[Federal Register Volume 69, Number 230 (Wednesday, December 1, 2004)]
[Notices]
[Pages 69887-69889]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26519]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket Nos. 04-BIS-02 and 04-BIS-03]


Decision and Order

    In the Matters of: Technology Options (India) Pvt. Ltd., Pilot 
<greek-i>168, Behind Maria Mansion, CST Road, Kalina, Mumbai 400 098 
India; and Shivram Rao, of Technology Options (India) Pvt. Ltd., 
Pilot <greek-i>168, Behind Maria Mansion, CST Road, Kalina, Mumbai 
400 098 India, Respondents.

    On February 2, 2004, the Bureau of Industry and Security (``BIS'') 
issued separate charging letters against the respondents, Technology 
Options (India) Pvt. Ltd. (Technology Options) and Shivram Rao (Rao), 
that alleged four violations each of the Export Administration 
Regulations (Regulations).\1\ The charging letters alleged that the 
respondents each committed one violation of section 764.2(d), two 
violations of section 764.2(h), and one violation of section 764.2(g) 
of the Regulations, issued under the Export Administration Act of 1979, 
as amended (50 U.S.C. app. 2401-2420 (2000)) (``Act'').\2\
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    \1\ The violations charged occurred between 2000 and 2002. The 
Regulations governing the violations at issue are found in the 2000, 
2001, and 2002 versions of the Code of Federal Regulations (15 CFR 
parts 730 through 774 (2000-2002). The 2004 Regulations establish 
the procedures that apply to this matter.
    \2\ From August 21, 1994 through November 12, 2000, the Act was 
in lapse. During that period, the President, through Executive Order 
12924, which had been extended by successive Presidential Notices, 
the last of which was August 3, 2000 (3 CFR, 2000 Comp. 397 (2001)), 
continued the Regulations in effect under the International 
Emergency Economic Powers Act (50 U.S.C. 1701-1706 (2000)) (IEEPA). 
On November 13, 2000, the Act was reauthorized and it remained in 
effect through August 20, 2001. Executive Order 13222 was 
reauthorized (3 CFR, 2001 Comp., p. 783 (2002)), which has been 
extended by successive Presidential Notices, the most recent being 
that of August 7, 2003 (68 FR 47833, August 11, 2003), continues the 
Regulations in effect under IEEPA.
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    Specifically, the charging letters alleged that, on or about April 
1, 2002, through on or about August 31, 2001, Technology Options and 
Shivram Rao, acting in his capacity as Managing Director of Technology 
Options, conspired with others, known and unknown, to export from the 
United States to the Indira Ghandi Centre for Atomic Research 
(``IGCAR'') a thermal mechanical fatigue rest system and a universal 
testing machine, both items subject to the Regulations, without the 
required export licenses from BIS as provided in section 744.1(c) of 
the Regulations. At all relevant times, IGCAR was an organization on 
the Entity List set forth at Supplement No. 4 to part 744 of the 
Regulations. In furtherance of the conspiracy, BIS alleged that false 
documentation as submitted to the U.S. exporter that provided that a 
party other than IGCAR was the ultimate consignee for the export from 
the United States of the items at issue. By conspiring to bring about 
an act in violation of the Regulations, BIS charged that the 
respondents committed one violation each of section 764.2(d) of the 
Regulations.
    The charging letters further alleged that, in connection with the 
export of the fatigue test system and universal testing machine to 
IGCAR, on or about June 13, 2000, and on or about December 21, 2000, 
the respondents took actions to evade the Regulations, including 
developing and employing a scheme by which Technology Options would 
receive the export of the items at issue from the United States without 
a BIS export license and then divert them to the true ultimate 
consignee, IGCAR, in violation of the Regulations. BIS alleged that, by 
engaging in such transactions, the respondents committed two violations 
each of section 764.2(h) of the Regulations.
    Finally, the charging letters alleged that, on or about August 16, 
2001 through on or about April 8, 2002, in connection with the export 
of the fatigue test system reference above, the respondents made false 
statements to the U.S. Government regarding their knowledge of and 
involvement in the export. Specifically, BIS alleged that the 
respondents made inconsistent and false statements to U.S. Foreign 
Commercial Service Officers regarding the end user of the fatigue test 
equipment. In doing so, BIS charged that the respondents committed one 
violation each of section 764.2(g) of the Regulations.
    On the basis of the factual record before the Administrative Law 
Judge (ALJ), he found that the respondents failed to file an answer to 
BIS's charging letter within the time required by the Regulations. 
Indeed, service of the notice of issuance of a charging letter on the 
respondents was properly effected on February 16, 2004, a response to 
the charging letter was due no later than March 17, 2004, and the 
record does not include any such response from the respondents. The ALJ 
therefore held Technology Options and Rao in default.
    Under the default procedures set forth in section 766.7(a) of the 
Regulations, ``[f]ailure of the respondent to file answer within the 
time provided constitutes a waiver of the respondent's right to 
appear,'' and ``on BIS's motion and without further notice to the 
respondent, [the ALJ] shall find the facts to be as alleged in the 
charging letter.'' Accordingly, on October 28, 2004, the ALJ issued a 
Recommended Decision and Order, in which he found that the facts 
alleged in the charging letter constitute the findings of fact in this 
matter and, thereby, establish that the respondents committed one 
violation of section 764.2(d), two violations of section 764.2(h), and 
one violation of section 764.2(g) of the Regulations. The AJL also 
recommended a penalty of a 15-year denial of the respondents' export 
privileges.
    Pursuant to section 766.22 of the Regulations, the ALJ's 
Recommended Decision and Order has been referred to me for final 
action. Based on my review of the entire record, I find that the record 
supports the ALJ's findings of fact and conclusions of law regarding 
each of the above-referenced charges. I

