€value.€€€€Ð¶(#(# ÐÌà0  à6.€€The€presence€in€the€same€transaction€of€concurrent€violations€of€laws€and€regulations,Ð Zª Ðother€than€those€enforced€by€BIS.Ð,|(#(# ÐÌà0  à7.€€Other€than€with€respect€to€antiboycott€matters€under€part€760:€€ÐÐ!  (#(# ÐÌà0  àà0` (#(#àa.€The€party€has€been€convicted€of€an€export„related€criminal€violation;Ðt%Ä $` (#` (# ÐÌà0  àà0` (#(#àb.€In€the€past€five€years,€the€party€has€entered€into€a€settlement€of€an€export„Ð )h$( Ðrelated€administrative€enforcement€case€with€BIS€or€another€U.S.€GovernmentÐ ê*:&* Ðagency€or€has€been€found€liable€in€an€export„related€administrative€enforcementÐ ° Ðcase€brought€by€BIS€or€another€U.S.€Government€agency;ЂÒ` (#` (# ÐÌà0  àà0` (#(#àc.€In€the€past€three€years,€the€party€has€received€a€warning€letter€from€BIS;€or€Ð& v` (#` (# ÐÌà0  àà0` (#(#àd.€In€the€past€five€years,€the€party€otherwise€violated€the€EAR.€Where€necessaryÐ Ê   Ðto€effective€enforcement,€the€prior€involvement€in€export€violations€of€a€partyððsÐ œì  Ðowners,€directors,€officers,€partners,€or€other€related€persons€may€be€imputed€to€aÐ n¾  Ðparty€in€determining€whether€these€criteria€are€satisfied.€Ð@` (#` (# ÐÌà0  à8.€€The€party€exports€as€a€regular€part€of€the€partyððs€business,€but€lacked€a€systematicÐ ä4 Ðexport€compliance€effort.€Ð¶(#(# ÐÌà  àòòóóIn€deciding€whether€and€what€scope€of€denial€or€exclusion€order€is€appropriate,€theÐ Zª Ðfollowing€factors€are€particularly€relevant:€the€presence€of€mitigating€or€aggravating€factors€ofÐ ,| Ðgreat€weight;€the€degree€of€willfulness€involved;€in€a€business€context,€the€extent€to€which€seniorÐ þN Ðmanagement€participated€in€or€was€aware€of€the€conduct€in€question;€the€number€of€violations;Ð Ð!   Ðthe€existence€and€seriousness€of€prior€violations;€the€likelihood€of€future€violations€(taking€intoÐ ¢#ò" Ðaccount€relevant€export€compliance€efforts);€and€whether€a€monetary€penalty€can€be€expected€toÐ t%Ä $ Ðhave€a€sufficient€deterrent€effect.€Ð F'–"& ÐÌòòIV.€€How€BIS€Makes€Suspension€and€Deferral€DecisionsóóÐ ê*:&* Їà  àA.€€òòCivil€Penaltiesóó:€In€appropriate€cases,€payment€of€a€civil€monetary€penalty€may€beÐ ° Ðdeferred€or€suspended.€€òòSeeóó€ðð764.3(a)(iii).€€In€determining€whether€suspension€or€deferral€isÐ ‚Ò Ðappropriate,€BIS€may€consider,€for€example,€whether€the€party€has€demonstrated€a€limited€abilityÐ T¤ Ðto€pay€a€penalty€that€would€be€appropriate€for€such€violations,€so€that€suspended€or€deferredÐ & v Ðpayment€can€be€expected€to€have€sufficient€deterrent€value,€and€whether,€in€light€of€all€of€theÐ ø H Ðcircumstances,€such€suspension€or€deferral€is€necessary€to€make€the€impact€of€the€penaltyÐ Ê   Ðconsistent€with€the€impact€of€BIS€penalties€on€other€parties€who€committed€similar€violations.€€€Ð œì  ÐÌà  àB.€€òòDenial€of€Export€Privileges€and€Exclusion€from€Practiceóó:€In€deciding€whether€a€denialÐ @ Ðor€exclusion€order€should€be€suspended,€BIS€may€consider,€for€example,€the€adverse€economicÐ b Ðconsequences€of€the€order€on€the€respondent,€its€employees,€and€other€parties,€as€well€as€on€theÐ ä4 Ðnational€interest€in€the€competitiveness€of€U.S.€businesses.€€An€otherwise€appropriate€denial€orÐ ¶ Ðexclusion€order€will€be€suspended€on€the€basis€of€adverse€economic€consequences€only€if€it€isÐ ˆØ Ðfound€that€future€export€control€violations€are€unlikely€and€if€there€are€adequate€measuresÐ Zª Ð(usually€a€substantial€civil€penalty)€to€achieve€the€necessary€deterrent€effect.€€€€€Ð ,| ÐÌÔ‡ X|îXX/X|îÔDATED:€September€9,€2003Ð Ð!   ÐKenneth€I.€JusterÐ ¢#ò" ÐòòUnder€Secretary€of€Commerce€forÔ#†/X|îXX X|îª#ÔÔ‡ X|îXX/X|îÔ€Industry€and€SecurityóóÐ t%Ä $ ÐÔ#†/X|îXX X|îÕª#ÔÓ=Ó