6896 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules

That airspace extending upward from 700

feet above the surface within a 10-mile radius

of Clearfield-Lawrence Airport, excluding

that portion which overlies the Philipsburg,

PA Class E airspace area.

* * * * *

Issued in Jamaica, New York, on February

3, 1997.

James K. Buckles,

Acting Manager, Air Traffic Division, Eastern

Region.

[FR Doc. 97–3752 Filed 2–13–97; 8:45 am]

BILLING CODE 4910–13–M

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Parts 500, 505 and 515

Foreign Assets Control Regulations;

Regulations Prohibiting Transactions

Involving the Shipment of Certain

Merchandise Between Foreign

Countries; Cuban Assets Control

Regulations: Civil Penalty

Administrative Hearings

AGENCY: Office of Foreign Assets

Control, Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Treasury Department

proposes to amend the Foreign Assets

Control Regulations and the Cuban

Asset Control Regulations to add

procedures for the conduct of

administrative hearings in civil penalty

cases and for settlement of civil penalty

cases in lieu of administrative hearings.

A conforming amendment is proposed

to be made to the Transaction Control

Regulations.

DATES: Written comments must be

received by March 17, 1997.

ADDRESSES: Comments may be mailed to

the Director, Office of Foreign Assets

Control, U.S. Treasury Department,

1500 Pennsylvania Avenue, NW—

Annex, Washington, DC 20220.

FOR FURTHER INFORMATION CONTACT: Mrs.

B.S. Scott, Chief, Civil Penalties

Program (tel.: 202/622–6140), or

William B. Hoffman, Chief Counsel (tel.:

202/622–2410), Office of Foreign Assets

Control, U.S. Treasury Department,

Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

This document is available as an

electronic file on The Federal Bulletin

Board the day of publication in the

Federal Register. By modem, dial 202/

512–1387 and type ‘‘/GO FAC,’’ or call

202/512–1530 for disk or paper copies.

This file is available for downloading

without charge in WordPerfect 5.1,

ASCII, and Adobe AcrobatTM readable

(*.PDF) formats. For Internet access, the

address for use with the World Wide

Web (Home Page), Telnet, or FTP

protocol is: fedbbs.access.gpo.gov. The

document is also accessible for

downloading in ASCII format without

charge from Treasury’s Electronic

Library (‘‘TEL’’) in the ‘‘Business, Trade

and Labor Mall’’ of the FedWorld

bulletin board. By modem, dial 703/

321–3339, and select the appropriate

self–expanding file in TEL. For Internet

access, use one of the following

protocols: Telnet = fedworld.gov

(192.239.93.3); World Wide Web (Home

Page) = http://www.fedworld.gov; FTP

= ftp.fedworld.gov (192.239.92.205).

Additional information concerning the

programs of the Office of Foreign Assets

Control is available for downloading

from the Office’s Internet Home Page:

http://www.ustreas.gov/treasury/

services/fac/fac.html, or in fax form

through the Office’s 24–hour fax–on–

demand service: call 202/622–0077

using a fax machine, fax modem, or

(within the United States) a touch–tone

telephone.

Background

The Foreign Assets Control

Regulations, 31 CFR part 500, and the

Cuban Asset Control Regulations, 31

CFR part 515 (jointly, the

‘‘Regulations’’), are proposed to be

amended to provide for detailed

procedures governing administrative

hearings, as provided in section 1710(c)

of the Cuban Democracy Act of 1992 (22

U.S.C. 6001–6010 — the ‘‘CDA’’). A

conforming amendment is proposed to

be made to § 505.50 of the Regulations

Prohibiting Transactions Involving the

Shipment of Certain Merchandise

Between Foreign Countries, 31 CFR part

505, which incorporates by reference

the penalty provisions of part 500.

Because the CDA amends section 16 of

the Trading with the Enemy Act (50

U.S.C. App. 16) to permit the imposition

of civil monetary penalties and civil

forfeiture with opportunity for hearing

and discovery, subpart G of the

Regulations is proposed to be revised to

establish the procedures governing

administrative hearings. Before this proposed rule is adopted

as a final rule, consideration will be

given to written comments (a signed

original and 2 copies) that are timely

submitted to the OFAC. All comments

will be available for public inspection

and copying.

Regulatory Flexibility Act

It has been determined that this notice

of proposed rulemaking is not a

‘‘significant regulatory action’’ as

defined in Executive Order 12866.

Therefore, a regulatory assessment is not

required. It is hereby certified, pursuant

to the Regulatory Flexibility Act (5

U.S.C. 605(b)), that the proposed rule, if

promulgated, will not have a significant

economic impact on a substantial

number of small entities, so that no

regulatory flexibility analysis is

required. The factual basis for this

certification is as follows: Since civil

penalty procedures under the

Regulations were adopted (June 29,

1993, for part 515; April 8, 1994, for part

500), all recipients of a prepenalty

notice under the Regulations have been

provided the opportunity to request an

administrative hearing, with prehearing

discovery, prior to imposition of a

penalty. §§ 500.702(b) & 515.702(b). As

of December 20, 1996, the cumulative

number of hearing requests pending was

27. Of these, only 10 involved

respondents that are small business

entities with fewer than 500 employees.

A respondent’s decision to use the

administrative hearing process is strictly

voluntary, and any final agency action

imposing a civil penalty, with or

without an administrative hearing,

remains appealable pursuant to section

702 of the Administrative Procedure Act

(5 U.S.C. 553–596 — the ‘‘APA’’).

The collection of information in the

proposed rules arises in the conduct of

administrative actions or investigations

by OFAC against specific individuals or

entities and is, therefore, not subject to

the requirements of the Paperwork

Reduction Act pursuant to 44 U.S.C.

3518(c)(1)(B)(ii).

List of Subjects

31 CFR Part 500

Administrative practice and

procedure, Banks, banking, Blocking of

assets, Cambodia, Currency, Estates,

Exports, Finance, Foreign claims,

Foreign investment in the United States,

Foreign trade, Imports, Information and

informational materials, International

organizations, North Korea, Penalties,

Reporting and recordkeeping

requirements, Securities, Services,

Specially designated nationals,

Terrorism, Travel restrictions, Trusts

and trustees, Vessels, Vietnam.

31 CFR Part 505

Administrative practice and

procedure, Arms and munitions, Banks,

banking, Communist countries, Exports,

Finance, Foreign trade, Nuclear

materials, Penalties, Reporting and

recordkeeping requirements.

31 CFR Part 515

Administrative practice and

procedure, Air carriers, Banks, banking,

Blocking of assets, Cuba, Currency,
Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules 6897

Estates, Exports, Finance, Foreign

investment in the United States, Foreign

trade, Imports, Information and

informational materials, Penalties,

Reporting and recordkeeping

requirements, Securities, Shipping,

Specially designated nationals,

Terrorism, Travel restrictions, Trusts

and trustees, Vessels.

For the reasons set forth in the

preamble, 31 CFR parts 500, 505 and

515 are proposed to be amended as set

forth below:

PART 500—FOREIGN ASSETS

CONTROL REGULATIONS

1. The authority citation for part 500

is revised to read as follows:

Authority: 50 U.S.C. App. 1–44; Pub. L.

104–132, 110 Stat. 1214, 1254 (18 U.S.C.

2332d); Pub. L. 101–410, 104 Stat. 890 (28

U.S.C. 2461 note); E.O. 9193, 7 FR 5205, 3

CFR, 1938–1943 Comp., p. 1174; E.O. 9989,

13 FR 4891, 3 CFR, 1943–1948 Comp., p. 748.

2. Subpart G is revised to read as

follows:

Subpart G—Penalties

Secs.

500.701 Penalties.

500.702 Prepenalty notice; contents; service.

500.703 Response to prepenalty notice; right

to hearing and prehearing discovery;

informal settlement.

500.704 Penalty imposition or withdrawal

absent a hearing request.

500.705 Time and opportunity to request a

hearing.

500.706 Hearing, discovery, and decision on

the record.

500.707 Judicial review.

500.708 Referral to United States Department

of Justice; administrative collection

measures.

Subpart G—Penalties

§ 500.701 Penalties.

(a) Attention is directed to section 16

of the Trading with the Enemy Act (50

U.S.C. App. 16), as adjusted pursuant to

the Federal Civil Penalties Inflation

Adjustment Act of 1990 (Pub. L. 101–

410, as amended, 28 U.S.C. 2461 note),

which provides that:

(1) Persons who willfully violate any

provision of that act or any license, rule,

or regulation issued thereunder, and

persons who willfully violate, neglect,

or refuse to comply with any order of

the President issued in compliance with

the provisions of that act shall, upon

conviction, be fined not more than

$1,000,000 or, if an individual, be fined

not more than $100,000 or imprisoned

for not more than 10 years, or both; and

an officer, director, or agent of any

corporation who knowingly participates

in such violation shall, upon conviction,

be fined not more than $100,000 or

imprisoned for not more than 10 years,

or both.

(2) Any property, funds, securities,

paper, or other articles or documents, or

any vessel, together with its tackle,

apparel, furniture, and equipment,

concerned in a violation of the act may

upon conviction be forfeited to the

United States.

(3) The Secretary of the Treasury may

impose a civil penalty of not more than

$55,000 per violation on any person

who violates any license, order, or

regulation issued under that act.

(4) Any property, funds, securities,

papers, or other articles or documents,

or any vessel, together with its tackle,

apparel, furniture, and equipment, that

is the subject of a violation subject to a

civil penalty issued pursuant to the act

shall, at the discretion of the Secretary

of the Treasury, be forfeited to the

United States Government.

(b) The criminal penalties provided in

the Trading with the Enemy Act are

subject to increase pursuant to 18 U.S.C.

3571.

(c) Attention is directed to 18 U.S.C.

1001, which provides that whoever, in

any matter within the jurisdiction of any

department or agency of the United

States, knowingly and willfully falsifies,

conceals or covers up by any trick,

scheme, or device a material fact, or

makes any false, fictitious or fraudulent

statements or representation or makes or

uses any false writing or document

knowing the same to contain any false,

fictitious or fraudulent statement or

entry, shall be fined under title 18,

United States Code, or imprisoned not

more than five years, or both.

§ 500.702 Prepenalty notice; contents;

service.

(a) When required. If the Director of

the Office of Foreign Assets Control has

reasonable cause to believe that there

has occurred a violation of any

provision of this part or a violation of

the provisions of any license, ruling,

regulation, order, direction or

instruction issued by or pursuant to the

direction or authorization of the

Secretary of the Treasury pursuant to

this part or otherwise under the Trading

with the Enemy Act, and the Director

determines that further proceedings are

warranted, he shall issue to the person

concerned a notice of his intent to

impose a monetary penalty and/or

forfeiture. The prepenalty notice may be

issued whether or not another agency

has taken any action with respect to this

matter.

(b) Contents—(1) Facts of violation.

The prepenalty notice shall describe the

violation, specify the laws and

regulations allegedly violated, and state

the amount of the proposed monetary

penalty and/or forfeiture.

(2) Respondent’s rights—(i) Right to

respond. The prepenalty notice shall

also inform the respondent of

respondent’s right to respond to the

notice within 30 days of the mailing or

other service of the notice pursuant to

paragraph (c) of this section, as to why

a monetary penalty and/or forfeiture

should not be imposed, or, if imposed,

why it should be in a lesser amount

than proposed.

(ii) Right to request a hearing. The

prepenalty notice shall also inform the

respondent that, in the response

provided for in paragraph (b)(2)(i) of

this section, the respondent may also

request a hearing conducted pursuant to

5 U.S.C. 554–557 to present the

respondent’s defenses to the imposition

of a penalty and/or forfeiture and to

offer any other information that the

respondent believes should be included

in the agency record prior to a final

determination concerning the

imposition of a penalty and/or

forfeiture. Untimely response

constitutes a waiver of a hearing.