[[Page 69888]]

also find that the penalty recommended by the ALJ is appropriate given 
the nature and scope of the violations, the disregard of the 
Regulations demonstrated by the respondents, and the lack of any 
mitigating factors.
    Specifically, the respondents engaged in transactions to evade the 
Regulations and conspired to export items useful in the development or 
production of nuclear weapons to an organization on the Entity List. 
BIS charged that Technology Options acted as a front company for the 
purpose of diverting U.S.-origin items to IGCAR without the necessary 
authorization. BIS also charged that the respondents did not cooperate 
with the investigation or participate in this proceeding. Indeed, the 
respondents made false statements to U.S. officials during the course 
of the investigation about the true location of the items that had been 
exported to IGCAR. There are no mitigating factors on the record that 
would justify a reduction in the denial order. Further, the imposition 
of a civil penalty in this case may not be effective, given the 
difficult of collecting payment against a party outside the United 
States. In light of these circumstances, I affirm the findings of fact 
and conclusions of law of the ALJ's Recommended Decision and Order.
    It is hereby ordered,
    First, that, for a period of 10 years from the date on which this 
Order takes effect, Technology Options (India) Pvt. Ltd. (Technology 
Options) and Shivram Rao, of Technology Options (both located at Pilot 
<greek-i>168, Behind Maria Mansion, CST Road, Kalina, Mumbai 400 098, 
India), and all of their successors or assigns, and, when acting for or 
on behalf of Technology Options, its officers, representatives, agents, 
and employees (individually referred to as ``a Denied Person''), 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 Regulations, or in any other 
activity subject to the Regulations, 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 Regulation, or in any other 
activity subject to the Regulations; or
    C. Benefiting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the Regulations, or in connection with any other activity subject to 
the Regulations.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of a Denied Person any item 
subject to the Regulations;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by a Denied Person of the ownership, possession, or control 
of any item subject to the Regulations that has been or will be 
exported from the United States, including financing or other support 
activities related to a transaction whereby a Denied Person acquires or 
attempts to acquire such ownership, possession, or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from a Denied Person of any item subject to 
the Regulations that has been exported from the United States;
    D. Obtain from a Denied Person in the United States any item 
subject to the Regulations with knowledge or reason to know that the 
item will be, or is intended to be, exported from the United States; or
    E. Engage in any transaction to service any item subject to the 
Regulations that has been or will be exported from the United States 
and that is owned, possessed, or controlled by a Denied Person, or 
service any item, of whatever origin, that is owned, possessed, or 
controlled by a Denied Person if such service involves the use of any 
item subject to the Regulations that has been or will be exported from 
the United States. 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 Regulations, any person, firm, corporation, or 
business organization related to a Denied Person by affiliation, 
ownership, control, or position of responsibility in the conduct of 
trade or related services may also be made subject to the provisions of 
this Order.
    Fourth, that this Order shall be served on the Denied Persons and 
on BIS, and shall be published in the Federal Register. In addition, 
the ALJ's Recommended Decision and Order, except for the section with 
the heading ``Recommended Order,'' shall be published in the Federal 
Register.
    This Order, which constitutes the final agency action in this 
matter, is effective upon publication in the Federal Register.

    Dated: November 24, 2004.
Kenneth I. Juster,
Under Secretary of Commerce for Industry and Security.

