[Federal Register Volume 78, Number 154 (Friday, August 9, 2013)]
[Rules and Regulations]
[Pages 48601-48606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19364]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 764 and 766
[Docket No. 120207107-3621-02]
RIN 0694-AF59
Time Limit for Completion of Voluntary Self-Disclosures and
Revised Notice of the Institution of Administrative Enforcement
Proceedings
AGENCY: Bureau of Industry and Security, Commerce.
ACTION: Final rule.
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SUMMARY: This rule requires that the final, comprehensive narrative
account required in voluntary self-disclosures (VSDs) of violations of
the Export Administration Regulations (EAR) be received by the Office
of Export Enforcement (OEE) within 180 days of OEE's receipt of the
initial VSD notification. This rule also authorizes the use of delivery
services other than registered or certified mail for providing notice
of the issuance of a charging letter instituting an administrative
enforcement proceeding under the EAR. It also removes the phrase ``if
delivery is refused'' from a provision related to determining the date
that notice of a charging letter's issuance is served based on an
attempted delivery to the respondent's last known address. The Bureau
of Industry and Security is making these changes to be better able to
resolve administrative enforcement proceedings in a timely manner and
provide more efficient notice of administrative charging letters.
DATES: This rule is effective September 9, 2013.
FOR FURTHER INFORMATION CONTACT: Special Agent Richard Jereski,
Investigations Division, Office of Export Enforcement, Bureau of
Industry and Security, US Department of Commerce, Room H4514, 14th
Street and Pennsylvania Avenue NW., Washington, DC 20230. Tel: (202)
482-5036. Facsimile: (202) 482-5889.
SUPPLEMENTARY INFORMATION:
Background
The Bureau of Industry and Security (BIS), Office of Export
Enforcement (OEE), investigates possible violations of the Export
Administration Regulations (EAR) and orders, licenses, and
authorizations issued thereunder. These investigations may result in
allegations of violations that may be settled, adjudicated in an
administrative enforcement proceeding, or referred to the Department of
Justice for possible criminal prosecution. On November 7, 2012, BIS
published a proposed rule (77 FR 66777) that set forth three changes to
the EAR, which are being implemented with some revisions here. One
change addresses voluntary self-disclosures in connection with OEE's
conduct of investigations. The other two changes address service of
notice in administrative enforcement proceedings. This rule also makes
non-substantive changes to the layout of the regulations to improve
readability.
Deadline for Completing the Narrative Account Portion of a Voluntary
Self-Disclosure
Section 764.5 of the EAR provides a procedure whereby parties that
believe they may have committed a violation of the EAR can voluntarily
disclose the facts of potential violations to OEE. Such disclosures
that meet the requirements of Sec. 764.5 typically are afforded
``great weight'' by BIS relative to other mitigating factors in
determining what administrative sanctions, if any, to seek. Section
764.5 of the EAR requires an initial notification, which is to include
a description of the general nature and extent of the suspected
violations and is to be made as soon as possible after the violations
are discovered, and is followed by a thorough review and the completion
and submission of a narrative account of the suspected violations,
including providing all relevant documentation. If the person making
the initial notification subsequently completes and submits the
narrative account, the disclosure is deemed to have been submitted to
OEE on the date of the initial notification. The date of the initial
notification may be significant because information provided to OEE may
be considered a voluntary disclosure only if the information ``is
received by OEE for review prior to the time that OEE or another United
States Government agency has learned of the same or substantially
similar information from another source and has commenced an
investigation or inquiry in connection with that information.'' (15 CFR
764.5(b)(3)). This rule adds a requirement that the completed narrative
account be received by BIS within 180 days of BIS's receipt of the
initial notification for initial notifications received on or after the
effective date of this rule.