(iii) Right to request discovery prior to

hearing. The prepenalty notice shall

also inform the respondent of the right

to discovery prior to a requested

hearing. Discovery must be requested in

writing in the response provided for in

paragraph (b)(2)(i) of this section, jointly

with respondent’s request for a hearing.

Untimely response constitutes a waiver

of prehearing discovery.

(c) Service. The prepenalty notice, or

any amendment or supplement thereto,

shall be served upon the respondent.

Service shall be presumed completed:

(1) Upon mailing a copy by registered

or certified mail, return receipt

requested, addressed to the respondent

at the respondent’s last known address;

or

(2) Upon presentment of a date–

stamped postal receipt by the Office of

Foreign Assets Control with respect to

any respondent who has refused,

avoided, or in any way attempted to

decline delivery, tender, or acceptance

of the registered or certified letter or has

refused to recover a registered or

certified letter served; or

(3) Upon leaving a copy with the

respondent or an officer, a managing or

general agent, or any other agent

authorized by appointment or by law to

accept or receive service for the

respondent, evidenced by a certificate of

service signed by the individual making

such service, stating the method of

service and the identity of the

individual with whom the prepenalty

notice was left; or
6898 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules

(4) Upon proof of service on a

respondent who is not resident in the

United States by any method of service

permitted by the law of the jurisdiction

in which the respondent resides or is

located, provided the requirements of

such foreign law satisfy due process

requirements under United States law

with respect to notice of administrative

proceedings, and where applicable laws

or intergovernmental agreements or

understandings make the methods of

service set forth in paragraphs (c)(1)

through (3) of this section inappropriate

or ineffective for service upon the

nonresident respondent.

§ 500.703 Response to prepenalty notice;

right to hearing and prehearing discovery;

informal settlement.

(a) Deadline for response. The

respondent shall have 30 days from the

date of mailing or other service of the

prepenalty notice pursuant to

§ 500.702(c) to respond thereto.

(b) Form and contents of response—

(1) In general. The written response

need not be in any particular form, but

shall contain information sufficient to

indicate that it is in response to the

prepenalty notice. It should be

responsive to the allegations contained

therein and set forth the nature of the

respondent’s defenses.

(i) The response must admit or deny

specifically each separate allegation of

violation made in the prepenalty notice.

If the respondent is without knowledge

as to an allegation, the response shall so

state, and such statement shall operate

as a denial. Failure to deny, controvert,

or object to any allegation will be

deemed an admission of that allegation.

(ii) The response must also set forth

any additional or new matter or

arguments the respondent seeks, or shall

seek, to use in support of all defenses or

claims for mitigation. Any defense or

partial defense not specifically set forth

in the response shall be deemed waived,

and evidence thereon may be refused,

except for good cause shown.

(iii) The response must also

accurately state, for each respondent,

the respondent’s full name and address

for future service, including current

telephone number and area code.

Respondents are responsible for

providing timely written notice to all

interested parties of any subsequent

changes in the information provided.

(2) Request for hearing. Any request

for an administrative hearing and

prehearing discovery shall be made in

the written response made pursuant to

this section and within the 30–day time

period specified in § 500.705(a).

(3) Informal settlement. In addition or

as an alternative to a written response

to a prepenalty notice pursuant to this

section, the respondent or respondent’s

representative may contact the Office of

Foreign Assets Control as advised in the

prepenalty notice to propose the

settlement of allegations contained in

the prepenalty notice and related

matters. In the event of settlement at the

prepenalty stage, the prepenalty notice

will be withdrawn, the respondent is

not required to take a written position

on allegations contained in the

prepenalty notice, and the Office of

Foreign Assets Control will make no

final determination as to whether a

violation occurred. The amount

accepted in settlement of allegations in

a prepenalty notice may vary from the

civil penalty that might finally be

imposed in the event of a formal

determination of violation. In the event

no settlement is reached, the 30–day

period specified in paragraph (a) of this

section for written response to the

prepenalty notice remains in effect

unless additional time is granted by the

Office of Foreign Assets Control.

Untimely response constitutes a waiver

of a hearing and prehearing discovery.

§ 500.704 Penalty imposition or withdrawal

absent a hearing request.

(a) No violation. If, after considering

any presentations made in response to

the prepenalty notice and any relevant

facts, the Director determines that there

was no violation by the respondent

named in the prepenalty notice, the

Director promptly shall notify the

respondent in writing of that

determination and that no civil

monetary penalty or civil forfeiture

pursuant to this subpart will be

imposed.

(b) Violation. If, after considering any

presentations made in response to the

prepenalty notice and any relevant facts,

the Director determines that there was a

violation by the respondent named in

the prepenalty notice, the Director

promptly shall issue a written notice of

the imposition by the Office of Foreign

Assets Control of the civil monetary

penalty and/or civil forfeiture and/or

other available disposition on that

respondent.

(1) The penalty/forfeiture notice shall

inform the respondent that payment of

the assessed penalty must be made

within 30 days of the mailing of the

penalty notice.

(2) The penalty/forfeiture notice shall

inform the respondent of the

requirement to furnish respondent’s

taxpayer identification number pursuant

to 31 U.S.C. 7701 and that the

Department intends to use such number

for the purposes of collecting and

reporting on any delinquent penalty

amount in the event of a failure to pay

the penalty imposed.

§ 500.705 Time and opportunity to request

a hearing.

(a) Deadline for hearing request.

Within 30 days of the date of mailing or

other service of the prepenalty notice

pursuant to § 500.702(c), the respondent

may file a written request for an agency

hearing conducted pursuant to this

section, to present the respondent’s

defenses to the imposition of a penalty

and/or forfeiture, and to offer any other

information found to be admissible into

the agency record prior to a final

determination concerning the

imposition of a penalty and/or

forfeiture.

(b) Content of written response. If an

agency hearing is requested by the

respondent or by the respondent’s

counsel, the written hearing request

must be accompanied by a written

response to the prepenalty notice

containing the information required by

§ 500.703(b)(1)(i) through (iii). An

untimely hearing request or written

response to the prepenalty notice

constitutes a waiver of a hearing.

(c) Signature of filings. All hearing

requests, motions, responses,

interrogatories, requests for deposition

transcripts, requests for protective

orders, and all other filings relating to

requests for and responses to discovery

or pertaining to the hearing process,

must be signed by each requesting party

and, if represented, by each party’s

counsel.

§ 500.706 Hearing, discovery, and decision

on the record.

(a) Notice of hearing. (1) Any

respondent requesting a hearing shall

receive notice of the time and place of

the hearing at the service address

provided pursuant to

§ 500.703(b)(1)(iii). Requests to change

the time and place of a hearing may be

submitted to the Administrative Law

Judge, who may modify the original

notice or subsequently set hearing dates.

All requests for any change in time and

place of a hearing must be received in

the Administrative Law Judge’s

chambers and served upon all interested

parties no later than 10 working days

before the scheduled hearing date.

(2) The hearing shall be conducted in

a manner consistent with 5 U.S.C. 554–

557, pursuant to section 1710(c) of the

Cuban Democracy Act of 1992 (22

U.S.C. 6001–6010), and section 16 of the

Trading with the Enemy Act (50 U.S.C.

App. 16).

(b) Powers. The Administrative Law

Judge shall have all powers necessary to

conduct the hearing, consistent with 5
Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules 6899

U.S.C. 554–557, including the following

powers:

(1) To administer oaths and

affirmations;

(2) To require production of records

or any information relative to any act or

transaction subject to this part,

including the imposition of sanctions

available under Federal Rule of Civil

Procedure 37(b)(2) (Fed. R. Civ. P.

37(b)(2), 28 U.S.C.) for a party’s failure

to comply with discovery requests;

(3) To receive relevant and material

evidence and to rule upon the

admission of evidence and offers of

proof;

(4) To take or cause depositions to be

taken as authorized by this part;

(5) To regulate the course of the

hearing and the conduct of the parties

and their counsel;

(6) To hold scheduling or prehearing

conferences as deemed necessary;

(7) To consider and rule upon all

procedural and other motions

appropriate in an adjudicatory

proceeding, provided that only the

Secretary or the Secretary’s designee

shall have the power to grant any

motion to dismiss the proceeding or to

decide any other motion that results in

a final determination of the merits of the

proceeding;

(8) To prepare and present to the

Secretary or to the Secretary’s designee

a recommended decision as provided in

paragraph (s) of this section;

(9) To recuse himself on motion made

by a party or on the Administrative Law

Judge’s own motion;

(10) To establish time, place and

manner limitations on the attendance of

the public and the media for any public

hearing;

(11) To perform all necessary or

appropriate measures to discharge the

duties of an Administrative Law Judge;

and

(12) To set fees and expenses for

witnesses, including expert witnesses.

(c) Appearance and practice in a civil

penalty hearing—(1) Appearance before

an Administrative Law Judge by

counsel. Any member in good standing

of the bar of the highest court of any

state, commonwealth, possession, or

territory of the United States, or the

District of Columbia may represent

respondents upon written request in a

civil penalty hearing. A copy of the

document appointing the counsel shall

be presented to the Administrative Law

Judge upon the first appearance of

counsel.

(2) Appearance before an

Administrative Law Judge by a non–

lawyer. A respondent may appear on his

own behalf; a member of a partnership

may represent the partnership; a duly

authorized officer, director, or employee

of any corporation may represent that

corporation in a civil penalty hearing.

(3) Office of Foreign Assets Control

representation. The Office of Foreign

Assets Control shall be represented by

the Chief Counsel of the Office of

Foreign Assets Control or by the Chief

Counsel’s designee.

(d) Conflicts of interest—(1) Conflict

of interest in representation. No

individual shall appear as counsel for a

party in a proceeding conducted

pursuant to this subpart if it reasonably

appears that such representation may be

materially limited by that counsel’s

responsibilities to a third person, or by

counsel’s own interests.

(2) Corrective Measures. The

Administrative Law Judge may take

corrective measures at any stage of a

proceeding to cure a conflict of interest

in representation, including the

issuance of an order limiting the scope

of representation or disqualifying an

individual from appearing in a

representative capacity for the duration

of the proceeding.

(e) Ex parte communications—(1)

Definition. The term ex parte

communication means any material oral

or written communication not on the

public record concerning the merits of

an adjudicatory proceeding with respect

to which reasonable prior notice to all

parties is not given, on any material

matter or proceeding covered by these

regulations that takes place between:

(i) A party to the proceeding, a party’s

counsel, or any other individual; and

(ii) The Administrative Law Judge

handling that proceeding, or the

Secretary, or the Secretary’s designee.

(2) Exceptions. (i) A request for the

status of the proceeding does not

constitute an ex parte communication;

and

(ii) Settlement inquiries and

discussions do not constitute ex parte

communications.

(3) Prohibition on ex parte

communications. From the time a

respondent requests a hearing until the

date that the Secretary or the Secretary’s

designee issues a final decision, no

party, interested person, or counsel

therefor shall knowingly make or cause

to be made an ex parte communication.

The Administrative Law Judge, the

Secretary, and the Secretary’s designee

shall not knowingly make or cause to be

made to a party, or to any interested

person or counsel therefor, any ex parte

communication.

