[Federal Register Volume 72, Number 101 (Friday, May 25, 2007)]
[Notices]
[Pages 29296-29299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-2604]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[06-BIS-16]


In the Matter of: Super Net Computers, L.L.C., No 505, Dar Al 
Riffa Building, Khalid Bin Al Waleed Rd., P.O. Box 43557, Dubai, United 
Arab Emirates

Respondent, Final Decision and Order
    This matter is before me upon a Recommended Decision and Order of 
an Administrative Law Judge (``ALJ''), as further described below.
    In a charging letter filed on August 28, 2006, the Bureau of 
Industry and Security (``BIS'') alleged that Respondent, Super Net 
Computers, L.L.C. (hereinafter ``Super Net''), committed six violations 
of the Export Administration Regulations (currently codified at 15 CFR 
parts 730-774) (2007)) (``Regulations''),\1\ issued under the Export 
Administration Act of 1979, as amended (50 U.S.C. app. 2401-2420 
(2000)) (the ``Act'').\2\ Specifically, the

[[Page 29297]]

charging letter alleged that, on six occasions from on or about 
September 25, 2001, through on or about March 25, 2003, Super Net 
caused, aided and abetted the doing of an act prohibited by the 
Regulations. Specifically, The Charging Letter alleged that Super Net 
ordered super servers (ECCN \3\ 4A994), motherboards (ECCNs 4A003 and 
4A994), and computer chassis (EAR99 \4\), items subject to the 
Regulations and the Iranian Transactions Regulations,\5\ from a U.S. 
company on behalf of Iranian end-users. The U.S. company then shipped 
those super servers and motherboards from the United States to Super 
Net in the United Arab Emirates. Super Net forwarded the items to end-
users in Iran. Pursuant to Section 560.204 of the Iranian Transactions 
Regulations, an export to a third country intended for transshipment to 
Iran is a transaction subject to the Iranian Transaction Regulations. 
Pursuant to Section 746.7 of the Regulations, authorization was 
required from the Office of Foreign Assets Control, U.S. Department of 
the Treasury (``OFAC'') for the shipment of these super servers and 
motherboards from the United States to Iran. No such U.S. Government 
authorization was obtained. By causing, aiding and/or abetting these 
exports in this manner, BIS alleged that Super Net committed six 
violations of Section 764.2(b) of the Regulations.
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    \1\ The charged violations occurred in 2001 through 2003. The 
Regulations governing the violations at issue are found in the 2001 
through 2003 versions of the Code of Federal Regulations (15 CFR 
parts 730-774 (2001-2003)). The 2007 Regulations set forth the 
procedures that apply to this matter.
    \2\ Since August 21, 2001, the Act has been in lapse and the 
President, through Executive Order 13222 of August 17, 2001 (3 CFR, 
2001 Comp. 783 (2002), which has been extended by successive 
Presidential Notices, the most recent being that of August 3, 2006, 
(71 FR 44,551 (August 7, 2006)), has continued the Regulations in 
effect under the International Emergency Economic Powers Act (50 
U.S.C. 1701-17706 (2000)).
    \3\ The term ``ECCN'' refers to an Export Control Classification 
Number. See Section 772.1 of the Regulations.
    \4\ Items subject to the Regulations, which are not listed on 
the Commerce Control List are designated as EAR99.
    \5\ 31 CFR Part 560.
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    In accordance with Section 766.3(b)(1) of the Regulations, on 
August 28, 2006, BIS mailed the notice of issuance of the charging 
letter by registered mail to Super Net at its last known address. The 
record contains evidence that the notice of issuance of a charging 
letter was received by Super Net on September 17, 2006. To date, 
however, Super Net has not filed an answer or otherwise responded to 
the charging letter with the ALJ, as required by the Regulations.
    On March 16, 2007, BIS filed a Motion for Default Order in accord 
with Section 766.7 of the Regulations. The Motion for Default Order 
recommended that Super Net be denied export privileges under the 
Regulations for a period of five years. Under Section 766.7(a) of the 
Regulations, ``[f]ailure of the respondent to file an 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.'' Based upon the record before him the ALJ has found 
Super Net in default.
    On May 1, 2007, based on the record before him, the ALJ issued a 
Recommended Decision and Order in which he found that Super Net 
committed six violations of Section 764.2(b) of the Regulations. The 
ALJ also recommended the penalty of denial of Super Net's export 
privileges for five years, as recommended by BIS.
    The ALJ's Recommended Decision and Order, together with the entire 
record in this case, has been referred to me for final action under 
Section 766.22 of the Regulations. I find that the record supports the 
ALJ's findings of fact and conclusions of law. I also find that the 
penalty recommended by the ALJ is appropriate, given the nature of the 
violations and the facts of this case, and the importance of preventing 
future unauthorized exports.
    Based on my review of the entire record, I affirm the findings of 
fact and conclusions of law recommended by the ALJ.