The Director of OEE may extend this 180-day time deadline at his or
her discretion if US Government interests would be served by an
extension or upon a showing by the party making the disclosure that
more time is reasonably necessary to complete the narrative account. In
response to public comments discussed below, this final rule includes
some greater detail about what a request to extend the 180-day deadline
should contain. Such requests should show specifically that the person
making the request: (1) Began its review promptly after discovery of
the violations; (2) has been conducting its review and preparation of
the narrative account as expeditiously as can be expected, consistent
with the need for completeness and accuracy; (3) reasonably needs the
requested extension despite having acted consistently with (1) and (2);
and (4) has considered whether interim compliance or other corrective
measures may be needed and has undertaken such measures as appropriate
to prevent recurring or additional violations. Such requests also
should set out a proposed
[[Page 48602]]
timeline for completion and submission of the narrative account that is
reasonable under the applicable facts and circumstances. They should
also designate a contact person, and provide that contact person's
current business street address, email address, and telephone number,
for purposes of communicating with OEE regarding the extension request.
(A similar requirement to designate a contact person is included in
this rule regarding initial notifications). Extension requests may also
include additional information that the requestor reasonably believes
is pertinent to the request under the applicable facts and
circumstances.
Some illustrative examples of circumstances that could, depending
on the overall facts and circumstances, support a request that
additional time is reasonably necessary include the following:
Records or information from multiple entities and/or
jurisdictions are needed to complete the narrative account.
Material changes occur in the business, such as a
bankruptcy, large layoffs, or a corporate acquisition or restructuring,
and present difficulties in gaining access to, or analyzing,
information needed to complete the narrative account.
A pending US Government determination (such as a commodity
jurisdiction determination or a classification request) is needed to
complete the narrative account.
The Director of OEE may place conditions on his or her approval of
an extension. OEE may obtain an agreement to toll the statute of
limitations at the time that an initial notification is filed. However,
if a tolling agreement that applies to any violations disclosed in the
initial notification or discovered during the review conducted to
prepare the narrative account has not already been obtained at the time
of a request for an extension, the Director of OEE may require one as a
condition of approving the extension. The Director of OEE also has
discretion to require the disclosing person to undertake specific
interim remedial compliance measures as a condition of granting an
extension to the 180-day deadline.
Failure to meet either the 180-day deadline or an extended deadline
granted by the Director of OEE would not be an additional violation of
the EAR. However, that failure may reduce or eliminate the mitigating
impact of the voluntary disclosure. The 180-day deadline serves as an
incentive to the disclosing party, as meeting the deadline will allow
information contained in the narrative account to be credited by OEE as
having been disclosed on the date of the initial notification even if
the information was not explicitly described in that initial
notification. This new rule is designed to be consistent with the
existing requirement in Sec. 764.5(c)(1) that an initial notification
be made as soon as possible after violations are discovered. Section
764.5 also will continue to acknowledge that a disclosing party may not
be able to identify all of the possible violations of the EAR at the
time an initial notification was made, consistent with Sec.
764.5(c)(3), and to recommend that the review following the initial
notification should cover a period of five years prior to the date of
the initial notification
Imposing a deadline to complete voluntary disclosures is consistent
with the practices of other agencies. The International Traffic in Arms
Regulations administered by the Department of State impose a 60-day
deadline (22 CFR 127.12(c)). Similarly, the Department of the
Treasury's Office of Foreign Assets Control also imposes time
constraints by requiring that disclosures be made within a reasonable
time following the initial notification. Based on its experience with
voluntary self-disclosures, BIS believes that 180 days is ample time to
complete the narrative account in most instances and that requests for
extensions will normally not be necessary or justified.
Institution of Administrative Enforcement Proceedings
Section 766.3 of the EAR sets forth the procedures for instituting
administrative enforcement proceedings. Those procedures include
issuing a charging letter, which constitutes the formal administrative
complaint. The charging letter sets forth the essential facts about the
alleged violations and certain other information about the case, and
informs the respondent that failure to answer the charges will be
treated as a default. Respondents must be notified of the issuance of a
charging letter by one of the methods listed in Sec. 766.3(b) of EAR.