(4) Procedure upon occurrence of ex

parte communication. If an ex parte

communication is received by the

Administrative Law Judge, the

Administrative Law Judge shall cause

all such written communication (or, if

the communication is oral, a

memorandum stating the substance of

the communication) to be placed on the

record of the proceeding and served on

all parties. All parties to the proceeding

shall have an opportunity, within 10

days of the receipt of service of the

notice or of receipt of a memorandum of

the ex parte communication, to file

responses thereto and to recommend

any sanctions, in accordance with

paragraph (e)(5) of this section,

appropriate under the circumstances, or

may file an interlocutory appeal with

the Secretary or the Secretary’s

designee.

(5) Sanctions. Any respondent,

respondent’s counsel, or other party

who makes a prohibited ex parte

communication, or who encourages or

solicits another to make any such

communication, may be subject to any

appropriate sanction or sanctions

imposed by the Administrative Law

Judge for good cause shown, or that may

be imposed upon interlocutory appeal

taken to the Secretary or the Secretary’s

designee, including, but not limited to,

exclusion from the hearing and an

adverse ruling on the issue which is the

subject of the prohibited

communication.

(f) Time limits. Except as provided

elsewhere in this subpart, the

Administrative Law Judge shall

establish all time limits for filings with

regard to hearings conducted pursuant

to this subpart, except for decisions on

interlocutory appeals filed with the

Secretary or the Secretary’s designee.

(g) Interlocutory Appeal. When

exceptions, requests for extensions, or

motions, including motions for

summary disposition, are denied by the

Administrative Law Judge, interlocutory

appeals may be taken to the Secretary or

to the Secretary’s designee for a

decision.

(1) Interlocutory appeals must be filed

no later than 10 working days after the

matter being appealed has been decided

in writing by the Administrative Law

Judge.

(2) Interlocutory appeals must be filed

with the Secretary’s Office, U.S.

Treasury Department, 1500

Pennsylvania Avenue, NW, Washington,

DC 20220, with certified copies served

upon the Administrative Law Judge and

the Office of Chief Counsel for the

Office of Foreign Assets Control.

(h) Opportunity for settlement. Any

party may, at any time during the

hearing, unilaterally submit written

offers or proposals for settlement of a

proceeding to the Secretary or the

Secretary’s designee, at the address

listed in paragraph (g)(2) of this section.
6900 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules

Submission of a written settlement offer

does not provide a basis for adjourning

or otherwise delaying all or any portion

of a hearing. No settlement offer or

proposal, or any subsequent negotiation

or resolution, is admissible as evidence

in any hearing before this tribunal.

(i) Failure to appear. The unexcused

failure of a respondent to appear in

person at a hearing or to have duly

authorized counsel appear in

respondent’s place, constitutes a waiver

of the respondent’s right to a hearing

and is deemed an admission of the

violation alleged. Without further

proceedings or notice to the respondent,

the Administrative Law Judge shall file

with the Secretary or the Secretary’s

designee a recommended decision

finding a violation and the amount of

penalty as indicated in the prepenalty

notice.

(j) Motions—(1) Written motions.

Except as otherwise specifically

provided herein, an application or

request for an order or ruling must be

made by written motion, in typed

format.

(i) All written motions must state with

particularity the relief sought and must

be accompanied by a proposed order.

(ii) No oral argument may be held on

written motions unless directed by the

Administrative Law Judge. Written

memoranda, briefs, affidavits, and other

relevant material and documents may be

filed in support of or in opposition to a

motion.

(2) Oral motions. A motion may be

made orally on the record unless the

Administrative Law Judge directs that

such motion be made in writing.

(3) Filing of motions—(i) In general.

Motions must be filed with the

Administrative Law Judge, and with the

Office of Chief Counsel, Office of

Foreign Assets Control, U.S. Treasury

Department, 1500 Pennsylvania

Avenue, NW, Washington, DC 20220,

with the envelope prominently marked,

‘‘Urgent: Annex—Room 3133,’’ unless

otherwise directed by the

Administrative Law Judge, or agreed to

by Chief Counsel.

(ii) Interlocutory appeals. Motions

related to interlocutory appeals to the

Secretary or the Secretary’s designee

must be sent by fax (fax number: 202/

622–1188) and filed with the Secretary,

U.S. Treasury Department, 1500

Pennsylvania Avenue, NW, Washington,

DC 20220, marked ‘‘Attention: OFAC

Interlocutory Appeal.’’

(4) Responses. (i) Any interested party

may file a written response to a motion

within 20 days of the date of mailing, by

registered or certified letter service and

pursuant to these regulations. If directed

by the Administrative Law Judge

response time may be shortened or

extended. The Administrative Law

Judge may allow each party to file a

response before finally ruling upon any

oral or written motion. The

Administrative Law Judge may allow a

rejoinder to responses for good cause

shown. If a rejoinder is permitted, it

must be filed within 15 days of the date

the response was filed and served upon

all parties.

(ii) The failure of a party to oppose a

written motion or an oral motion made

on the record is deemed to be consent

by that party to the entry of an order

substantially in the form of the order

accompanying the motion.

(5) Dilatory motions. Frivolous,

dilatory, or repetitive motions are

prohibited. The filing of such motions

may form the basis for sanctions.

(k) Discovery—(1) In general. The

availability of information and

documents through discovery is subject

to the agency’s assertion of privileges

available to OFAC and/or to the

Treasury and to the application of all

exemptions afforded the agency

pursuant to the Freedom of Information

Act (5 U.S.C. 552(b)(1) through (9)) and

the Privacy Act (5 U.S.C. 552a) to all

facets of discovery, including

interrogatories, depositions that seek the

release of trade secrets, proprietary

materials, third party confidential and/

or commercially sensitive material,

placement of information, documents

and/or materials under seal and/or

protective order, and interlocutory

appeal to the Secretary or the

Secretary’s designee from any decision

of the Administrative Law Judge.

(2) Types of discovery. Parties may

obtain discovery by one or more of the

following methods: depositions upon

oral examination or written questions;

written interrogatories; production of

documents or other evidence for

inspection; and requests for admission.

All depositions of federal employees

must take place in Washington, DC, at

the U.S. Treasury Department or at the

location where the federal employee to

be deposed performs his duties,

whichever the federal employee’s

supervisor or Chief Counsel shall deem

appropriate. All depositions of federal

employees shall be held at a mutually

agreed upon date and time, and for a

mutually agreed upon length of time.

(3) Interrogatories. Respondent’s

interrogatories must be served upon the

Chief Counsel within 20 days of

respondent’s written request for a

hearing. Chief Counsel must serve Chief

Counsel’s interrogatories within 30 days

of the receipt of service of respondent’s

interrogatories or within 30 days of the

receipt of respondent’s written request

for a hearing if no interrogatories are

filed by respondent by that time. Parties

have 30 days to respond to

interrogatories from the date

interrogatories are received.

Interrogatories shall be limited to 20

questions only. Each subpart, section, or

other designation of a part of a question

shall be counted as one complete

question in computing the permitted 20

question total. Where more than 20

questions are served upon a party, the

receiving party may determine which of

the 20 questions the receiving party

shall answer.

(4) Scope. Parties may obtain

discovery regarding any matter not

privileged, which has material relevance

to the merits of the pending action. It is

not a ground for objection that the

information sought will be inadmissible

at the hearing if the information sought

appears reasonably calculated to lead to

discovery of admissible evidence. The

Administrative Law Judge may make

any order which justice requires to

ensure that requests are not

unreasonable, oppressive, excessive in

scope or unduly burdensome, including

the issuance of an order to show cause

why a particular discovery request is

justified upon the motion of the

objecting party.

(5) Privileged matter. Privileged

documents are not discoverable.

Privileges include, inter alia, the

attorney–client privilege, attorney

work–product privilege, any

government’s or government agency’s

deliberative–process or classified

information privilege, including

materials classified pursuant to

Executive Order 12958 (3 CFR, 1995

Comp., p. 333) and any future Executive

orders that may be issued relating to the

treatment of national security

information, and all materials and

information exempted from release to

the public pursuant to the Privacy Act

(5 U.S.C. 552a) and the Freedom of

Information Act (5 U.S.C. 552(b)(1)

through (9)).

(6) Updating discovery. Whenever a

party receives new or additional

information or documentation, all

information produced, and all

information required to be provided

pursuant to the discovery and hearing

process, must automatically be updated.

The Administrative Law Judge may

impose sanctions for failure to update,

including prohibiting opposition to

claims or defenses raised, striking

pleadings or staying proceedings,

dismissing the action or any part

thereof, rendering a judgment by

default, and holding a party in

contempt.
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(7) Time limits. All discovery,

including all responses to discovery

requests, shall be completed no later

than 20 days prior to the date scheduled

for the commencement of the hearing.

No exceptions to this time limit shall be

permitted, unless the Administrative

Law Judge finds on the record that good

cause exists for waiving the

requirements of this paragraph (k)(7).

(l) Summary disposition—(1) In

general. The Administrative Law Judge

shall recommend that the Secretary or

the Secretary’s designee issue a final

order granting a motion for summary

disposition if the facts of the record

show that:

(i) There is no genuine issue as to any

material fact; and

(ii) The moving party is entitled to a

decision in its favor as a matter of law.

(2) Filing of motions and responses. (i)

Any party who believes that there is no

genuine issue of material fact to be

determined and that he or she is entitled

to a decision as a matter of law may

move at any time for summary

disposition in its favor of all or any part

of the proceeding. Any party, within 20

days after service of such a motion, or

within such time period as allowed by

the Administrative Law Judge, may file

a response to such motion.

(ii) A motion for summary disposition

must be accompanied by a statement of

the material facts as to which the

moving party contends there is no

genuine issue. Such motion must be

supported by documentary evidence,

which may take the form of admissions

in pleadings, stipulations, depositions,

transcripts, affidavits, and any other

evidentiary materials that the moving

party contends support his position.

The motion must also be accompanied

by a brief containing the points and

authorities in support of the moving

party’s arguments. Any party opposing

a motion for summary disposition must

file a statement setting forth those

material facts as to which he or she

contends a genuine dispute exists. Such

opposition must be supported by

evidence of the same type as that

submitted with the motion for summary

disposition and a brief containing the

points and authorities in support of the

contention that summary disposition

would be inappropriate.

(3) Hearing on motion. At the request

of any party or on his own motion, the

Administrative Law Judge may hear oral

argument on the motion for summary

disposition.

(4) Decision on motion. Following

receipt of a motion for summary

disposition and all responses thereto,

the Administrative Law Judge shall

determine whether the moving party is

entitled to summary disposition. If the

Administrative Law Judge determines

that summary disposition is warranted,

the Administrative Law Judge shall

submit a recommended decision to that

effect to the Secretary. If the

Administrative Law Judge finds that no

party is entitled to summary

disposition, he or she shall make a

ruling denying the motion.

(5) Interlocutory appeal. Following

receipt of the Administrative Law

Judge’s recommended decision relating

to summary disposition, each party has

the right to an interlocutory appeal to

the Secretary or the Secretary’s

designee, within 20 days immediately

following the Administrative Law

Judge’s decision.

(m) Partial summary disposition. If

the Administrative Law Judge

determines that a party is entitled to

summary disposition as to certain

claims only, the Administrative Law

Judge shall defer submission of a

recommended decision as to those

claims. A hearing on the remaining

issues must be ordered and those claims

for which the Administrative Law Judge

has determined that summary

disposition is warranted will be

addressed in the recommended decision

filed at the conclusion of the hearing.