Accordingly, it is Therefore Ordered,

    First, that for a period of five years from the date this Order is 
published in the Federal Register, Super Net Computers, L.L.C., No 505, 
Dar Al Riffa Building, Khalid Bin Al Waleed Rd., P.O. Box 43557, Dubai, 
United Arab Emirates, its successors and assigns, and when acting for 
or on behalf of Super Net, its representatives, agents and employees 
(hereinafter collectively referred to as the ``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 Regulations, or in any other 
activity subject to the Regulations; or
    C. Benefitting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the Regulations, or in 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 the Denied Person any item 
subject to the Regulations;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by the 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 the 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 the Denied Person of any item subject to 
the Regulations that has been exported from the United States;
    D. Obtain from the Denied Person in the United States any item 
subject to the Regulations with knowledge or reason to now that the 
item will be, or is intended to be, exported from the United States; or
    E. Engage in any transactions 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 the Denied Person, or 
service any item, of whatever origin, that is owned, possessed or 
controlled by the 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 the Denied Person by affiliation, 
ownership, or position or responsibility in the conduct of trade or 
related services may also be made subject to the provisions of this 
Order.
    Fourth, that this Order does not prohibit any export, reexport, or 
other transaction subject to the Regulations where the only items 
involved that are subject to the Regulations are the foreign-produced 
direct product of U.S.-origin technology.

[[Page 29298]]

    Fifth, that this Order shall be served on the Denied Person and on 
BIS, and shall be published in the Federal Register. In addition, the 
ALJ's Recommended Decision and Order, except for the section related to 
the Recommended Order, shall be published in the Federal Register.
    This Order, which constitutes the final agency in this matter, is 
effective upon publication in the Federal Register.

    Dated: May 21, 2007.
Mark Foulon,
Acting Under Secretary of Commerce for Industry and Security.

REDACTED COPY

UNITED STATES DEPARTMENT OF COMMERCE, BUREAU OF INDUSTRY AND SECURITY, 
WASHINGTON, DC 20230

Docket No: 06-BIS-16

    In the matter of: Super Net Computers, L.L.C., No 505, Dar Al 
Riffa Building, Khalid Bin Al Waleed Rd., P.O. Box 43557, Dubai, 
United Arab Emirates. Respondent.