One allowable method is mailing a copy of the letter by registered or
certified mail to the respondent's last known address. This rule adds,
as an authorized method of notification, sending a copy of the charging
letter to the respondent's last known address by express mail or by a
commercial courier or delivery service. The purpose of this change is
to facilitate the process of notifying the respondent in cases where
the respondent's last known address is in a country with a postal
service that is inefficient or unreliable or in which postal delivery
tracking information is not available. It also will allow BIS to select
an efficient and effective method of notifying the respondent of the
issuance of the charging letter. Moreover, unlike registered and
certified mail, reputable commercial courier or delivery services and
the US Postal Service's express mail use point-by-point tracking or
similar electronic tracking methods to provide detailed records of a
parcel's delivery or attempted delivery. The use of services that
provide detailed tracking information for parcels sent outside the
United States will enable BIS to track and monitor the delivery status
of pending notifications more efficiently and effectively.
Respondents are required to answer a charging letter within 30 days
of being served with notice of its issuance. Prior to the effective
date of this rule, the date of service of notice is determined under
Section 766.3(c) by the date of delivery, or of attempted delivery if
delivery is refused. This rule removes the phrase ``if delivery is
refused'' from Sec. 766.3(c) of the EAR, eliminating the requirement
that an attempted delivery must involve documentation that the delivery
was ``refused.'' The phrase ``is refused'' focuses on registered and
certified mail, which include a postcard-sized hard-copy receipt that
is returned to the sender after delivery or attempted delivery. This
rule provides for the use of reliable mail or delivery services that do
not use such a hard-copy return receipt system and can efficiently and
effectively track deliveries and attempted deliveries. In addition, BIS
has found that in some instances foreign postal services do not return
the receipt even though the parcel or package has been not been
returned, including in situations where the respondent subsequently
contacts BIS about the charging letter. Moreover, some foreign postal
services do not list ``refused'' as an option on a pre-printed return
receipt or do not record other information when the package containing
the charging letter is returned, including in situations when the
package has been returned unopened. This change to Sec. 766.3(c) would
better enable BIS to determine the date of service of notice of
issuance of charging letters sent to entities located in foreign
countries.
Comments on the Proposed Rule
BIS received comments from one individual and four organizations.
Most of the ideas expressed in the comments related to the 180-day
limit for completing the narrative account. The comments generally
supported the 180-day limit. However, one commenter
[[Page 48603]]
proposed a shorter time limit with possible extensions. Other
commenters expressed concerns that in some cases 180 days would be
inadequate.
Comment: Two commenters expressed approval of the 180-day limit as
providing adequate time to complete the review and compile the
narrative account in most cases. Both commenters noted the possibility
that extensions could be granted in limited circumstances. One
commenter recommended that the initial limit be set at 60 days, with
the possibility of successive 30-day extensions and that the acceptable
reasons for an extension narrow as the time since the initial
disclosure approaches 180 days. While acknowledging that many VSDs
likely could not be completed within 60 days, this commenter stated
that under its proposed procedure disclosing parties would better focus
on timely completion of voluntary self-disclosures without having to
request more than one extension. That commenter also asserted that a
60-day deadline would align BIS's practice with those of the
Directorate of Defense Trade Controls.
Response: This final rule does not change the basic time limit of
180 days. BIS's intent in setting the 180-day limit is to provide a
basic time limit that is sufficient to complete the narrative
disclosure in the large majority of voluntary self-disclosures. BIS
believes that a party who has begun a voluntary self-disclosure process
should be mindful of the requirements of Sec. 764.5, including the
deadline imposed by the regulation, and should be capable of organizing
and managing its activities with the goal of meeting the deadline.
Similarly, in situations where more than 180 days' time is reasonably
necessary to complete the task, the disclosing party should be able to
explain the reasons why that is the case and provide a reasonable
estimate of the additional time needed. BIS further believes that
procedures proposed above likely would lead to repeated requests for
extensions (and related agency determinations and responses) that
should be unnecessary and would themselves increase the total workload
for all involved in the voluntary self-disclosure process.