(n) Prehearing conferences and

submissions—(1) Prehearing

conferences. The Administrative Law

Judge may, on his own motion, or at the

request of any party for good cause

shown, direct counsel for the parties to

meet with him (in person, by telephone,

or by teleconference) at a prehearing

conference to address any or all of the

following:

(i) Simplification and clarification of

the issues;

(ii) Stipulations, admissions of fact,

and the contents, authenticity and

admissibility into evidence of

documents;

(iii) Matters of which official notice

may be taken;

(iv) Limitation of the number of

witnesses;

(v) Summary disposition of any or all

issues;

(vi) Resolution of discovery issues or

disputes; and

(vii) Such other matters as may aid in

the orderly disposition of the

proceeding.

(2) Prehearing orders. At, or within a

reasonable time following the

conclusion of, any prehearing

conference, the Administrative Law

Judge shall serve on each party an order

setting forth any agreements reached

and any procedural determinations

made.

(3) Prehearing submissions. Within 40

days of the receipt of respondent’s

request for a hearing or at a time set by

the Administrative Law Judge, the

Office of Foreign Assets Control shall

serve on the respondent and upon the

Administrative Law Judge, the

following:

(i) Stipulations of fact, if any;

(ii) A list of the exhibits to be

introduced at the hearing along with a

copy of each exhibit; and

(iii) A list of witnesses to be called to

testify at the hearing, including name

and address of each witness and a short

summary of the expected testimony of

each witness.

(4) Deadline for respondent’s and

other interested parties’ submissions.

Unless for good cause shown the

Administrative Law Judge permits an

extension of time to file, the respondent

and other interested parties shall have

20 days from the date of the submission

by the Office of Foreign Assets Control

of the items set forth in paragraph (n)(3)

of this section, and/or of another

interested party’s service of items set

forth in this paragraph (n)(4), to serve

upon the Administrative Law Judge and

all parties, the following:

(i) Its response to stipulations of fact,

if any;

(ii) A list of the exhibits to be

introduced at the hearing along with a

copy of each exhibit; and

(iii) A list of witnesses to be called to

testify at the hearing, including the

name and address of each witness and

a short summary of the expected

testimony of each witness.

(5) Effect of failure to comply. No

witness may testify and no exhibits may

be introduced at the hearing if such

witness or exhibit is not listed in the

prehearing submissions pursuant to

paragraphs (n)(3) and (n)(4) of this

section, except for good cause shown.

(o) Public hearings—(1) In general.

All hearings shall be open to the public,

unless the Administrative Law Judge, at

his discretion, determines at any time

prior to or during the hearing, that

holding an open hearing would be

contrary to the public interest. Within

20 days of service of the notice, any

party may file with the Administrative

Law Judge a request for a closed

hearing, and any party may file a

pleading in reply to such a request.

Failure to file a request or a reply is

deemed a waiver of any objections

regarding whether the hearing will be

public or closed.

(2) Filing document under seal. (i)

The Office of Foreign Assets Control

may file any documents or any part of

a document under seal if disclosure of

the document would be inconsistent
6902 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules

with the protection of the public interest

or if justice requires protection of any

person, including a source or a party,

from annoyance, threat, oppression, or

undue burden or expense, or the

disclosure of the information would be,

or might reasonably lead to a disclosure,

contrary to Executive Order 12958 or

other Executive orders concerning

disclosure of information, U.S. Treasury

Department regulations, the Privacy Act,

or the Freedom of Information Act.

(ii) The Administrative Law Judge

shall also safeguard the security and

integrity of any documents under seal

and shall take all appropriate steps to

preserve the confidentiality of such

documents or any parts thereof,

including closing portions of the

hearing to the public. Release of any

information under seal, in any form, or

in any manner, is subject to the same

sanctions and the exercise of the same

authorities provided with respect to ex

parte communications under paragraph

(e)(5) of this section.

(iii) Should the Administrative Law

Judge deny placement of any documents

under seal or under protective order,

any interested party, and any person

whose documents or materials are at

issue, may file an interlocutory appeal

to the Secretary or the Secretary’s

designee. In such cases the

Administrative Law Judge must not

release or expose any of the records or

documents in question to the public or

to any other parties for a period of 20

days from the date of the Administrative

Law Judge’s ruling, in order to permit a

petitioner the opportunity to either

withdraw the records and documents or

to file an interlocutory appeal with the

Secretary or the Secretary’s designee

requesting an order that the records be

placed under seal.

(iv) Upon settlement, final decision,

or motion to the Administrative Law

Judge for good cause shown, all

materials (including all copies) under

seal or protective order shall be returned

to the respective parties, except when it

may be necessary to retain a record until

the judicial process is completed.

(v) Written notice of all requests for

release of protected documents or

materials shall be given to all interested

parties registered with the

Administrative Law Judge at least 20

days prior to any permitted release and

prior to any access not specifically

authorized under the protective order. A

copy of all requests for information,

including the name, address, and

telephone number of the requester, shall

be provided to the petitioner. Each

request for access to protected material

must also provide the names, addresses,

and telephone numbers of all persons

represented by the requester, including

those on whose behalf the requester

seeks access to protected information.

The Administrative Law Judge shall

impose sanctions provided under

paragraphs (e)(4) and (5) of this section

for failure to provide this information.

(p) Conduct of hearings—(1) In

general—(i) Overview. Hearings shall be

conducted to provide a fair and

expeditious presentation of the relevant

disputed issues and facts. Each party

has the right to present its case or

defense by oral and documentary

evidence and to conduct such cross

examination as may be required for full

disclosure of the relevant facts.

(ii) Order of hearing. The Office of

Foreign Assets Control shall present its

case–in–chief first, unless otherwise

ordered in advance by the

Administrative Law Judge or otherwise

expressly specified by law or regulation.

The Office of Foreign Assets Control

shall be the first party to present an

opening statement and a closing

statement and may make a rebuttal

statement after the respondent’s closing

statement.

(iii) Stipulations. Unless the

Administrative Law Judge directs

otherwise, all stipulations of fact and

law previously agreed upon by the

parties, and all documents, the

admissibility of which has been

previously stipulated, will be admitted

into evidence upon commencement of

the hearing.

(2) Transcript. A record of the hearing

shall be made by manual or electronic

means, including through the use of

audio recorded diskettes or audio–

visual cassettes, and transcribed unless

the Administrative Law Judge rules

otherwise. The transcript shall be made

available to any party upon payment of

the cost thereof. The Administrative

Law Judge shall have authority to order

the record corrected, either upon a

motion to correct, upon a motion to

stipulate by the parties for good cause

shown, or following notice to the parties

upon the Administrative Law Judge’s

own motion. The Administrative Law

Judge shall serve notice upon all parties,

at the addresses provided by the parties

pursuant to § 500.703(b)(1)(iii), that the

certified transcript, together with all

hearing exhibits and exhibits introduced

but not admitted into evidence at the

hearing, has been filed with the

Administrative Law Judge.

(q) Evidence—(1) Admissibility. (i)

Except as is otherwise set forth in this

section, evidence that is relevant and

material is admissible to the fullest

extent authorized by the Administrative

Procedure Act and other applicable law.

(ii) Evidence may be excluded if it is

misleading or its probative value is

substantially outweighed by the danger

of unfair prejudice or confusion of the

issues, considerations of undue delay or

waste of time, or of needless

presentation of cumulative evidence.

(iii) Evidence that would be

inadmissible under the Federal Rules of

Evidence need not be deemed or ruled

to be inadmissible in a proceeding

conducted pursuant to this subpart if

such evidence is relevant and material,

and not unduly repetitive.

(2) Official notice. (i) Official notice

may be taken of any material fact which

may be judicially noticed by a United

States district court.

(ii) All matters officially noticed by

the Administrative Law Judge shall

appear on the record.

(iii) If official notice is requested or

taken of any material fact, the parties,

upon timely request, shall be afforded

an opportunity to object.

(3) Duplicate copies. A duplicate copy

of a document is admissible to the same

extent as the original, unless a genuine

issue is raised as to whether the copy is

in some material respect not a true and

legible copy of the original.

(4) Admissibility of evidence.

Objections to the admissibility of

evidence must be timely made and

rulings on all objections must appear on

the record. Failure to object to

admission of evidence or to any ruling

constitutes a waiver of the objection.

(5) Rejected exhibits. The

Administrative Law Judge shall retain

rejected exhibits, adequately marked for

identification, in the event of an

interlocutory appeal.

(6) Stipulations. The parties may

stipulate as to any relevant matters of

fact or to the authenticity of any

relevant documents. Such stipulations

may be received into evidence at a

hearing and are binding on the parties

with respect to the matters therein

stipulated.

(7) Depositions of unavailable

witnesses. If a witness is unavailable to

testify at a hearing, and that witness has

testified in a deposition within the

United States to which all parties to the

proceeding have received timely notice

and an opportunity to participate, a

party may offer as evidence all or any

part of the transcript of the deposition,

including deposition exhibits. All costs

of depositions shall be borne by the

party requesting the deposition.

(r) Proposed decision and supporting

briefs—(1) Proposed decisions. Any

party may file with the Administrative

Law Judge a proposed decision within

30 days after the parties have received

notice that the transcript has been filed
Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules 6903

with the Administrative Law Judge,

unless otherwise ordered by the

Administrative Law Judge.

(2) Reliance on relevant authorities.

The proposed decision must be

supported by citation to relevant

authorities and by transcript page

references to any relevant portions of

the record. At the same time the

proposed decision is filed, a post–

hearing brief may be filed in support.

The post–hearing brief shall be filed

either as part of the same document or

in a separate document.

(3) Reply briefs. Reply briefs may be

filed within 15 days after the date on

which the parties’ proposed decision is

due. Reply briefs must be strictly

limited to responding to new matters,

issues, or arguments raised in another

party’s papers. A party who has not

filed a proposed decision or a post–

hearing brief may not file a reply brief.

(4) Simultaneous filing required.

Absent a showing of good cause for the

use of another procedure, the

Administrative Law Judge shall not

order the filing by any party of any brief

or reply brief in advance of the other

party’s filing of its brief.

(s) Recommended decision and filing

of record. Within 45 days after

expiration of the time allowed for filing

reply briefs, the Administrative Law

Judge shall file with and certify to the

Secretary or the Secretary’s designee the

record of the proceeding and the

decision. The record must include the

Administrative Law Judge’s

recommended decision, including a

determination either that there was no

violation by the person named in the

prepenalty notice, or that there was a

violation by the person named in the

prepenalty notice, and the

recommended monetary penalty and/or

civil forfeiture and/or other disposition

available to the Office of Foreign Assets

Control. In addition to the proposed

decision, the record must include all

prehearing and hearing transcripts,

exhibits, and rulings, and the motions,

briefs, memoranda, and other

supporting papers filed in connection

with the hearing. The Administrative

Law Judge shall have the recommended

decision served upon each party.

(t) Exceptions to the recommended

decision. When the Administrative Law

Judge has issued his recommended

decision, the Administrative Law Judge

or his representative shall contact each

party by telephone at the telephone

number provided by each party

pursuant to § 500.703(b)(1)(iii). Within 3

days of telephoning the parties, the

recommended decision shall be mailed

by the Administrative Law Judge to the

parties. A party may file written

exceptions to the recommended

decision with the Secretary or the

Secretary’s designee within 30 days of

the date the telephone call is placed by

the Administrative Law Judge or his

representative. A supporting brief may

be filed at the time the exceptions are

filed.

(u) Final decision. The final decision

of the Secretary or the Secretary’s

designee shall be based on a review of

the proposed decision and the entire

record of the proceeding. The final

written decision shall be provided to all

parties.

§ 500.707 Judicial review.

Any person may seek judicial review

as provided under 5 U.S.C. 702 for a

penalty and/or forfeiture imposed

pursuant to this part.

§ 500.708 Referral to United States

Department of Justice; administrative

collection measures.