Recommended Decision and Order

    On august 28, 2006, the Bureau of Industry and Security, U.S. 
Department of Commerce (``BIS''), issued a charging letter 
initiating this administrative enforcement proceeding against Super 
Net Computers, L.L.C. (``Super Net''). The charging letter alleged 
that Super Net committed six violations of the Export Administration 
Regulations (currently codified at 15 CFR parts 730-774 (2006)) (the 
``Regulations''),\1\ issued under the Export Administration Act of 
1979, as amended (50 U.S.C. App. 2401-2420 (2000)) (the ``Act'').\2\
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    \1\ The charged violations occurred in 2001 through 2003. The 
Regulations governing the violations at issue are found in the 2001 
through 2003 versions of the Code of Federal Regulations (15 CFR 
parts 730-774 (2001-2003)). The 2006 Regulations establish the 
procedures that apply to this matter.
    \2\ Since August 21, 2001, the Act has been in lapse and the 
President, through Executive Order 13222 of August 17, 2001 (3 CFR, 
2001 Comp. 783 (2002)), as extended by the Notice of August 3, 2006 
(71 FR 44,551 (Aug. 7, 2006)), has continued the regulations in 
effect under the International Emergency Economic Powers Act (50 
U.S.C. 1701-1706 (2000)).
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    Specifically, the charging letter alleged that, on six occasions 
from on or about September 25, 2001, through on or about March 25, 
2003, Super Net caused, aided and abetted the doing of an act 
prohibited by the Regulations. Specifically, BIS alleged that Super 
Net ordered super servers (EEN \3\ 4A994), motherboards (ECCNs 4A003 
and 4A994), and computer chassis (EAR99 \4\), items subject to the 
Regulations and the Iranian Transactions Regulations,\5\ from a U.S. 
company on behalf of Iranian end-users. The U.S. company shipped 
those super servers and motherboards from the United States to Super 
Net in the United Arab Emirates. Super net then forwarded the items 
to end-users in Iran. Pursuant to Section 560.204 of the Iranian 
Transactions Regulations, an export to a third country intended for 
transshipment to Iran is a transaction subject to the Iranian 
Transaction Regulations. Pursuant to Section 746.7 of the 
Regulations, a license was required for the shipment of these super 
servers and motherboards from the United States to Iran. No such 
license was obtained. BIS alleged that Super Net committed six 
violations of the Regulations. (Charges 1-6).
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    \3\ The term ``ECCN'' refers to an Export Control Classification 
Number. See Section 772.1 of the Regulations.
    \4\ Items subject to the Regulations, which are not listed on 
the Commerce Control List are designated as EAR99.
    \5\ 31 CFR part 560.
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    Section 766.3(b)(1) of the Regulations provides that notice of 
the issuance of a charging letter shall be served on a respondent by 
mailing a copy by registered or certified mail addressed to the 
respondent at the respondent's last known address. In accordance 
with the Regulations, on August 28, 2006, BIS mailed the notice of 
issuance of the charging letter by registered mail to Super Net at 
its last known address: Super Net Computers, L.L.C., No 505, Dar Al 
Riffa Building, Khalid Bin Al Waleed Rd., P.O. Box 43557, Dubai, 
United Arab Emirates. BIS has submitted evidence that establishes 
that the charging letter was received by Super Net on or about 
September 17, 2006.\6\
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    \6\ BIS did not receive a delivery receipt for the charging 
letter and requested that the U.S. Postal Service inquire further 
about the delivery of the charging letter. The U.S. Postal Service 
was advised by the postal service of the United Arab Emirates that 
the charging letter was delivered on or about September 17, 2006.
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    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'' initiating the administrative enforcement proceeding. 
Furthermore, BIS informed Super Net that a failure to follow this 
requirement would result in default. (Charging Letter, at 2). To 
date, Super Net has not filed an answer, or otherwise responded, to 
the charging letter.
    Pursuant to the default procedures set forth in Section 766.7 of 
the Regulations, the undersigned finds the facts to be as alleged in 
the charging letter, and hereby determine that those facts establish 
that Super Net committed six violations of Section 764.2(b) of the 
Regulations.
    Section 764.3 of the Regulations sets forth that sanctions BIS 
may seek for violations of the Regulations. The applicable sanctions 
are: (i) A monetary penalty, (ii) suspension from practice before 
the Bureau of Industry and Security, and (iii) a denial of export 