Recommended Decision and Order on Motion for Default Order

    On February 2, 2004, the Bureau of Industry and Security, United 
States Department of Commerce (BIS), issued a charging letter 
initiating this administrative enforcement proceeding against 
Technology Options (India) Pvt. Ltd. (``Technology Options''). The 
charging letter alleged that Technology Options committed one 
violation of section 764.2(d), one violation of section 764.2(g), 
and two violations of section 764.2(h) of the Export Administration 
Regulations (currently codified at 15 CFR parts 730 through 774 
(2004)) (the ``Regulations'') \1\, issued under the Export 
Administration Act of 1979, as amended (50 U.S.C. app. 2401-2420 
(2000)) (the ``Act'').\2\ In accordance with section 766.7 of the 
Regulations, BIS moved for the issuance of an Order of Default 
against Technology Options, because Technology Options has not 
answered or otherwise responded to the charging letter as required 
by the Regulations.
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    \1\ The violations charged occurred in 2000 and 2001. The 
Regulations governing the violations at issue are found in the 2000 
and 2001 versions of the Code of Federal Regulations (15 CFR parts 
730 through 774 (2000-2001)). The 2004 Regulations establish the 
procedures that apply to this matter.
    \2\ From August 21, 1994, through November 12, 2000, the Act was 
in lapse. During that period, the President, through Executive Order 
12924, which had been extended by successive Presidential Notices, 
the last of which was August 3, 2000 (3 CFR 2000 Comp. 397 (2001)), 
continued the Regulations in effect under the International 
Emergency Economic Powers Act (50 U.S.C. 1701 through 1706 (2000)) 
(IEEPA). On November 13, 2000, the Act was reauthorized and it 
remained in effect through August 20, 2001. Executive Order 13222 of 
August 17, 2001 (3 CFR, 2001 Comp., p. 783 (2002)), which has been 
extended by successive Presidential Notices, the most recent being 
that of August 6, 2004 (69 FR 48763, August 10, 2004), has continued 
the Regulations in effect under IEEPA.
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A. Legal Basis for Issuing an Order of Default

    Section 766.7 of the Regulations state that BIS may file a 
Motion for an Order of Default if a respondent fails to file a 
timely Answer to a charging letter. That section, entitled 
``Default,'' provides in pertinent part:

Failure of the respondent to file an answer within the time provided 
constitutes a waiver of the respondent's right to appear and contest 
the allegations in the charging letter. In such event, the 
administrative law judge, on BIS's motion and without further notice 
to the respondent, shall find the facts to be as alleged in the 
charging letter and render an initial or recommended decision 
containing findings of fact and appropriate conclusions of law and 
issue or recommend an order imposing appropriate sanctions.

15 CFR 766.7 (2004).

[[Page 69889]]

    Pursuant to section 766.7 of the Regulations, as respondent must 
file an Answer to the charging letter ``within 30 days after being 
served with notice of the issuance of the charging letter'' 
initiating the proceeding.

B. Service of the Charging Letter

    Section 766.3(b)(1) of the Regulations provides that notice of 
issuance of a charging letter shall be served on a respondent by 
mailing a copy via registered or certified mail addressed to the 
respondent at the respondent's last known address. In accordance 
with that section, as previously mentioned, on February 2, 2004, BIS 
sent a notice of issuance of the charging letter by registered mail 
to Respondent Technology Options, at its last known address: 
Technology Options (India) Pvt. Ltd., Plot <greek-i>168, Behind 
Maria Mansion, CST Road, Kalina, Mumbai 400 098, India. BIS 
submitted evidence establishing that on February 16, 2004, 
Technology Options received the notice of issuance of a charging 
letter. These actions constitute service under the Regulations.
    Section 766.6(a) of the Regulations provides, in pertinent part, 
that ``[t]he respondent must answer the charging letter within 30 
days after being served with notice of issuance of the charging 
letter[.]'' Since service was effectuated on February 16, 2004, 
Technology Options' Answer to the charging letter was due no later 
than March 16, 2004. Technology Options did not file an Answer to 
the Charging letter nor did Technology Options request an extension 
of time to answer the Charging letter under section 766.16(b)(2). 
Accordingly, because Technology Options failed to answer or 
otherwise respond to the charging letter within thirty days from the 
date he received the notice of issuance of the charging letter, as 
required by section 766.6 of the Regulations, Technology Options is 
in default.