In the event that the respondent does

not pay the penalty imposed pursuant to

this part within 30 days of the mailing

of the written notice of the imposition

of the penalty, the matter may be

referred for administrative collection

measures or to the United States

Department of Justice for appropriate

action to recover the penalty in a civil

suit in a Federal district court.

PART 505—REGULATIONS

PROHIBITING TRANSACTIONS

INVOLVING THE SHIPMENT OF

CERTAIN MERCHANDISE BETWEEN

FOREIGN COUNTRIES

1. The authority citation for part 505

is revised to read as follows:

Authority: 50 U.S.C. App. 1–44; Pub. L.

101–410, 104 Stat. 890 (28 U.S.C. 2461 note);

E.O. 9193, 7 FR 5205, 3 CFR, 1938–1943

Comp., p. 1174; E.O. 9989, 13 FR 4891, 3

CFR, 1943–1948 Comp., p. 748.

2. Section 505.50 is revised to read as

follows:

§ 505.50 Penalties.

For provisions relating to civil

penalties and civil forfeiture, see

subpart G of part 500 of this chapter.

PART 515—CUBAN ASSETS

CONTROL REGULATIONS

1. The authority citation for part 515

is revised to read as follows:

Authority: 50 U.S.C. App. 1–44; 22 U.S.C.

6001–6010; 22 U.S.C. 6021–6091; 22 U.S.C.

2370(a); Pub. L. 104–132, 110 Stat. 1214,

1254 (18 U.S.C. 2332d); Pub. L. 101–410, 104

Stat. 890 (28 U.S.C. 2461 note); E.O. 9193, 7

FR 5205, 3 CFR, 1938–1943 Comp., p. 1174;

E.O. 9989, 13 FR 4891, 3 CFR, 1943–1948

Comp., p. 748; Proc. 3447, 27 FR 1085, 3

CFR, 1959–1963 Comp., p. 157; E.O. 12854,

58 FR 36587, 3 CFR, 1993 Comp., p. 614.

2. Subpart G is revised to read as

follows:

Subpart G—Penalties

Secs.

515.701 Penalties.

515.702 Prepenalty notice; contents; service.

515.703 Response to prepenalty notice; right

to hearing and prehearing discovery;

informal settlement.

515.704 Penalty imposition or withdrawal

absent a hearing request.

515.705 Time and opportunity to request a

hearing.

515.706 Hearing, discovery, and decision on

the record.

515.707 Judicial review.

515.708 Referral to United States Department

of Justice; administrative collection

measures.

Subpart G—Penalties

§ 515.701 Penalties.

(a) Attention is directed to section 16

of the Trading with the Enemy Act (50

U.S.C. App. 16), as adjusted pursuant to

the Federal Civil Penalties Inflation

Adjustment Act of 1990 (Pub. L. 101–

410, as amended, 28 U.S.C. 2461 note),

which provides that:

(1) Persons who willfully violate any

provision of that act or any license, rule,

or regulation issued thereunder, and

persons who willfully violate, neglect,

or refuse to comply with any order of

the President issued in compliance with

the provisions of that act shall, upon

conviction, be fined not more than

$1,000,000 or, if an individual, be fined

not more than $100,000 or imprisoned

for not more than 10 years, or both; and

an officer, director, or agent of any

corporation who knowingly participates

in such violation shall, upon conviction,

be fined not more than $100,000 or

imprisoned for not more than 10 years,

or both.

(2) Any property, funds, securities,

paper, or other articles or documents, or

any vessel, together with its tackle,

apparel, furniture, and equipment,

concerned in a violation of the act may

upon conviction be forfeited to the

United States.

(3) The Secretary of the Treasury may

impose a civil penalty of not more than

$55,000 per violation on any person

who violates any license, order, or

regulation issued under that act.

(4) Any property, funds, securities,

papers, or other articles or documents,

or any vessel, together with its tackle,

apparel, furniture, and equipment, that

is the subject of a violation subject to a

civil penalty issued pursuant to the act

shall, at the discretion of the Secretary

of the Treasury, be forfeited to the

United States Government.
6904 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules

(b) The criminal penalties provided in

the Trading with the Enemy Act are

subject to increase pursuant to 18 U.S.C.

3571.

(c) Attention is directed to 18 U.S.C.

1001, which provides that whoever, in

any matter within the jurisdiction of any

department or agency of the United

States, knowingly and willfully falsifies,

conceals or covers up by any trick,

scheme, or device a material fact, or

makes any false, fictitious or fraudulent

statements or representation or makes or

uses any false writing or document

knowing the same to contain any false,

fictitious or fraudulent statement or

entry, shall be fined under title 18,

United States Code, or imprisoned not

more than five years, or both.

§ 515.702 Prepenalty notice; contents;

service.

(a) When required. If the Director of

the Office of Foreign Assets Control has

reasonable cause to believe that there

has occurred a violation of any

provision of this part or a violation of

the provisions of any license, ruling,

regulation, order, direction or

instruction issued by or pursuant to the

direction or authorization of the

Secretary of the Treasury pursuant to

this part or otherwise under the Trading

with the Enemy Act, and the Director

determines that further proceedings are

warranted, he shall issue to the person

concerned a notice of his intent to

impose a monetary penalty and/or

forfeiture. The prepenalty notice may be

issued whether or not another agency

has taken any action with respect to this

matter.

(b) Contents—(1) Facts of violation.

The prepenalty notice shall describe the

violation, specify the laws and

regulations allegedly violated, and state

the amount of the proposed monetary

penalty and/or forfeiture.

(2) Respondent’s rights—(i) Right to

respond. The prepenalty notice shall

also inform the respondent of

respondent’s right to respond to the

notice within 30 days of the mailing or

other service of the notice pursuant to

paragraph (c) of this section, as to why

a monetary penalty and/or forfeiture

should not be imposed, or, if imposed,

why it should be in a lesser amount

than proposed.

(ii) Right to request a hearing. The

prepenalty notice shall also inform the

respondent that, in the response

provided for in paragraph (b)(2)(i) of

this section, the respondent may also

request a hearing conducted pursuant to

5 U.S.C. 554–557 to present the

respondent’s defenses to the imposition

of a penalty and/or forfeiture and to

offer any other information that the

respondent believes should be included

in the agency record prior to a final

determination concerning the

imposition of a penalty and/or

forfeiture. Untimely response

constitutes a waiver of a hearing.

(iii) Right to request discovery prior to

hearing. The prepenalty notice shall

also inform the respondent of the right

to discovery prior to a requested

hearing. Discovery must be requested in

writing in the response provided for in

paragraph (b)(2)(i) of this section, jointly

with respondent’s request for a hearing.

Untimely response constitutes a waiver

of prehearing discovery.

(c) Service. The prepenalty notice, or

any amendment or supplement thereto,

shall be served upon the respondent.

Service shall be presumed completed:

(1) Upon mailing a copy by registered

or certified mail, return receipt

requested, addressed to the respondent

at the respondent’s last known address;

or

(2) Upon presentment of a date–

stamped postal receipt by the Office of

Foreign Assets Control with respect to

any respondent who has refused,

avoided, or in any way attempted to

decline delivery, tender, or acceptance

of the registered or certified letter or has

refused to recover a registered or

certified letter served; or

(3) Upon leaving a copy with the

respondent or an officer, a managing or

general agent, or any other agent

authorized by appointment or by law to

accept or receive service for the

respondent, evidenced by a certificate of

service signed by the individual making

such service, stating the method of

service and the identity of the

individual with whom the prepenalty

notice was left; or

(4) Upon proof of service on a

respondent who is not resident in the

United States by any method of service

permitted by the law of the jurisdiction

in which the respondent resides or is

located, provided the requirements of

such foreign law satisfy due process

requirements under United States law

with respect to notice of administrative

proceedings, and where applicable laws

or intergovernmental agreements or

understandings make the methods of

service set forth in paragraphs (c)(1)

through (3) of this section inappropriate

or ineffective for service upon the

nonresident respondent.

§ 515.703 Response to prepenalty notice;

right to hearing and prehearing discovery;

informal settlement.

(a) Deadline for response. The

respondent shall have 30 days from the

date of mailing or other service of the

prepenalty notice pursuant to

§ 515.702(c) to respond thereto.

(b) Form and contents of response—

(1) In general. The written response

need not be in any particular form, but

shall contain information sufficient to

indicate that it is in response to the

prepenalty notice. It should be

responsive to the allegations contained

therein and set forth the nature of the

respondent’s defenses.

(i) The response must admit or deny

specifically each separate allegation of

violation made in the prepenalty notice.

If the respondent is without knowledge

as to an allegation, the response shall so

state, and such statement shall operate

as a denial. Failure to deny, controvert,

or object to any allegation will be

deemed an admission of that allegation.

(ii) The response must also set forth

any additional or new matter or

arguments the respondent seeks, or shall

seek, to use in support of all defenses or

claims for mitigation. Any defense or

partial defense not specifically set forth

in the response shall be deemed waived,

and evidence thereon may be refused,

except for good cause shown.

(iii) The response must also

accurately state, for each respondent,

the respondent’s full name and address

for future service, including current

telephone number and area code.

Respondents are responsible for

providing timely written notice to all

interested parties of any subsequent

changes in the information provided.

(2) Request for hearing. Any request

for an administrative hearing and

prehearing discovery shall be made in

the written response made pursuant to

this section and within the 30–day time

period specified in § 515.705(a).

(3) Informal settlement. In addition or

as an alternative to a written response

to a prepenalty notice pursuant to this

section, the respondent or respondent’s

representative may contact the Office of

Foreign Assets Control as advised in the

prepenalty notice to propose the

settlement of allegations contained in

the prepenalty notice and related

matters. In the event of settlement at the

prepenalty stage, the prepenalty notice

will be withdrawn, the respondent is

not required to take a written position

on allegations contained in the

prepenalty notice, and the Office of

Foreign Assets Control will make no

final determination as to whether a

violation occurred. The amount

accepted in settlement of allegations in

a prepenalty notice may vary from the

civil penalty that might finally be

imposed in the event of a formal

determination of violation. In the event

no settlement is reached, the 30–day

period specified in paragraph (a) of this
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section for written response to the

prepenalty notice remains in effect

unless additional time is granted by the

Office of Foreign Assets Control.

Untimely response constitutes a waiver

of a hearing and prehearing discovery.

§ 515.704 Penalty imposition or withdrawal

absent a hearing request.

(a) No violation. If, after considering

any presentations made in response to

the prepenalty notice and any relevant

facts, the Director determines that there

was no violation by the respondent

named in the prepenalty notice, the

Director promptly shall notify the

respondent in writing of that

determination and that no civil

monetary penalty or civil forfeiture

pursuant to this subpart will be

imposed.

(b) Violation. If, after considering any

presentations made in response to the

prepenalty notice and any relevant facts,

the Director determines that there was a

violation by the respondent named in

the prepenalty notice, the Director

promptly shall issue a written notice of

the imposition by the Office of Foreign

Assets Control of the civil monetary

penalty and/or civil forfeiture and/or

other available disposition on that

respondent.

(1) The penalty/forfeiture notice shall

inform the respondent that payment of

the assessed penalty must be made

within 30 days of the mailing of the

penalty notice.

(2) The penalty/forfeiture notice shall

inform the respondent of the

requirement to furnish respondent’s

taxpayer identification number pursuant

to 31 U.S.C. 7701 and that the

Department intends to use such number

for the purposes of collecting and

reporting on any delinquent penalty

amount in the event of a failure to pay

the penalty imposed.

§ 515.705 Time and opportunity to request

a hearing.

(a) Deadline for hearing request.