privileges under the Regulations. See 15 CFR 764.3 (2001-2003). BIS 
requests that the undersigned recommend to the Under Secretary of 
Commerce for Industry and Security \7\ that Super Net's export 
privileges be denied for five years.
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    \7\ Pursuant to Section 13(c)(1) of the Export Administration 
Act and Section 766.17(b)(2) of the Regulations, in export control 
enforcement cases, the ALJ makes recommended findings of fact and 
conclusions of law that the Under Secretary must affirm, modify or 
vacate. The Under Secretary's action is the final decision for the 
U.S. Commerce Department.
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    BIS has suggested this sanction because Super Net's role in 
causing, aiding and abetting the export of super servers, 
motherboards and chassis from the United States to Iran without U.S. 
Government authorization evidences a serious disregard for U.S. 
export control laws. BIS notes that the items exported in this case 
involved super servers and motherboards controlled for anti-
terrorism reasons. BIS asserts that Super Net's role in ordering and 
forwarding these items to Iran--a country that the United States 
Government has designated a state sponsor of international 
terrorism--represents a significant harm to national security and to 
the national interests protected by U.S. export controls.\8\ 
Furthermore, BIS believes that the recommended denial order is 
particularly appropriate in this case, since Super Net failed to 
respond to the charging letter filed by BIS, despite evidence 
indicating that Super Net received actual service of the charging 
letter. Although the imposition of a monetary penalty is an option, 
BIS contends that such a penalty would not be effective, given the 
above reasons and the difficulty of collecting payment against a 
party outside the United States. Based on the foregoing, BIS 
believes that the denial of Super Net export privileges for five 
years is an appropriate sanction.
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    \8\ Cf. 15 CFR part 766, Supp. No. 1, III, A (discussing the 
factors that BIS considers in the context of settling an enforcement 
action and stating that ``BIS is more likely to seek a greater 
monetary penalty and/or denial or export privileges * * * in cases 
involving: (1) Exports or reexports to countries subject to anti-
terrorism controls * * *.''). Iran has been designated as a 
Terrorist Supporting Country and is subject to such anti-terrorism 
controls. See 15 CFR part 740, Supp. No. 1 Country Group E:1 (2001-
2003); 15 CFR 742.8 (2001-2003); 15 CFR 746.7 (2001-2003).
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    The undersigned concurs with BIS and recommends that the Under 
Secretary enter an Order denying Super Net's export privileges for a 
period of five years. Such a denial order is consistent with 
penalties imposed in similar cases involving shipments to countries 
designated as ``Terrorist Supporting Countries'' \9\ in which a 
default judgment was issued on BIS's motion. See, e.g., In the 
Matter of Teepad Electronic General Trading, 71 FR 34,596 (June 15, 
2006) (affirming the ALJ's recommendation to grant BIS's motion for 
a ten-year denial where a Canadian respondent knowingly caused the 
export of telecommunications devices to Iran, and where that 
respondent failed to respond to BIS's charging letter); In the 
Matter of Swiss Telecom, 71 FR 32,920 (June 7, 2006) (affirming the 
ALJ's recommendation to grant BIS's motion for a ten-year denial 
where a respondent in the United Arab Emirates knowingly forwarded 
telecommunications devices to Iran, and failed to respond to BIS's 
charging letter); In the Matter of MUTCO International, 71 FR 38,133 
(July 5, 2006) (affirming the ALJ's recommendation to grant BIS's 
default motion for a six-year denial to resolve conspiracy and 
solicitations charges

[[Page 29299]]

related to an attempted export to North Korea).
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    \9\ The U.S. Government's List of Terrorist Supporting Countries 
is set forth in 15 CFR part 740, Supp. No. 1, Country Group E:1.
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    The terms of the denial of export privileges against Super Net 
should be consistent with the standard language used by BIS in such 
orders. The language is:

[REDACTED SECTION]

    This Order, which constitutes the final agency action in this 
matter, is effective upon publication in the Federal Register.
    Accordingly, the undersigned refers this Recommended Decision 
and Order to the Under Secretary of Commerce for Industry and 
Security 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).

    Dated: May 1, 2007.

The Honorable Joseph N. Ingolia,

Chief Administrative Law Judge.

[FR Doc. 07-2604 Filed 5-24-07; 8:45 am]
BILLING CODE 3510-DT-M