07-949. In the Matter of: S.P. Equipamentos de Proteção ao Trabalho Ltda., Rua Visconde de Inhaúma 386-Saúde, 04146-030 São Paulo, Brazil, Respondent; Final Decision and Order

This matter is before me upon a Recommended Decision and Order (“RDO”) of an Administrative Law Judge (“ALJ”), as further described below.

In a charging letter filed on September 13, 2004, the Bureau of Industry and Security (“BIS”) alleged that Respondent, S.P. Equipamentos de Proteção ao Trabalho Ltda. (“S.P. Equipamentos”), committed two violations of the Export Administration Regulations (“Regulations”) ^[1] , issued under the Export Administration Act of 1979, as amended (50 U.S.C. app. sections 2401-2420 (2000)) (the “Act”).^[2] Specifically, the charging letter alleged that S.P. Equipamentos engaged in conduct prohibited by the Regulations by transferring one thermal imaging camera classified under Export Control Classification Number (“ECCN”) 6A003.b.4 to the State Secretariet of Civil Defense (Military Police of the State of Rio de Janeiro) in violation of condition 4 of license D274828, which forbade the resale, reexport, or transfer of the thermal imaging camera to any part other than that listed on the license without the prior approval of the United States Government. In transferring the thermal imaging camera to a non-approved end-user without prior U.S. Government authorization, S.P. Equipamentos committed one violation of Section 764.2(a) of the Regulations.

The charging letter further alleged that S.P. Equipamentos sold one thermal imaging camera classified under ECCN 6A003.b.4 to the State Secretariet of Civil Defense (Military Police of the State of Rio Janeiro) with the knowledge that doing so was a violation of condition 4 of license D274828, which forbade the resale, reexport, or transfer of the thermal imaging camera to any party other than that listed on the license without the prior approval of the United States Government. In transferring the thermal imaging camera with such knowledge, S.P. Equipamentos committed one violation of Section 764.2(e) of the Regulations.

In accordance with Section 766.3(b)(1) of the Regulations, on September 13, 2004, BIS mailed the notice of issuance of the charging letter by registered mail to S.P. Equipamentos at its last known address. The record establishes that the notice of issuance of a charging letter was received by S.P. Equipamentos on September 24, 2004. Counsel for S.P. Equipamentos filed a Notice of Appearance in this matter of February 7, 2005. To date, however, S.P. Equipamentos has not filed an answer to the charging letter with the ALJ, as required by the Regulations.

In accordance with Section 766.7 of the Regulations, BIS filed a Motion for Default Order on or about November 11, 2006. This Motion for Default Order recommended that S.P. Equipamentos be denied export privileges for a period of ten years. Under Section 766.7(a) of the Regulations, “[f]ailure of the respondents to file an answer within the time provided constitutes a waiver of the respondent's right to appear,” and “on BIS's motion and without further notice to the respondent, [the ALJ] shall find the facts to be as alleged in the charging letter.” The ALJ has found S.P. Equipamentos in default.

On January 31, 2007, based on the record before him, the ALJ issued an RDO in which he found that S.P. Equipamentos committed one violation of Section 764.2(a) and one violation of Section 764.2(e). The ALJ also recommended the penalty of denial of S.P. Equipamentos' export privileges under the Regulations for ten years.

The ALJ's RDO, together with the entire record in this case, has been referred to me for final action under Section 766.22 of the Regulations. I find that the record supports the ALJ's findings of fact and conclusions of law. I also find that the penalty recommended by the ALJ is appropriate, given the nature of the violations and the facts of this case, and the importance of preventing future unauthorized exports.

Based on my review of the entire record, I affirm the findings of fact and conclusions of law as recommended by the ALJ.

Accordingly, it is therefore ordered,

FIRST, that for a period of ten years from the date of this Order, S.P. Equipamentos de Proteção ao Trabalho Ltda., Rua Visconde de Inhaúma, 386-Saúde, 04146-030 São Paulo, Brazil, its successors and assigns, and when acting for or on behalf of S.P. Equipamentos, its representatives, agents and employees (hereinafter collectively referred to as the “Denied Person”), may not, directly or indirectly, participate in any way in any transaction involving any commodity, software or technology (hereinafter collectively referred to as “item”) exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations, including, but not limited to:

A. Applying for, obtaining, or using any license, License Exception, or export control document;

B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or

C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.

Second, that no person may, directly or indirectly, do any of the following:

A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;

B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;

C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;

D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or

E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and that is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.

Third, that after notice and opportunity for comment as provided in Section 766.23 of the Regulations, any person, firm, corporation, or business organization related to the Denied Person by affiliation, ownership, control, or position of responsibility in the conduct of trade or related services may also be made subject to the provisions of this Order.

Fourth, that this Order does not prohibit any export, reexport, or other transaction subject to the Regulations where the only items involved that are subject to the Regulations are the foreign-produced direct product of U.S.-origin technology.