Within 30 days of the date of mailing or

other service of the prepenalty notice

pursuant to § 515.702(c), the respondent

may file a written request for an agency

hearing conducted pursuant to this

section, to present the respondent’s

defenses to the imposition of a penalty

and/or forfeiture, and to offer any other

information found to be admissible into

the agency record prior to a final

determination concerning the

imposition of a penalty and/or

forfeiture.

(b) Content of written response. If an

agency hearing is requested by the

respondent or by the respondent’s

counsel, the written hearing request

must be accompanied by a written

response to the prepenalty notice

containing the information required by

§ 515.703(b)(1)(i) through (iii). An

untimely hearing request or written

response to the prepenalty notice

constitutes a waiver of a hearing.

(c) Signature of filings. All hearing

requests, motions, responses,

interrogatories, requests for deposition

transcripts, requests for protective

orders, and all other filings relating to

requests for and responses to discovery

or pertaining to the hearing process,

must be signed by each requesting party

and, if represented, by each party’s

counsel.

§ 515.706 Hearing, discovery, and decision

on the record.

(a) Notice of hearing. (1) Any

respondent requesting a hearing shall

receive notice of the time and place of

the hearing at the service address

provided pursuant to

§ 515.703(b)(1)(iii). Requests to change

the time and place of a hearing may be

submitted to the Administrative Law

Judge, who may modify the original

notice or subsequently set hearing dates.

All requests for any change in time and

place of a hearing must be received in

the Administrative Law Judge’s

chambers and served upon all interested

parties no later than 10 working days

before the scheduled hearing date.

(2) The hearing shall be conducted in

a manner consistent with 5 U.S.C. 554–

557, pursuant to section 1710(c) of the

Cuban Democracy Act of 1992 (22

U.S.C. 6001–6010), and section 16 of the

Trading with the Enemy Act (50 U.S.C.

App. 16).

(b) Powers. The Administrative Law

Judge shall have all powers necessary to

conduct the hearing, consistent with 5

U.S.C. 554–557, including the following

powers:

(1) To administer oaths and

affirmations;

(2) To require production of records

or any information relative to any act or

transaction subject to this part,

including the imposition of sanctions

available under Federal Rule of Civil

Procedure 37(b)(2) (Fed. R. Civ. P.

37(b)(2), 28 U.S.C.) for a party’s failure

to comply with discovery requests;

(3) To receive relevant and material

evidence and to rule upon the

admission of evidence and offers of

proof;

(4) To take or cause depositions to be

taken as authorized by this part;

(5) To regulate the course of the

hearing and the conduct of the parties

and their counsel;

(6) To hold scheduling or prehearing

conferences as deemed necessary;

(7) To consider and rule upon all

procedural and other motions

appropriate in an adjudicatory

proceeding, provided that only the

Secretary or the Secretary’s designee

shall have the power to grant any

motion to dismiss the proceeding or to

decide any other motion that results in

a final determination of the merits of the

proceeding;

(8) To prepare and present to the

Secretary or to the Secretary’s designee

a recommended decision as provided in

paragraph (s) of this section;

(9) To recuse himself on motion made

by a party or on the Administrative Law

Judge’s own motion;

(10) To establish time, place and

manner limitations on the attendance of

the public and the media for any public

hearing;

(11) To perform all necessary or

appropriate measures to discharge the

duties of an Administrative Law Judge;

and

(12) To set fees and expenses for

witnesses, including expert witnesses.

(c) Appearance and practice in a civil

penalty hearing—(1) Appearance before

an Administrative Law Judge by

counsel. Any member in good standing

of the bar of the highest court of any

state, commonwealth, possession, or

territory of the United States, or the

District of Columbia may represent

respondents upon written request in a

civil penalty hearing. A copy of the

document appointing the counsel shall

be presented to the Administrative Law

Judge upon the first appearance of

counsel.

(2) Appearance before an

Administrative Law Judge by a non–

lawyer. A respondent may appear on his

own behalf; a member of a partnership

may represent the partnership; a duly

authorized officer, director, or employee

of any corporation may represent that

corporation in a civil penalty hearing.

(3) Office of Foreign Assets Control

representation. The Office of Foreign

Assets Control shall be represented by

the Chief Counsel of the Office of

Foreign Assets Control or by the Chief

Counsel’s designee.

(d) Conflicts of interest—(1) Conflict

of interest in representation. No

individual shall appear as counsel for a

party in a proceeding conducted

pursuant to this subpart if it reasonably

appears that such representation may be

materially limited by that counsel’s

responsibilities to a third person, or by

counsel’s own interests.

(2) Corrective Measures. The

Administrative Law Judge may take

corrective measures at any stage of a

proceeding to cure a conflict of interest

in representation, including the
6906 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules

issuance of an order limiting the scope

of representation or disqualifying an

individual from appearing in a

representative capacity for the duration

of the proceeding.

(e) Ex parte communications—(1)

Definition. The term ex parte

communication means any material oral

or written communication not on the

public record concerning the merits of

an adjudicatory proceeding with respect

to which reasonable prior notice to all

parties is not given, on any material

matter or proceeding covered by these

regulations that takes place between:

(i) A party to the proceeding, a party’s

counsel, or any other individual; and

(ii) The Administrative Law Judge

handling that proceeding, or the

Secretary, or the Secretary’s designee.

(2) Exceptions. (i) A request for the

status of the proceeding does not

constitute an ex parte communication;

and

(ii) Settlement inquiries and

discussions do not constitute ex parte

communications.

(3) Prohibition on ex parte

communications. From the time a

respondent requests a hearing until the

date that the Secretary or the Secretary’s

designee issues a final decision, no

party, interested person, or counsel

therefor shall knowingly make or cause

to be made an ex parte communication.

The Administrative Law Judge, the

Secretary, and the Secretary’s designee

shall not knowingly make or cause to be

made to a party, or to any interested

person or counsel therefor, any ex parte

communication.

(4) Procedure upon occurrence of ex

parte communication. If an ex parte

communication is received by the

Administrative Law Judge, the

Administrative Law Judge shall cause

all such written communication (or, if

the communication is oral, a

memorandum stating the substance of

the communication) to be placed on the

record of the proceeding and served on

all parties. All parties to the proceeding

shall have an opportunity, within 10

days of the receipt of service of the

notice or of receipt of a memorandum of

the ex parte communication, to file

responses thereto and to recommend

any sanctions, in accordance with

paragraph (e)(5) of this section,

appropriate under the circumstances, or

may file an interlocutory appeal with

the Secretary or the Secretary’s

designee.

(5) Sanctions. Any respondent,

respondent’s counsel, or other party

who makes a prohibited ex parte

communication, or who encourages or

solicits another to make any such

communication, may be subject to any

appropriate sanction or sanctions

imposed by the Administrative Law

Judge for good cause shown, or that may

be imposed upon interlocutory appeal

taken to the Secretary or the Secretary’s

designee, including, but not limited to,

exclusion from the hearing and an

adverse ruling on the issue which is the

subject of the prohibited

communication.

(f) Time limits. Except as provided

elsewhere in this subpart, the

Administrative Law Judge shall

establish all time limits for filings with

regard to hearings conducted pursuant

to this subpart, except for decisions on

interlocutory appeals filed with the

Secretary or the Secretary’s designee.

(g) Interlocutory Appeal. When

exceptions, requests for extensions, or

motions, including motions for

summary disposition, are denied by the

Administrative Law Judge, interlocutory

appeals may be taken to the Secretary or

to the Secretary’s designee for a

decision.

(1) Interlocutory appeals must be filed

no later than 10 working days after the

matter being appealed has been decided

in writing by the Administrative Law

Judge.

(2) Interlocutory appeals must be filed

with the Secretary’s Office, U.S.

Treasury Department, 1500

Pennsylvania Avenue, NW, Washington,

DC 20220, with certified copies served

upon the Administrative Law Judge and

the Office of Chief Counsel for the

Office of Foreign Assets Control.

(h) Opportunity for settlement. Any

party may, at any time during the

hearing, unilaterally submit written

offers or proposals for settlement of a

proceeding to the Secretary or the

Secretary’s designee, at the address

listed in paragraph (g)(2) of this section.

Submission of a written settlement offer

does not provide a basis for adjourning

or otherwise delaying all or any portion

of a hearing. No settlement offer or

proposal, or any subsequent negotiation

or resolution, is admissible as evidence

in any hearing before this tribunal.

(i) Failure to appear. The unexcused

failure of a respondent to appear in

person at a hearing or to have duly

authorized counsel appear in

respondent’s place, constitutes a waiver

of the respondent’s right to a hearing

and is deemed an admission of the

violation alleged. Without further

proceedings or notice to the respondent,

the Administrative Law Judge shall file

with the Secretary or the Secretary’s

designee a recommended decision

finding a violation and the amount of

penalty as indicated in the prepenalty

notice.

(j) Motions—(1) Written motions.

Except as otherwise specifically

provided herein, an application or

request for an order or ruling must be

made by written motion, in typed

format.

(i) All written motions must state with

particularity the relief sought and must

be accompanied by a proposed order.

(ii) No oral argument may be held on

written motions unless directed by the

Administrative Law Judge. Written

memoranda, briefs, affidavits, and other

relevant material and documents may be

filed in support of or in opposition to a

motion.

(2) Oral motions. A motion may be

made orally on the record unless the

Administrative Law Judge directs that

such motion be made in writing.

(3) Filing of motions—(i) In general.

Motions must be filed with the

Administrative Law Judge, and with the

Office of Chief Counsel, Office of

Foreign Assets Control, U.S. Treasury

Department, 1500 Pennsylvania

Avenue, NW, Washington, DC 20220,

with the envelope prominently marked,

‘‘Urgent: Annex—Room 3133,’’ unless

otherwise directed by the

Administrative Law Judge, or agreed to

by Chief Counsel.

(ii) Interlocutory appeals. Motions

related to interlocutory appeals to the

Secretary or the Secretary’s designee

must be sent by fax (fax number: 202/

622–1188) and filed with the Secretary,

U.S. Treasury Department, 1500

Pennsylvania Avenue, NW, Washington,

DC 20220, marked ‘‘Attention: OFAC

Interlocutory Appeal.’’

(4) Responses. (i) Any interested party

may file a written response to a motion

within 20 days of the date of mailing, by

registered or certified letter service and

pursuant to these regulations. If directed

by the Administrative Law Judge

response time may be shortened or

extended. The Administrative Law

Judge may allow each party to file a

response before finally ruling upon any

oral or written motion. The

Administrative Law Judge may allow a

rejoinder to responses for good cause

shown. If a rejoinder is permitted, it

must be filed within 15 days of the date

the response was filed and served upon

all parties.

(ii) The failure of a party to oppose a

written motion or an oral motion made

on the record is deemed to be consent

by that party to the entry of an order

substantially in the form of the order

accompanying the motion.

(5) Dilatory motions. Frivolous,

dilatory, or repetitive motions are

prohibited. The filing of such motions

may form the basis for sanctions.
Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules 6907

(k) Discovery—(1) In general. The

availability of information and

documents through discovery is subject

to the agency’s assertion of privileges

available to OFAC and/or to the

Treasury and to the application of all

exemptions afforded the agency

pursuant to the Freedom of Information

Act (5 U.S.C. 552(b)(1) through (9)) and

the Privacy Act (5 U.S.C. 552a) to all

facets of discovery, including

interrogatories, depositions that seek the

release of trade secrets, proprietary

materials, third party confidential and/

or commercially sensitive material,

placement of information, documents

and/or materials under seal and/or

protective order, and interlocutory

appeal to the Secretary or the

Secretary’s designee from any decision

of the Administrative Law Judge.

