Archive for the ‘BIS’ Category

Trilogy International Associates, Inc. and William Michael Johnson Each Receives $100,000 Civil Penalty for Export Violations

2018/04/04

By: Ashleigh Foor

On or about January 23, 2010, April 6, 2010, and May 14, 2010, Trilogy International Associates, Inc., of Altaville, CA exported an explosives detector and a total of 115 analog-to-digital converters to Russia. These items are subject to the EAR and controlled on national security grounds. The items were classified under Export Control Classification Numbers 1A004 and 3A001, respectively, and valued in total at approximately $76,035. Each of the items required a license for export to Russia pursuant to Section 742.4 of the EAR.

Between, on, or about January 20, 2010 and May 14, 2010, William Michael Johnson of Angels Camp, CA, caused, aided, and/or abetted three violations of the EAR, specifically three exports from the United States to Russia of items subject to the EAR without the required BIS export licenses.

Charges include:

  • Three Charges of 15 C.F.R. § 764.2(a) – Engaging in Prohibited Conduct
  • Three charges of 15 C.F.R. § 764.2(b) – Causing, Aiding, or Abetting a Violation

Penalty:

  • Civil penalty of $100,000 against Trilogy International Associates, Inc.
  • Civil penalty of $100,000 against William Michael Johnson
  • Debarred: Both Trilogy International Associates, Inc. and William Michael Johnson are denied export privileges for a period of 10 years from the date of this Order, until 26 February 2028.

Date of Order: 26 February 2018


BIS Publishes Clarifications to the Export Administration Regulations for the Use of License Exceptions

2018/02/08

Source: Federal Register

The goal of this final rule is to provide guidance based on existing agency understanding and practice on the use of License Exception GOV and STA. Specifically, this final rule makes three clarifications to License Exception Governments, International Organizations, International Inspections under the Chemical Weapons Convention, and the International Space Station (GOV) and adds five notes, along with making other minor clarifications, to License Exception Strategic Trade Authorization (STA).

Changes are as follows:

PART 740

Section 740.11 is amended:

  1. By revising paragraph (b)(2)(ii);
  2. By revising the introductory text of paragraph (b)(2)(iii)(C);
  3. By adding Note 1 to paragraph (b)(2)(iii)(C); and
  4. By adding Note 1 to paragraph (c)(1) to read as follows:
  • 740.11 Governments, International Organizations, International Inspections under the Chemical Weapons Convention, and the International Space Station (GOV).

* * * * *

(b) * * *

(2) * * *

(ii) Exports, reexports, and transfers (in-country) made by or consigned to a department or agency of the U.S. Government. This paragraph authorizes exports, reexports, and transfers of items when made by or consigned to a department or agency of the U.S. Government solely for its official use or for carrying out any U.S. Government program with foreign governments or international organizations that is authorized by law and subject to control by the President by other means. This paragraph does not authorize a department or agency of the U.S. Government to make any export, reexport, or transfer that is otherwise prohibited by other administrative provisions or by statute. Contractor support personnel of a department or agency of the U.S. Government are eligible for this authorization when in the performance of their duties pursuant to the applicable contract or other official duties. ‘Contractor support personnel’ for the purpose of this provision means those persons who provide administrative, managerial, scientific or technical support under contract to a U.S. Government department or agency (e.g., contractor employees of Federally Funded Research Facilities or Systems Engineering and Technical Assistance contractors). The term ‘contractor support personnel’ for purposes of this paragraph (b)(2)(ii) is limited to those individuals who are providing such support within a U.S. Government owned or operated facility or under the direct supervision of a U.S. government employee (i.e., an individual directly employed by the U.S. Government). Private security contractors are not ‘contractor support personnel’ for purposes of this paragraph (b)(2)(ii) because although they may work within a U.S. Government owned or operated facility, such contractors do not provide administrative, managerial, scientific or technical support under contract to the U.S. Government. This authorization is not available when a department or agency of the U.S. Government acts as a transmittal agent on behalf of a non- U.S. Government person, either as a convenience or in satisfaction of security requirements.

(iii) * * *

(C) This paragraph authorizes the ‘temporary’ export, reexport, or transfer (in-country) of an item in support of any foreign assistance or sales program authorized by law and subject to the control of the President by other means, when:

* * * * *

Note 1 to paragraph (b)(2)(iii)(C): ‘Temporary,’ for purposes of paragraph (b)(2)(iii)(C) of this section, means that four years from the date of an item’s initial export, reexport, or transfer (in-country), it must be returned to the exporter, reexporter, or transferor or its disposition otherwise authorized (e.g., pursuant to a license or another license exception) in accordance with the EAR.