In addition, BIS does not believe that its deadline needs to be
``aligned'' in the sense of being identical to those of other
government agencies. The proposed rule did note that the 180-day
deadline is consistent with the practices of other agencies and
regulations, including in the Department of State's International
Traffic in Arms Regulations and the Department of the Treasury's Office
of Foreign Assets Control regulations. These examples were intended to
demonstrate that by proposing a deadline for completion of voluntary
self-disclosures, BIS is acting in the same general manner as other
agencies that have a role in export controls. BIS believes prescribing
a time limit that is reasonable with respect to EAR violations is more
important than having identical time limits with other programs.
Comment: Several commenters expressed concern that although the
180-day deadline should generally be sufficient, there may be instances
where the time limit would be inadequate. One commenter stated that
large organizations with operations in multiple countries may need to
obtain records from and interview employees at multiple locations in
order to complete an investigation and prepare a thorough final
narrative. One commenter noted that the proposed rule authorized the
Director of OEE to act at his or her discretion, which the commenter
characterized as authorization to act with ``unfettered discretion.''
The commenter also stated its belief that the rule would not afford a
disclosing party a regulatory right to an extension of time even if
circumstances warranted an extension. Finally, the commenter described
as ``not comforting,'' BIS's statement in the preamble to the proposed
rule that requests for extensions would, in most instances, not be
necessary or justified. Commenters recommended several changes, which
are described below.
One such recommendation was to state in the rule the circumstances
that would justify an extension. Another recommendation was to state in
the rule that extensions would not be unreasonably refused when more
time is shown to be reasonably necessary to complete the account. A
third recommendation was to allow disclosing parties to submit, within
180 days of the initial disclosure, either a completed narrative
account or a supplemental filing that indicates the status of the
company's review, including interim remedial measures it has already
taken and an action plan with the company's timeline for completion of
the review and submission of the final narrative account.
Response: BIS does not believe that it is possible to identify in
advance all of the circumstances that would make it in the government's
interest to grant an extension or those that would make an extension
reasonably necessary to complete the narrative account. The facts and
circumstances of each matter vary depending on, inter alia, the items,
destinations and parties involved, the nature and extent of the
violations, and the size, scope, and structure of disclosing parties
and their export activities and compliance programs. Therefore, case-
by-case requests by disclosing parties and decisions by an authorized
official are necessary. This final rule sets out in greater detail the
types of information that should be included in a request, and as with
the preamble to the proposed rule, the preamble to this final rule
provides illustrative examples of the type of circumstances that could
provide support for a request that additional time is reasonably
necessary. These examples are not an exclusive list, and extension
requests and the consideration of those requests will, of necessity, be
made on a case-by-case basis, but the examples provide guidance about
the type of situations that, depending on the overall facts and
circumstances, may justify an extension beyond 180 days. BIS believes
that in most instances 180 days should be adequate to complete the
narrative account. However, as discussed above, in appropriate
instances the Director of OEE may grant an extension to a person
seeking an extension of time. In most circumstances, tolling agreements
will be signed and agreed upon prior to the extension being provided.
Comment: Some commenters expressed a desire for more precision
concerning the procedures for submitting a voluntary self-disclosure.
Specifically, they asked that the rule state precisely when the 180-day
time period begins to run and when during the 180-day period a request
for extension may be submitted. These commenters also asked for more
information about the timing of a request for an extension. They asked
whether a request for an extension may be submitted with the initial
disclosure, whether a request may be submitted after the 180 days has
elapsed, and what would happen if a disclosing party submitted a
request before the 180 days had elapsed, but too late for BIS to make a
decision and respond within 180 days.