(2) Types of discovery. Parties may

obtain discovery by one or more of the

following methods: depositions upon

oral examination or written questions;

written interrogatories; production of

documents or other evidence for

inspection; and requests for admission.

All depositions of federal employees

must take place in Washington, DC, at

the U.S. Treasury Department or at the

location where the federal employee to

be deposed performs his duties,

whichever the federal employee’s

supervisor or Chief Counsel shall deem

appropriate. All depositions of federal

employees shall be held at a mutually

agreed upon date and time, and for a

mutually agreed upon length of time.

(3) Interrogatories. Respondent’s

interrogatories must be served upon the

Chief Counsel within 20 days of

respondent’s written request for a

hearing. Chief Counsel must serve Chief

Counsel’s interrogatories within 30 days

of the receipt of service of respondent’s

interrogatories or within 30 days of the

receipt of respondent’s written request

for a hearing if no interrogatories are

filed by respondent by that time. Parties

have 30 days to respond to

interrogatories from the date

interrogatories are received.

Interrogatories shall be limited to 20

questions only. Each subpart, section, or

other designation of a part of a question

shall be counted as one complete

question in computing the permitted 20

question total. Where more than 20

questions are served upon a party, the

receiving party may determine which of

the 20 questions the receiving party

shall answer.

(4) Scope. Parties may obtain

discovery regarding any matter not

privileged, which has material relevance

to the merits of the pending action. It is

not a ground for objection that the

information sought will be inadmissible

at the hearing if the information sought

appears reasonably calculated to lead to

discovery of admissible evidence. The

Administrative Law Judge may make

any order which justice requires to

ensure that requests are not

unreasonable, oppressive, excessive in

scope or unduly burdensome, including

the issuance of an order to show cause

why a particular discovery request is

justified upon the motion of the

objecting party.

(5) Privileged matter. Privileged

documents are not discoverable.

Privileges include, inter alia, the

attorney–client privilege, attorney

work–product privilege, any

government’s or government agency’s

deliberative–process or classified

information privilege, including

materials classified pursuant to

Executive Order 12958 (3 CFR, 1995

Comp., p. 333) and any future Executive

orders that may be issued relating to the

treatment of national security

information, and all materials and

information exempted from release to

the public pursuant to the Privacy Act

(5 U.S.C. 552a) and the Freedom of

Information Act (5 U.S.C. 552(b)(1)

through (9)).

(6) Updating discovery. Whenever a

party receives new or additional

information or documentation, all

information produced, and all

information required to be provided

pursuant to the discovery and hearing

process, must automatically be updated.

The Administrative Law Judge may

impose sanctions for failure to update,

including prohibiting opposition to

claims or defenses raised, striking

pleadings or staying proceedings,

dismissing the action or any part

thereof, rendering a judgment by

default, and holding a party in

contempt.

(7) Time limits. All discovery,

including all responses to discovery

requests, shall be completed no later

than 20 days prior to the date scheduled

for the commencement of the hearing.

No exceptions to this time limit shall be

permitted, unless the Administrative

Law Judge finds on the record that good

cause exists for waiving the

requirements of this paragraph (k)(7).

(l) Summary disposition—(1) In

general. The Administrative Law Judge

shall recommend that the Secretary or

the Secretary’s designee issue a final

order granting a motion for summary

disposition if the facts of the record

show that:

(i) There is no genuine issue as to any

material fact; and

(ii) The moving party is entitled to a

decision in its favor as a matter of law.

(2) Filing of motions and responses. (i)

Any party who believes that there is no

genuine issue of material fact to be

determined and that he or she is entitled

to a decision as a matter of law may

move at any time for summary

disposition in its favor of all or any part

of the proceeding. Any party, within 20

days after service of such a motion, or

within such time period as allowed by

the Administrative Law Judge, may file

a response to such motion.

(ii) A motion for summary disposition

must be accompanied by a statement of

the material facts as to which the

moving party contends there is no

genuine issue. Such motion must be

supported by documentary evidence,

which may take the form of admissions

in pleadings, stipulations, depositions,

transcripts, affidavits, and any other

evidentiary materials that the moving

party contends support his position.

The motion must also be accompanied

by a brief containing the points and

authorities in support of the moving

party’s arguments. Any party opposing

a motion for summary disposition must

file a statement setting forth those

material facts as to which he or she

contends a genuine dispute exists. Such

opposition must be supported by

evidence of the same type as that

submitted with the motion for summary

disposition and a brief containing the

points and authorities in support of the

contention that summary disposition

would be inappropriate.

(3) Hearing on motion. At the request

of any party or on his own motion, the

Administrative Law Judge may hear oral

argument on the motion for summary

disposition.

(4) Decision on motion. Following

receipt of a motion for summary

disposition and all responses thereto,

the Administrative Law Judge shall

determine whether the moving party is

entitled to summary disposition. If the

Administrative Law Judge determines

that summary disposition is warranted,

the Administrative Law Judge shall

submit a recommended decision to that

effect to the Secretary. If the

Administrative Law Judge finds that no

party is entitled to summary

disposition, he or she shall make a

ruling denying the motion.

(5) Interlocutory appeal. Following

receipt of the Administrative Law

Judge’s recommended decision relating

to summary disposition, each party has

the right to an interlocutory appeal to

the Secretary or the Secretary’s

designee, within 20 days immediately

following the Administrative Law

Judge’s decision.

(m) Partial summary disposition. If

the Administrative Law Judge
6908 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules

determines that a party is entitled to

summary disposition as to certain

claims only, the Administrative Law

Judge shall defer submission of a

recommended decision as to those

claims. A hearing on the remaining

issues must be ordered and those claims

for which the Administrative Law Judge

has determined that summary

disposition is warranted will be

addressed in the recommended decision

filed at the conclusion of the hearing.

(n) Prehearing conferences and

submissions—(1) Prehearing

conferences. The Administrative Law

Judge may, on his own motion, or at the

request of any party for good cause

shown, direct counsel for the parties to

meet with him (in person, by telephone,

or by teleconference) at a prehearing

conference to address any or all of the

following:

(i) Simplification and clarification of

the issues;

(ii) Stipulations, admissions of fact,

and the contents, authenticity and

admissibility into evidence of

documents;

(iii) Matters of which official notice

may be taken;

(iv) Limitation of the number of

witnesses;

(v) Summary disposition of any or all

issues;

(vi) Resolution of discovery issues or

disputes; and

(vii) Such other matters as may aid in

the orderly disposition of the

proceeding.

(2) Prehearing orders. At, or within a

reasonable time following the

conclusion of, any prehearing

conference, the Administrative Law

Judge shall serve on each party an order

setting forth any agreements reached

and any procedural determinations

made.

(3) Prehearing submissions. Within 40

days of the receipt of respondent’s

request for a hearing or at a time set by

the Administrative Law Judge, the

Office of Foreign Assets Control shall

serve on the respondent and upon the

Administrative Law Judge, the

following:

(i) Stipulations of fact, if any;

(ii) A list of the exhibits to be

introduced at the hearing along with a

copy of each exhibit; and

(iii) A list of witnesses to be called to

testify at the hearing, including name

and address of each witness and a short

summary of the expected testimony of

each witness.

(4) Deadline for respondent’s and

other interested parties’ submissions.

Unless for good cause shown the

Administrative Law Judge permits an

extension of time to file, the respondent

and other interested parties shall have

20 days from the date of the submission

by the Office of Foreign Assets Control

of the items set forth in paragraph (n)(3)

of this section, and/or of another

interested party’s service of items set

forth in this paragraph (n)(4), to serve

upon the Administrative Law Judge and

all parties, the following:

(i) Its response to stipulations of fact,

if any;

(ii) A list of the exhibits to be

introduced at the hearing along with a

copy of each exhibit; and

(iii) A list of witnesses to be called to

testify at the hearing, including the

name and address of each witness and

a short summary of the expected

testimony of each witness.

(5) Effect of failure to comply. No

witness may testify and no exhibits may

be introduced at the hearing if such

witness or exhibit is not listed in the

prehearing submissions pursuant to

paragraphs (n)(3) and (n)(4) of this

section, except for good cause shown.

(o) Public hearings—(1) In general.

All hearings shall be open to the public,

unless the Administrative Law Judge, at

his discretion, determines at any time

prior to or during the hearing, that

holding an open hearing would be

contrary to the public interest. Within

20 days of service of the notice, any

party may file with the Administrative

Law Judge a request for a closed

hearing, and any party may file a

pleading in reply to such a request.

Failure to file a request or a reply is

deemed a waiver of any objections

regarding whether the hearing will be

public or closed.

(2) Filing document under seal. (i)

The Office of Foreign Assets Control

may file any documents or any part of

a document under seal if disclosure of

the document would be inconsistent

with the protection of the public interest

or if justice requires protection of any

person, including a source or a party,

from annoyance, threat, oppression, or

undue burden or expense, or the

disclosure of the information would be,

or might reasonably lead to a disclosure,

contrary to Executive Order 12958 or

other Executive orders concerning

disclosure of information, U.S. Treasury

Department regulations, the Privacy Act,

or the Freedom of Information Act.

(ii) The Administrative Law Judge

shall also safeguard the security and

integrity of any documents under seal

and shall take all appropriate steps to

preserve the confidentiality of such

documents or any parts thereof,

including closing portions of the

hearing to the public. Release of any

information under seal, in any form, or

in any manner, is subject to the same

sanctions and the exercise of the same

authorities provided with respect to ex

parte communications under paragraph

(e)(5) of this section.

(iii) Should the Administrative Law

Judge deny placement of any documents

under seal or under protective order,

any interested party, and any person

whose documents or materials are at

issue, may file an interlocutory appeal

to the Secretary or the Secretary’s

designee. In such cases the

Administrative Law Judge must not

release or expose any of the records or

documents in question to the public or

to any other parties for a period of 20

days from the date of the Administrative

Law Judge’s ruling, in order to permit a

petitioner the opportunity to either

withdraw the records and documents or

to file an interlocutory appeal with the

Secretary or the Secretary’s designee

requesting an order that the records be

placed under seal.

(iv) Upon settlement, final decision,

or motion to the Administrative Law

Judge for good cause shown, all

materials (including all copies) under

seal or protective order shall be returned

to the respective parties, except when it

may be necessary to retain a record until

the judicial process is completed.

(v) Written notice of all requests for

release of protected documents or

materials shall be given to all interested

parties registered with the

Administrative Law Judge at least 20

days prior to any permitted release and

prior to any access not specifically

authorized under the protective order. A

copy of all requests for information,

including the name, address, and

telephone number of the requester, shall

be provided to the petitioner. Each

request for access to protected material

must also provide the names, addresses,

and telephone numbers of all persons

represented by the requester, including

those on whose behalf the requester

seeks access to protected information.

The Administrative Law Judge shall

impose sanctions provided under

paragraphs (e)(4) and (5) of this section

for failure to provide this information.

(p) Conduct of hearings—(1) In

general—(i) Overview. Hearings shall be

conducted to provide a fair and

expeditious presentation of the relevant

disputed issues and facts. Each party

has the right to present its case or

defense by oral and documentary

evidence and to conduct such cross

examination as may be required for full

disclosure of the relevant facts.

(ii) Order of hearing. The Office of

Foreign Assets Control shall present its

case–in–chief first, unless otherwise

ordered in advance by the

Administrative Law Judge or otherwise
Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules 6909

expressly specified by law or regulation.

The Office of Foreign Assets Control

shall be the first party to present an

opening statement and a closing

statement and may make a rebuttal

statement after the respondent’s closing

statement.