C. Summary of Violations

    The charging letter filed by BIS included a total of four 
charges. Specifically, the charging letter alleged that from on or 
about April 1, 2000, through on or about August 31, 2001, Technology 
Options conspired with others, known and unknown, to export from the 
United States to the Indira Gandhi Centre for Atomic Research 
(``IGCAR'') a thermal mechanical fatigue test system (``fatigue test 
system'') and a universal testing machine, both items subject to the 
Regulations, without a BIS export license as required by section 
744.11 of the Regulations. See Gov't Ex. 3. At all relevant times, 
IGCAR was an organization listed on the Entity List set forth at 
Supplement No. 4 to part 744 of the Regulations (``Entity 
List'').\3\ In furtherance of the conspiracy, false documentation 
was submitted to the United States exporter that provided that a 
party other than IGCAR was the ultimate consignee for the items to 
be exported from the United States.
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    \3\ The persons on the Entity List are end-users who have been 
determined to present an unacceptable risk of diversion to the 
development of weapons of mass destruction or the missiles used to 
delivery such weapons.
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    The charging letter further alleged that on or about June 13, 
2000, in connection with the export of the fatigue test system and 
attempted export of the universal testing machine, Technology 
Options took actions to evade the Regulations. Specifically, 
Technology Options, with others, known and unknown, developed and 
employed a scheme by which the company with which Technology Options 
was affiliated, Technology Options (India) Pvt. Ltd. (``Technology 
Options''), would receive the export of the fatigue test system from 
the United States without a BIS license and then divert it to the 
true ultimate consignee, IGCAR, in violation of the Regulation.
    The charging letter also alleged that on or about August 16, 
2001, through on or about April 8, 2002, in connection with the 
export of the fatigue test system references above, Technology 
Options made false statement to the U.S. Government regarding its 
knowledge of and involvement in the export. Specifically, Technology 
Options made misleading and false statements to U.S. Foreign 
Commercial Service Officers regarding the end user of the fatigue 
test system.
    Pursuant to the default procedures set forth in section 766.7 of 
the Regulations, I find the facts to be as alleged in the charging 
letter, and hereby determine that those facts establish that 
Technology Options committed one violations of section 764.2(d), one 
violation of section 764(g), and two violations of 764.2(h) of the 
Regulations.
    Section 764.3 of the Regulations establishes the sanctions that 
BIS may seek for the violations charged in this proceeding. The 
applicable sanctions are a civil monetary penalty, suspension from 
practice before the Department of Commerce, and a denial of export 
privileges under the Regulations. See 15 CFR 764.3 (2004).
    Because Technology Options violated the Regulations by 
conspiring and engaging in transactions to evade the Regulations, 
BIS request that I recommend to the Under Secretary of Commerce for 
Industry and Security \4\ that Technology Options' export privileges 
be denied for fifteen (15) years. BIS has suggest this sanction 
because Technology Options has demonstrated a severe disregard for 
U.S. export control laws. Further, BIS believes that imposition of a 
civil penalty in this case may be ineffective, given the difficulty 
of collecting payment against a party outside of the United States. 
In light of these circumstances, BIS believes that the denial of 
Technology Options' export privileges for fifteen (15) years is an 
appropriate sanction.
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    \4\ Pursuant to section 13(c)(1) of the Act and section 
766.17(b)(2) of the Regulations, in export control enforcement 
cases, the Administrative Law Judge makes recommended findings of 
fact and conclusions of law that the Under Secretary must affirm, 
modify or vacate. The Under Secretary's actions is the final 
decision for the agency.
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    Given the foregoing, I concur with BIS and recommend that the 
Under Secretary enter an Order denying Technology Options' export 
privileges for a period of fifteen (15) years.
    The terms of the denial of export privileges against Technology 
Options should be consistent with the standard language used by BIS 
in such order. The language is:

[Portions of recommend decision and order REDACTED]

    Accordingly, I am referring this Recommended Decision and Order 
to the Under Secretary for review and final action for the agency, 
without further notice to the Respondent, as provided in section 
766.7 of the Regulations.
    Within 30 days after receipt of this Recommended Decision and 
Order, the Under Secretary shall issue a written order affirming, 
modifying, or vacating the Recommended Decision and Order. See 15 
CFR 766.22(c).

The Honorable Joseph N. Ingolia,
Chief Administrative Law Judge.

Done and dated this 27 of October, at Baltimore, MD.

Certificate of Service

    I hereby certify that I served the Recommended Decision and 
Order by Federal Express to the following person:

Technology Options (India) Pvt. Ltd.,
Pilot <greek-i>168, Behind Maria Mansion, CST Road, Kalina, Mumbai 
400 098, India.

Alyssa L. Paladino,
Law Clerk, ALJ Docketing Center, United States Coast Guard, 40 S. 
Gay Street, Room 412, Baltimore, MD 21202. Phone: (410) 962-7434. 
Facsimile: (410) 962-1742.

Done and dated this 28 day of October 2004 Baltimore, Maryland.

[FR Doc. 04-26519 Filed 11-30-04; 8:45 am]
BILLING CODE 3510-33-M