Opinion ID: 162841
Heading Depth: 3
Heading Rank: 2

Heading: Exported Goods Transformed or Coming to Rest in a Third Country

Text: 34 Mr. Soussi also asks us to consider what he calls an ambiguity in the regulations designed to address instances where goods are exported from the United States to a third country before being shipped to Libya. According to Mr. Soussi, Section 550.409(a), 31 C.F.R., states that such export to a third country is prohibited where the goods do not come to rest in a third country and are not substantially transformed or incorporated into manufactured products. (Emphasis in original.) In contrast, Mr. Soussi argues subsection (d) states that such exports are not prohibited if the goods come to rest in a third country or are substantially transformed or incorporated into manufactured products. (Emphasis in original). Mr. Soussi believes, because the conjunctive and was used in subsection (a) and the disjunctive or was used in subsection (d), the regulations are vague and did not give notice of [the] proscribed conduct. 35 After reviewing the regulations and arguments posed by Mr. Soussi, we conclude there is no ambiguity. It is useful first to consider the text of the two subsections. Subsection (a) provides: 36 Exports of goods or technology ... from the United States to third countries are prohibited if the exporter knows, or has reason to know, that: 37 ... The goods ... are intended for transshipment to Libya ... without coming to rest in a third country and without being substantially transformed or incorporated into manufactured products in a third country.... 38 31 C.F.R. § 550.409(a)(1) (1991). Subsection (d) provides: 39 Exports of goods or technology from the United States to third countries are not prohibited where the exporter has reasonable cause to believe that: 40 (1) Except as otherwise provided in paragraph (a) of this section, the goods will be substantially transformed or incorporated into manufactured products before export to Libya, or 41 (2) The goods will come to rest in a third country for purposes other than reexport to Libya, e.g., for purposes of restocking the inventory of a distributer whose sales of the particular goods are not predominantly to Libya.... 42 31 C.F.R. § 550.409(d) (1991). Although the regulations could have been more artfully drafted, they are consistent. Subsection (a) admonishes an exporter his shipment is illegal if he knows or has reason to know both that the goods will not come to rest in a third country and that the goods will not be substantially transformed or incorporated. 31 C.F.R. § 550.409(a) (1991). Both conditions must be present for the shipment to be illegal. Id. If, on the other hand, one of the conditions from subsection (a) is not present, the shipment is not illegal. 31 C.F.R. § 550.409(a), (d) (1991). Stated differently, if the exporter has reasonable cause to believe the goods will either be transformed or will come to rest in a third country, then the shipment is not illegal. 31 C.F.R. § 550.409(d) (1991). In short, we conclude the regulations can be harmoniously applied and are not excessively confusing or unconstitutionally vague.