(iii) Stipulations. Unless the

Administrative Law Judge directs

otherwise, all stipulations of fact and

law previously agreed upon by the

parties, and all documents, the

admissibility of which has been

previously stipulated, will be admitted

into evidence upon commencement of

the hearing.

(2) Transcript. A record of the hearing

shall be made by manual or electronic

means, including through the use of

audio recorded diskettes or audio–

visual cassettes, and transcribed unless

the Administrative Law Judge rules

otherwise. The transcript shall be made

available to any party upon payment of

the cost thereof. The Administrative

Law Judge shall have authority to order

the record corrected, either upon a

motion to correct, upon a motion to

stipulate by the parties for good cause

shown, or following notice to the parties

upon the Administrative Law Judge’s

own motion. The Administrative Law

Judge shall serve notice upon all parties,

at the addresses provided by the parties

pursuant to § 515.703(b)(1)(iii), that the

certified transcript, together with all

hearing exhibits and exhibits introduced

but not admitted into evidence at the

hearing, has been filed with the

Administrative Law Judge.

(q) Evidence—(1) Admissibility. (i)

Except as is otherwise set forth in this

section, evidence that is relevant and

material is admissible to the fullest

extent authorized by the Administrative

Procedure Act and other applicable law.

(ii) Evidence may be excluded if it is

misleading or its probative value is

substantially outweighed by the danger

of unfair prejudice or confusion of the

issues, considerations of undue delay or

waste of time, or of needless

presentation of cumulative evidence.

(iii) Evidence that would be

inadmissible under the Federal Rules of

Evidence need not be deemed or ruled

to be inadmissible in a proceeding

conducted pursuant to this subpart if

such evidence is relevant and material,

and not unduly repetitive.

(2) Official notice. (i) Official notice

may be taken of any material fact which

may be judicially noticed by a United

States district court.

(ii) All matters officially noticed by

the Administrative Law Judge shall

appear on the record.

(iii) If official notice is requested or

taken of any material fact, the parties,

upon timely request, shall be afforded

an opportunity to object.

(3) Duplicate copies. A duplicate copy

of a document is admissible to the same

extent as the original, unless a genuine

issue is raised as to whether the copy is

in some material respect not a true and

legible copy of the original.

(4) Admissibility of evidence.

Objections to the admissibility of

evidence must be timely made and

rulings on all objections must appear on

the record. Failure to object to

admission of evidence or to any ruling

constitutes a waiver of the objection.

(5) Rejected exhibits. The

Administrative Law Judge shall retain

rejected exhibits, adequately marked for

identification, in the event of an

interlocutory appeal.

(6) Stipulations. The parties may

stipulate as to any relevant matters of

fact or to the authenticity of any

relevant documents. Such stipulations

may be received into evidence at a

hearing and are binding on the parties

with respect to the matters therein

stipulated.

(7) Depositions of unavailable

witnesses. If a witness is unavailable to

testify at a hearing, and that witness has

testified in a deposition within the

United States to which all parties to the

proceeding have received timely notice

and an opportunity to participate, a

party may offer as evidence all or any

part of the transcript of the deposition,

including deposition exhibits. All costs

of depositions shall be borne by the

party requesting the deposition.

(r) Proposed decision and supporting

briefs—(1) Proposed decisions. Any

party may file with the Administrative

Law Judge a proposed decision within

30 days after the parties have received

notice that the transcript has been filed

with the Administrative Law Judge,

unless otherwise ordered by the

Administrative Law Judge.

(2) Reliance on relevant authorities.

The proposed decision must be

supported by citation to relevant

authorities and by transcript page

references to any relevant portions of

the record. At the same time the

proposed decision is filed, a post–

hearing brief may be filed in support.

The post–hearing brief shall be filed

either as part of the same document or

in a separate document.

(3) Reply briefs. Reply briefs may be

filed within 15 days after the date on

which the parties’ proposed decision is

due. Reply briefs must be strictly

limited to responding to new matters,

issues, or arguments raised in another

party’s papers. A party who has not

filed a proposed decision or a post–

hearing brief may not file a reply brief.

(4) Simultaneous filing required.

Absent a showing of good cause for the

use of another procedure, the

Administrative Law Judge shall not

order the filing by any party of any brief

or reply brief in advance of the other

party’s filing of its brief.

(s) Recommended decision and filing

of record. Within 45 days after

expiration of the time allowed for filing

reply briefs, the Administrative Law

Judge shall file with and certify to the

Secretary or the Secretary’s designee the

record of the proceeding and the

decision. The record must include the

Administrative Law Judge’s

recommended decision, including a

determination either that there was no

violation by the person named in the

prepenalty notice, or that there was a

violation by the person named in the

prepenalty notice, and the

recommended monetary penalty and/or

civil forfeiture and/or other disposition

available to the Office of Foreign Assets

Control. In addition to the proposed

decision, the record must include all

prehearing and hearing transcripts,

exhibits, and rulings, and the motions,

briefs, memoranda, and other

supporting papers filed in connection

with the hearing. The Administrative

Law Judge shall have the recommended

decision served upon each party.

(t) Exceptions to the recommended

decision. When the Administrative Law

Judge has issued his recommended

decision, the Administrative Law Judge

or his representative shall contact each

party by telephone at the telephone

number provided by each party

pursuant to § 515.703(b)(1)(iii). Within 3

days of telephoning the parties, the

recommended decision shall be mailed

by the Administrative Law Judge to the

parties. A party may file written

exceptions to the recommended

decision with the Secretary or the

Secretary’s designee within 30 days of

the date the telephone call is placed by

the Administrative Law Judge or his

representative. A supporting brief may

be filed at the time the exceptions are

filed.

(u) Final decision. The final decision

of the Secretary or the Secretary’s

designee shall be based on a review of

the proposed decision and the entire

record of the proceeding. The final

written decision shall be provided to all

parties.

§ 515.707 Judicial review.

Any person may seek judicial review

as provided under 5 U.S.C. 702 for a

penalty and/or forfeiture imposed

pursuant to this part.
6910 Federal Register / Vol. 62, No. 31 / Friday, February 14, 1997 / Proposed Rules

§ 515.708 Referral to United States

Department of Justice; administrative

collection measures.

In the event that the respondent does

not pay the penalty imposed pursuant to

this part within 30 days of the mailing

of the written notice of the imposition

of the penalty, the matter may be

referred for administrative collection

measures or to the United States

Department of Justice for appropriate

action to recover the penalty in a civil

suit in a Federal district court.

Dated: December 23, 1996.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: December 31, 1996.

James E. Johnson,

Assistant Secretary (Enforcement).

[FR Doc. 97–3537 Filed 2–13–97; 8:45 am]

BILLING CODE 4810–25–F

DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Parts 3400, 3410, 3420, 3440,

3450, 3460, 3470, and 3480

[WO–320–1320–02–1A]

RIN 1004–AC37

Federal Coal Management Program

Regulations

AGENCY: Bureau of Land Management,

Interior.

ACTION: Proposed rule; withdrawal.

SUMMARY: The Bureau of Land

Management (BLM) is withdrawing the

proposed rule to amend the Federal

Coal Management Program regulations.

The proposal was published in the

Federal Register on July 12, 1991. BLM

is taking this action because we plan to

issue a new proposal for public

comment. We will write the new

proposal in plain, understandable

language as required by Executive Order

12866 and the President’s regulatory

reform initiative. This action will also

give commenters on the 1991 proposal

an opportunity to update their concerns.

FOR FURTHER INFORMATION CONTACT:

William Radden-Lesage, Mining

Engineer, Solid Minerals Group (WO–

320), Bureau of Land Management, Mail

Stop 501LS, 1849 ‘‘C’’ Street, N.W.,

Washington, DC 20240; telephone (202)

452–0350 (Commercial or FTS).

SUPPLEMENTARY INFORMATION: On July

12, 1991, BLM published a proposed

rule to amend the Federal Coal

Management Program regulations. See

56 FR 32002–32048. We intended the

proposed changes in part to simplify

and streamline the existing regulations.

The initial comment period was to close

on September 12, 1991, but we extended

it at the request of commenters an

additional 30 days, closing on October

12, 1991.

Shortly thereafter, the General

Accounting Office began an

investigation of the Federal coal leasing

program that culminated in the issuance

of a report, entitled ‘‘Mineral Resources:

Federal Coal-Leasing Program Needs

Strengthening’’ (GAO/RCED–94–10). We

responded to the report by issuing a

proposed rule to amend the regulations

pertaining to logical mining units (59 FR

66874, Dec. 28, 1994). This 1994

proposal affected portions of the coal

management regulations that had been

proposed for reorganization, but not

substantive change, under the 1991

proposal. We will soon complete work

on the logical mining unit regulations

and publish a final rule.

In the meantime, the President issued

Executive Order 12866 which requires

each agency to put all information

provided to the public in plain,

understandable language. See 58 FR

51736, Oct. 4, 1993. Further, in his

February 21, 1995, message on

regulatory reform, the President directed

agencies to carry out a review of their

regulations to reduce the regulatory

burden on the American people.

Therefore, we have decided to withdraw

the 1991 proposal. We plan to issue a

new proposal for public comment in the

near future. This action will also give

commenters on the 1991 proposal a

chance to update any concerns or

suggestions which they may have

regarding BLM’s coal management

regulations based on changes in the coal

industry since 1991.

Dated: February 5, 1997.

Bob Armstrong,

Assistant Secretary, Land and Minerals

Management.

[FR Doc. 97–3699 Filed 2–13–97; 8:45 am]

BILLING CODE 4310–84–P

FEDERAL EMERGENCY

MANAGEMENT AGENCY

44 CFR Part 67

[Docket No. FEMA–7199]

Proposed Flood Elevation

Determinations

AGENCY: Federal Emergency

Management Agency, FEMA.

ACTION: Proposed rule.

SUMMARY: Technical information or

comments are requested on the

proposed base (1% annual chance) flood

elevations and proposed base flood

elevation modifications for the

communities listed below. The base

flood elevations are the basis for the

floodplain management measures that

the community is required either to

adopt or to show evidence of being

already in effect in order to qualify or

remain qualified for participation in the

National Flood Insurance Program

(NFIP).

DATES: The comment period is ninety

(90) days following the second

publication of this proposed rule in a

newspaper of local circulation in each

community.

ADDRESSES: The proposed base flood

elevations for each community are

available for inspection at the office of

the Chief Executive Officer of each

community. The respective addresses

are listed in the following table.

FOR FURTHER INFORMATION CONTACT:

Frederick H. Sharrocks, Jr., Chief,

Hazard Identification Branch, Mitigation

Directorate, 500 C Street SW.,

Washington, DC 20472, (202) 646–2796.

SUPPLEMENTARY INFORMATION: The

Federal Emergency Management Agency

(FEMA or Agency) proposes to make

determinations of base flood elevations

and modified base flood elevations for

each community listed below, in

accordance with section 110 of the

Flood Disaster Protection Act of 1973,

42 U.S.C. 4104, and 44 CFR 67.4(a).

These proposed base flood and

modified base flood elevations, together

with the floodplain management criteria

required by 44 CFR 60.3, are the

minimum that are required. They

should not be construed to mean that

the community must change any

existing ordinances that are more

stringent in their floodplain

management requirements. The

community may at any time enact

stricter requirements of its own, or

pursuant to policies established by other

Federal, state or regional entities. These

proposed elevations are used to meet

the floodplain management

requirements of the NFIP and are also

used to calculate the appropriate flood

insurance premium rates for new

buildings built after these elevations are

made final, and for the contents in these

buildings.

National Environmental Policy Act

This proposed rule is categorically

excluded from the requirements of 44

CFR Part 10, Environmental

Consideration. No environmental

impact assessment has been prepared.