Response: BIS agrees with the comments summarized in the
immediately preceding paragraph that it would be more helpful to
provide more information about the procedures surrounding the 180-day
deadline and for requesting an extension than was provided in the
proposed rule. In response to those comments, this final rule provides
that guidance. This final rule states that, for purposes of calculating
the 180-day deadline, the date of initial notification is the date that
the initial notification is received
[[Page 48604]]
by OEE. BIS will notify the disclosing party in writing of the date
that the initial notification was received. To enable such
notification, BIS has added a new requirement that parties should
designate a contact person in their initial notification and provide
that person's contact information. For the narrative account to be
considered timely under paragraph (c)(2)(iii) of Sec. 764.5, the
disclosing party must submit the completed narrative account in time
for BIS to receive it within 180 days of BIS' receipt of the initial
notification or, where appropriate, seek and receive an extension from
BIS. As this rule indicates, however, initial notifications should be
sent so that they are received by OEE as soon as possible and narrative
accounts should be complete, accurate, and timely submitted.
This final rule also states that to be considered, a request for an
extension of time to submit the narrative account must be received by
OEE before the deadline for receipt of the narrative account. The
Director of OEE will evaluate all of the facts and circumstances
surrounding a request and any related investigation(s) in deciding
whether to grant an extension. Requests for an extension should be made
as soon as possible once a disclosing person determines that it will be
unable to meet the deadline or the extended deadline where an extension
previously has been granted, and possesses the information needed to
prepare an extension request in accordance with paragraph
(c)(2)(iv)(B). Parties who request an extension shortly before the
deadline incur the risk that the Director of OEE will be unable to
properly consider and determine the request and communicate his or her
decision before the deadline. That said, BIS believes that disclosing
parties typically will need some time after the initial notification to
acquire the facts that may justify an extension and prepare the
extension request, including proposing a reasonable extended timeline
for the completion and submission of the narrative account. BIS expects
it will be rare for parties to request an extension of time in their
initial disclosure, because it is unlikely that disclosing parties will
have at the time of the initial notification all information pertinent
to an extension request or the ability to show that an extension is
needed despite prompt and diligent efforts to complete their review and
prepare a narrative account.
The Director of OEE also is unlikely to grant extension requests
that appear be ``boilerplate'' requests not based on the particular
facts and circumstances, or to grant repeated requests or requests that
appear to be submitted on a routine, ``it can't hurt to ask'' basis. As
discussed in the preamble, this final rule provides additional detail
concerning the contents of an extension request, which should limit the
number of routine or boilerplate requests.
Comment: One commenter recommended that BIS impose a reasonableness
standard as to both tolling agreements and remedial measures that may
be required when granting an extension. The commenter asserted that
tolling agreements extending back more than five years prior to the
initial disclosure have sometimes been required.
Response: BIS understands that there may be times when meeting the
180-day deadline will not be possible (see discussion above); however,
as also discussed, BIS must be able to appropriately remedy matters
brought to light in a disclosure and will require (in most cases) the
signing of a tolling agreement to extend the statutory limit. BIS will
continue its practice of seeking appropriate tolling agreements and
remedial measures that take into account the specific facts and
circumstances of each case in requiring a tolling agreement and any
remedial measures.
Comment: One commenter recommended that BIS specify what
constitutes a completed narrative account. The commenter suggested that
an explicit definition of a completed VSD would ensure consistency and
uniformity and lead to a more efficient and transparent process for all
parties. BIS could then request additional information or documentation
as needed. The commenter proposed that the elements set forth in Sec.
764.5(c)(3), (4) and (5) should satisfy the requirements of a voluntary
self-disclosure. This commenter also recommended that a disclosing
party who ``prepares a VSD in good faith that reasonably addresses all
applicable elements in Sec. 764.5(c)(3), (4) and (5), . . . should be
granted the presumption of acceptance as `complete' when received by
OEE.''