* * * * *

(c) * * *

(1) * * *

Note 1 to paragraph (c)(1):

Civil intergovernmental organizations (such as the European Space Agency (ESA)) where the membership is limited to national governments that are ‘cooperating governments’ are also considered ‘cooperating governments’ for purposes of paragraph (c)(1) of this section. If the membership of the civil intergovernmental organization includes any national governments or other organizations that are not ‘cooperating governments,’ such civil intergovernmental organizations are not considered ‘cooperating governments’ for purposes of paragraph (c)(1) of this section. For example, civil intergovernmental organizations such as the European Aviation Safety Agency (EASA), the United Nations, and the World Bank do not fall within paragraph (c)(1) of this section because their membership includes governments that are not ‘cooperating governments.’

* * * * *

Section 740.20 is amended:

  1. By adding Note 1 to paragraph (a);
  2. By adding Note 1 to paragraphs (b)(2) and (b)(3) at the end of paragraph (b)(3);
  3. By revising paragraphs (d)(1)(i) and (d)(1)(ii);
  4. By revising paragraph (d)(2); and
  5. By adding Note 1 to paragraph (d)(3) to read as follows:
  • 740.20 License Exception Strategic Trade Authorization (STA).

* * * * *

(a) * * *

Note 1 to paragraph (a): License Exception STA authorizes transfers (in-country) but is only needed to authorize a transfer (in- country) when an EAR authorization is required. If a transfer (in-country) is not being made under STA, the requirements specified in this section do not apply (see Note 1 to paragraphs (b)(2) and (b)(3) of this section for requirements specific to staying within the scope of the original License Exception STA authorization and the concept of ‘completing the chain’ for purposes of ‘‘600 series’’ items originally authorized under License Exception STA).

(b) * * *

(3) * * *

Note 1 to paragraphs (b)(2) and (b)(3): Any export, reexport, or transfer (in-country) originally authorized under License Exception STA must stay within the scope of the original authorization. For example, for ‘‘600 series’’ items authorized under License Exception STA, such items must be provided to an eligible ultimate end user, such as a Country Group A:5 military, to stay in compliance with the original authorization. This requirement for the ‘‘600 series’’ is referred to as ‘completing the chain,’ meaning regardless of how many times the ‘‘600 series’’ item is transferred (in-country) or whether the ‘‘600 series’’ item is incorporated into higher level assemblies or other items, the ‘‘600 series’’ item must ultimately be provided to an eligible ultimate end user, or be otherwise authorized under the EAR. This applies regardless of whether the ‘‘600 series’’ item has been incorporated into a foreign-made item that may no longer be ‘‘subject to the EAR.’’ Because the other items eligible for authorization under License Exception STA (9×515 and other non-600 series ECCNs) do not include the ‘‘600 series’’ requirements specific to ultimate end user, this ‘completing the chain’ concept does not apply to 9×515 and other non-600 series ECCNs authorized under License Exception STA. However, the original export, reexport, or transfer (in-country) made under License Exception STA for 9×515 and other non-600 series ECCNs still must comply with the original authorization—meaning the terms and conditions of License Exception STA.

* * * * *

(d) Conditions—(1) Requirement to furnish Export Control Classification Number.

(i) The exporter must furnish to the consignee the ECCN of each item to be exported pursuant to this section. Once furnished to a particular consignee, the ECCN that applies to any item need not be refurnished to that consignee at the time the same exporter makes an additional export of the same item, if the information remains accurate at the time of the additional export.

(ii) A reexporter or transferor must furnish to subsequent consignees the ECCN, provided by the exporter or a prior reexporter or transferor, of each item to be reexported or transferred (in- country) pursuant to this section. Once furnished to a particular consignee, the ECCN that applies to any item need not be refurnished to that consignee at the time the same reexporter or transferor makes an additional reexport or transfer (in-country) of the same item, if the information remains accurate at the time of the additional reexport or transfer (in- country).

* * * * *

(2) Prior Consignee Statement. The requirements in this paragraph (d)(2) apply to each party using License Exception STA to export, reexport, or transfer (in-country), including reexporters and transferors of items previously received under License Exception STA. The exporter, reexporter, or transferor must obtain the following statement in writing from its consignee(s) prior to exporting, reexporting, or transferring (in-country) the item and must retain the statement in accordance with part 762 of the EAR. One statement may be used for multiple exports, reexports, or transfers (in- country) of the same items between the same parties so long as the party names, the description(s) of the item(s) and the ECCNs are correct. The exporter, reexporter, or transferor must maintain a log or other record (such as documents created in the ordinary course of business) that identifies each shipment made pursuant to this section and the specific consignee statement that is associated with each shipment. For purposes of this paragraph (d)(2), a log or other record is not required for intangible (i.e., electronic or in an otherwise intangible form) exports, reexports, or transfers (in-country) made under License Exception STA, but an exporter, reexporter, or transferor is required, prior to making any export, reexport, or transfer (in-country), to ensure that a prior consignee statement has been obtained pursuant to the requirements of this paragraph (d)(2). (See Note 1 to paragraph (d)(3) of this section for additional guidance on intangible exports, reexports, and transfers (in-country), including best practices). Paragraphs (d)(2)(i) through (vi) of this section are required for all transactions. In addition, paragraph (d)(2)(vii) is required for all transactions in ‘‘600 series’’ items and paragraph (viii) of this section is required for transactions in ‘‘600 series’’ items if the consignee is not the government of a country listed in Country Group A:5 (See supplement no. 1 to part 740 of the EAR). Paragraph (d)(2)(viii) is also required for transactions including 9×515 items.