Response: BIS agrees with this comment to the extent that it may be
helpful to the disclosing party to know when and how they can meet the
180-day deadline. To be considered a complete submission for purposes
of meeting the 180-day deadline (or the extended deadline if one is
granted by BIS), the voluntary disclosure must meet all of the relevant
requirements of Section 764.5 of the EAR, including paragraphs (c)(3),
(c)(4), and (c)(5). In response to public comments on the proposed
rule, paragraph (c)(2)(iii) of Sec. 764.5 in this final rule so
provides. In addition, as discussed in the preamble, paragraph
(c)(2)(iv) provides greater detail concerning the contents of an
extension request. Under paragraph (c)(2)(iv), a person making an
extension request may also submit additional information it reasonably
believes is pertinent under the applicable facts and circumstances. As
currently with regard to initial notifications and narrative accounts
submitted to BIS, OEE may seek supplemental information from a person
making an extension request after its receipt and review of the
request.
Comment: BIS received several comments concerning informing the
disclosing party about the status of the investigation. One
recommendation was that BIS ``communicate the status of the
investigation of the voluntary self-disclosure, akin to the status
updates in SNAP-R'' (the system for electronically submitting export
license applications and certain other documents to BIS and monitoring
their status). Another recommendation was that BIS be required to
acknowledge receipt of a completed disclosure within some reasonable
time after its receipt. One commenter acknowledged that it is perhaps
impractical to require BIS to complete all action on a voluntary self-
disclosure within a specified time period, possibly 180 days, but
stated that it is practical to expect that BIS will dispose of a
voluntary self-disclosure as promptly as possible given the
circumstances of the disclosure. This commenter recommended that OEE be
required to send the disclosing party a status report within 180 days
of the receipt of the completed VSD and every 90 days thereafter.
Response: BIS works to resolve voluntary self-disclosures promptly.
However, voluntary self-disclosures vary in number, size, and
complexity. In addition, other investigations and activities can affect
the amount of resources that BIS can devote to resolving voluntary
self-disclosures. Therefore, BIS cannot set a time limit for completion
of investigations made in response to voluntary self-disclosures.
Comment: Two commenters expressed approval of allowing service of
charging documents by private courier. One noted that doing so would be
a modernization of BIS procedures.
Response: BIS concurs.
Non-substantive Changes to Layout To Improve Readability
In addition to the changes proposed in the proposed rule and those
made in
[[Page 48605]]
response to the public comments, this final rule reorganizes Sec.
764.5(c)(2) by breaking it into multiple designated paragraphs, each
addressing separate topics, with italicized headers to improve
readability.
Rulemaking Requirements
1. Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). This rule
is consistent with the goals of Executive Order 13563. This rule has
been determined not to be a significant rule for purposes of Executive
Order 12866.
2. Notwithstanding any other provision of law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C.
3501, et seq., unless that collection of information displays a
currently valid Office of Management and Budget (OMB) control number.
This rule involves an approved information collection entitled
``Procedure for Voluntary Self-Disclosure of Violations'' (OMB control
number 0694-0058). BIS believes that the changes to the voluntary
disclosure procedures that this rule describes would have no material
effect on the burden imposed by this collection. Send comments
regarding this burden estimate or any other aspect of this collection
of information, including suggestions for reducing the burden to
Jasmeet Seehra, Office of Management and Budget (OMB), by email to
[email protected] or by fax to (202) 395-7285; and to the Regulatory
Policy Division, Bureau of Industry and Security, Department of
Commerce, Room 2099B, 14th Street and Pennsylvania Ave. NW.,
Washington, DC 20230 or by email to [email protected]
referencing RIN 0694-AF59 in the subject line.
3. The Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 601 et
seq., generally requires an agency to prepare a regulatory flexibility
analysis of any rule subject to the notice and comment rulemaking
requirements under the Administrative Procedure Act (5 U.S.C. 553) or
any other statute. Under section 605(b) of the RFA, however, if the
head of an agency certifies that a rule will not have a significant
impact on a substantial number of small entities, the statute does not
require the agency to prepare a regulatory flexibility analysis.
Pursuant to section 605(b), the Chief Counsel for Regulations,
Department of Commerce, submitted a memorandum to the Chief Counsel for
Advocacy, Small Business Administration, certifying that this rule will
not have a significant impact on a substantial number of small
entities. This final rule adds a new requirement that parties that
decide to submit an initial notification should include their name and
contact information with the notification. This request for contact
information was not in the proposed rule. However, because the
requirement to include contact information in any voluntarily submitted
initial notification will not have a significant additional impact on a
substantial number of small entities or increase the economic burden
more than a nominal amount, no changes were necessary to the rationale
for the certification in the proposed rule (77 FR 66777, 66778,
November 7, 2012). BIS received no comments on that rationale and it is
not being changed for this final rule. Therefore it is not repeated
here.
On August 21, 2001, the Export Administration Act of 1979, as
amended, expired and the President, through Executive Order 13222 of
August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), as amended by Executive
Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013), and as
extended most recently by the Notice of August 15, 2012, 77 FR 49699
(August 16, 2012), has continued the EAR in effect under the
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.).
BIS continues to carry out the provisions of the Export Administration
Act, as appropriate and to the extent permitted by law, pursuant to
Executive Order 13222.
List of Subjects
15 CFR Part 764
Administrative practice and procedure, Exports, Law enforcement,
Penalties.
15 CFR Part 766
Administrative practice and procedure, Confidential business
information, Exports, Law enforcement, Penalties.
For the reasons stated in the preamble, parts 764 and 766 of the
Export Administration Regulations (15 CFR parts 730-774) are amended as
follows.
PART 764--[AMENDED]
0
1. The authority citation for part 764 continues to read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
15, 2012, 77 FR 49699 (August 16, 2012).
0
2. Revise Sec. 764.5(c)(2) to read as follows:
Sec. 764.5 Voluntary self-disclosure.
* * * * *
(c) * * *
(2) Initial notification. (i) Manner and content of initial
notification. The initial notification should be in writing and be sent
to the address in paragraph (c)(7) of this section. The notification
should include the name of the person making the disclosure and a brief
description of the suspected violations, and should designate a contact
person regarding the initial notification and provide that contact
person's current business street address, email address, and telephone
number. The notification should describe the general nature and extent
of the violations. OEE recognizes that there may be situations where it
will not be practical to make an initial notification in writing. For
example, written notification may not be practical if a shipment leaves
the United States without the required license, yet there is still an
opportunity to prevent acquisition of the items by unauthorized
persons. In such situations, OEE should be contacted promptly at the
office listed in paragraph (c)(7) of this section.
(ii) Initial notification date. For purposes of calculating when a
complete narrative account must be submitted under paragraph
(c)(2)(iii) of this section, the initial notification date is the date
the notification is received by OEE. OEE will notify the disclosing
party in writing of the date that it receives the initial notification.
At OEE's discretion, such writing from OEE may be on paper, or in an
email message or facsimile transmission from OEE, or by any other
method for the transmission of written communications. Where it is not
practical to make an initial notification in writing, the person making
the notification should confirm the oral notification in writing as
soon as possible.
(iii) Timely completion of narrative accounts. The narrative
account required by paragraph (c)(3) of this section must be received
by OEE within 180 days of the initial notification date for purposes of
paragraph (b)(3) of this section, absent an extension from the Director
of OEE. If the person making
[[Page 48606]]
the initial notification subsequently completes and submits to OEE the
narrative account required by paragraph (c)(3) of this section such
that OEE receives it within 180 days of the initial notification date,
or within the additional time, if any, granted by the Director of OEE
pursuant to paragraph (c)(2)(iv) of this section, the disclosure,
including violations disclosed in the narrative account that were not
expressly mentioned in the initial notification, will be deemed to have
been made on the initial notification date for purposes of paragraph
(b)(3) of this section if the initial notification was made in
compliance with paragraphs (c)(1) and (2) of this section. Failure to
meet the deadline (either the initial 180-day deadline or an extended
deadline granted by the Director of OEE) would not be an additional
violation of the EAR, but such failure may reduce or eliminate the
mitigating impact of the voluntary disclosure under Supplement No. 1 to
this part. For purposes of determining whether the deadline has been
met under this paragraph, a complete narrative account must contain all
of the pertinent information called for in paragraphs (c)(3), (c)(4),
and (c)(5) of this section, and the voluntary self-disclosure must
otherwise meet the requirements of this section.