[INSERT NAME(S) OF CONSIGNEE(S)]:

(i) Is aware that [INSERT GENERAL DESCRIPTION AND APPLICABLE ECCN(S) OF ITEMS TO BE SHIPPED (e.g., aircraft parts and components classified under ECCN 9A610)] will be shipped pursuant to License Exception Strategic Trade Authorization (STA) in § 740.20 of the United States Export Administration Regulations (15 CFR 740.20);

(ii) Has been informed of the ECCN(s) noted above by [INSERT NAME OF EXPORTER, REEXPORTER OR TRANSFEROR];

(iii) Understands that items shipped pursuant to License Exception STA may not subsequently be reexported pursuant to paragraphs (a) or (b) of License Exception APR (15 CFR 740.16(a) or (b)); (iv) Agrees to obtain a prior consignee statement when using License Exception STA for any reexport or transfer (in-country) of items previously received under License Exception STA; (v) Agrees not to export, reexport, or transfer these items to any destination, use or user prohibited by the United States’ Export Administration Regulations;

(vi) Agrees to provide copies of this document and all other export, reexport, or transfer records (i.e., the documents described in 15 CFR part 762) relevant to the items referenced in this statement to the U.S. Government as set forth in 15 CFR 762.7;

(vii) Understands that License Exception STA may be used to export, reexport, and transfer (in-country) ‘‘600 series’’ items to persons, whether non- governmental or governmental, only if they are in and, for natural persons, nationals of a country listed in Country Group A:5 (See supplement no. 1 to part 740 of the EAR) or the United States and if:

(A) The ultimate end user for such items is the armed forces, police, paramilitary, law enforcement, customs, correctional, fire, or a search and rescue agency of a government of one of the countries listed in Country Group A:5 or the United States Government;

(B) For the ‘‘development,’’ ‘‘production,’’ operation, installation, maintenance, repair, overhaul, or refurbishing of an item in one of the countries listed in Country Group A:5 or the United States that will be for one, or more, of the following purposes:

(1) Ultimately to be used by any such government agencies in one of the countries listed in Country Group A:5 or the United States Government; or

(2) Sent to a person in the United States and not for subsequent export under § 740.9(b)(1) (License Exception TMP for items moving in transit through the United States); or

(C) The United States Government has otherwise authorized the ultimate end use, the license or other authorization is in effect, and the consignee verifies in writing that such authorization exists and has provided the license or other approval identifier to the exporter, reexporter or transferor (as applicable).

(viii) Agrees to permit a U.S. Government end-use check with respect to the items.

[INSERT NAME(S) AND TITLE(S) OF PERSON(S) SIGNING THIS DOCUMENT, AND DATE(S) DOCUMENT IS SIGNED].

Note 1 to paragraph (d)(2): When multiple consignees who form a network engaged in a production process (or other type of collaborative activity, such as joint development) will be receiving items under License Exception STA, a single prior consignee statement for multiple consignees may be used for any item eligible for export, reexport, or transfer (in-country) under License Exception STA, provided all of the applicable requirements of License Exception STA are met, including those specified in paragraph (d)(2).

Note 2 to paragraph (d)(2): Country Group A:5 and A:6 government consignees are not required to sign or provide a prior consignee statement.

(3) * * *

Note 1 to paragraph (d)(3): While the exporter, reexporter, and transferor must furnish the applicable ECCN and obtain a consignee statement prior to export, reexport or transfer (in-country) made under License Exception STA in accordance with the requirements of paragraphs (d)(1) and (d)(2) of this section, intangible (i.e., electronic or in an otherwise intangible form) exports, reexports, and transfers (in-country) made under License Exception STA are not subject to the notification requirements of paragraph (d)(3) of this section. However, any export, reexport, or transfer (in-country) made under STA must stay within the scope of the original authorization.

* * * * *

Federal Register: https://www.bis.doc.gov/index.php/documents/regulations-docs/federal-register-notices/federal-register-2017/2163-82-fr-50511/file