(iv) Deadline extensions. The Director of OEE may extend the 180-
day deadline upon a determination in his or her discretion that U.S.
Government interests would be served by an extension or that the person
making the initial notification has shown that more than 180 days is
reasonably needed to complete the narrative account.
(A) Conditions for extension. The Director of OEE in his or her
discretion may place conditions on the approval of an extension. For
example, the Director of OEE may require that the disclosing person
agree to toll the statute of limitations with respect to violations
disclosed in the initial notification or discovered during the review
for or preparation of the narrative account, and/or require the
disclosing person to undertake specified interim remedial compliance
measures.
(B) Contents of Request. (1) In most instances 180 days should be
adequate to complete the narrative account. Requests to extend the 180-
day deadline set forth in paragraph (c)(2)(iii) of this section will be
determined by the Director of OEE pursuant to his or her authority
under this paragraph (c)(2)(iv) based upon his consideration and
evaluation of U.S. Government interests and the facts and circumstances
surrounding the request and any related investigations. Such requests
should show specifically that the person making the request:
(i) Began its review promptly after discovery of the violations;
(ii) Has been conducting its review and preparation of the
narrative account as expeditiously as can be expected, consistent with
the need for completeness and accuracy;
(iii) Reasonably needs the requested extension despite having begun
its review promptly after discovery of the violations and having
conducted its review and preparation of the narrative account as
expeditiously as can be expected consistent with the need for
completeness and accuracy; and
(iv) Has considered whether interim compliance or other corrective
measures may be needed and has undertaken such measures as appropriate
to prevent recurring or additional violations.
(2) Such requests also should set out a proposed timeline for
completion and submission of the narrative account that is reasonable
under the applicable facts and circumstances, and should also designate
a contact person regarding the request and provide that contact
person's current business street address, email address, and telephone
number. Requests may also include additional information that the
person making the request reasonably believes is pertinent to the
request under the applicable facts and circumstances.
(C) Timing of requests. Requests for an extension should be made
before the 180-day deadline and as soon as possible once a disclosing
person determines that it will be unable to meet the deadline or the
extended deadline where an extension previously has been granted, and
possesses the information needed to prepare an extension request in
accordance with paragraph (c)(2)(iv)(B) of this section. Requests for
extension that are not received before the deadline for completing the
narrative account has passed will not be considered. Parties who
request an extension shortly before the deadline incur the risk that
the Director of OEE will be unable to consider the request, determine
whether or not to grant the extension, and communicate his or her
decision before the deadline, and that any subsequently submitted
narrative account will be considered untimely under paragraph
(c)(2)(iii) of this section.
* * * * *
PART 766--[AMENDED]
0
3. The authority citation paragraph for part 766 continues to read as
follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
15, 2012, 77 FR 49699 (August 16, 2012).
0
4. Section 766.3 is amended by revising paragraphs (b)(1) and (c) to
read as follows:
Sec. 766.3 Institution of administrative enforcement proceedings.
* * * * *
(b) * * *
(1) By sending a copy by registered or certified mail or by express
mail or commercial courier or delivery service addressed to the
respondent at the respondent's last known address;
* * *
(c) The date of service of notice of the issuance of a charging
letter instituting an administrative enforcement proceeding, or service
of notice of the issuance of a supplement or amendment to a charging
letter, is the date of its delivery, or of its attempted delivery, by
any means described in paragraph (b)(1) of this section.
Dated August 5, 2013.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2013-19364 Filed 8-8-13; 8:45 am]
BILLING CODE 3510-33-P