Fifth, that this Order shall be served on the Denied Person and on BIS, and shall be published in the Federal Register. In addition, the ALJ's Recommended Decision and Order, except for the section related to the Recommended Order, shall be published in the Federal Register.

This Order, which constitutes the final agency action in this matter, is effective immediately.

Dated: February 26, 2007.

Mark Foulon,

Acting Under Secretary of Commerce, for Industry and Security.

Certificate of Service

I hereby certify that on February 26, 2007, I caused a copy of the foregoing Decision and Order signed by Mark Foulon, Acting Under Secretary of Commerce for Industry and Security, in the matter of S.P. Equipamentos de Proteção ao Trabalho Ltda. (Docket No.: 04-BIS-15), to be sent via FedEx or mailed first-class, postage prepaid to:

S.P. Equipamentos de Proteção ao Trabalho Ltda., Rua Visconde de Inhaúma, 386-Saúde, 04146-030 São Paulo, Brazil.

ALJ Docketing Center, Attn: Jenny L. Collins, United States Coast Guard, 40 S. Gay Street, Room 412, Baltimore, MD 21202-4022.

I hereby also certify that on February 26, 2007, a copy of the same foregoing Decision and Order was delivered to Melissa B. Mannino, Esq., Office of Chief Counsel for Industry and Security, U.S. Department of Commerce, Room H-3839, 14th and Constitution Avenue, NW., Washington, DC 20030.

Catherine J. Parker,

Executive Secretariat.

Recommended Decision and Order

On September 13, 2004, the Bureau of Industry and Security (“BIS”), U.S. Department of Commerce, issued a Charging Letter initiating this administrative enforcement proceeding against S.P. Equipmantos de Proteção ao Trabalho Ltda. (“S.P. Equipamentos”). The Charging Letter alleged that S.P. Equipamentos committed one violation of § 764.2(a) and one violation of § 764.2(e) of the Export Administration Regulations (currently codified at 15 CFR Parts 730-774 (2006)) (“Regulations”),^[1] issued under the Export Administration Act of 1979, as amended (50 U.S.C. app. 2401-2420 (2000)) (“Act”).^[2] In accordance with § 766.7 of Regulations, BIS moved for the issuance of an Order of Default against S.P. Equipamentos as S.P. Equipamentos failed to file an answer to the allegations in the Charging Letter issued by BIS within the time period required by law.

A. Legal Authority for Issuing an Order of Default

Section 776.7 of the Regulations states that BIS may file a motion for an order of default if a respondent fails to file a timely answer to a charging letter. That section, entitled Default, provides in pertinent part:

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

15 CFR 766.7 (2005).

Pursuant to § 766.6 of the Regulations, a respondent must file an answer to the charging letter “within 30 days after being served with notice of the issuance of the charging letter * * *” initiating the proceeding.

B. Service of the Notice of Issuance of Charging Letter

In this case, BIS served notice of issuance of the Charging Letter in accordance with § 766.3(b)(1) of the Regulations when it sent a copy of the Charging Letter by registered mail to S.P. Equipamentos at its last known address on September 13, 2004. BIS submitted evidence that established the Charging letter was received by S.P. Equipamentos on or about September 24, 2004. Counsel for S.P. Equipamentos filed a Notice of Appearance in this matter on February 7, 2005. To date, however, S.P. Equipamentos has failed to file an answer or otherwise file a response to the Charging Letter. Accordingly, because S.P. Equipamentos failed to file an answer to the Charging Letter within thirty (30) days from the time it received notice of issuance of the Charging Letter, as required by § 766.6 of the Regulations, the undersigned finds S.P. Equipamentos to be in default.

C. Summary of Violations Charged

The Charging Letter issued by BIS included a total of two (2) charges. Specifically, the Charging letter alleged that on one occasion, on or about February 25, 2002, S.P. Equipamentos engaged in conduct prohibited by the Regulations by transferring one thermal imaging camera classified under Export Control Classification Number (“ECCN”) 6A003.b.4 to State Secretariet of Civil Defense (Military Police of the State of Rio de Janeiro) in violation of condition 4 of license D274828, which forbade the resale, reexport, or transfer of the thermal imaging camera to any party other than that listed on the license without the prior approval of the United States Government. In transferring the thermal imaging camera to a non-approved end-user without prior U.S. Government authorization, S.P. Equipamentos committed one violation of § 764.2(a) of the Regulations. (Charge 1).

The Charging Letter further alleged that S.P. Equipamentos sold one thermal imaging camera classified under ECCN 6A003.b.4 to the State Secretariet of Civil Defense (Military Police of the State of Rio de Janeiro) with the knowledge that doing so was a violation of condition 4 license D274828, which forbade the resale, reexport, or transfer of the thermal imaging camera to any party other than that listed on the license without the prior approval of the United States Government. In transferring the thermal imaging camera with such knowledge, S.P. Equipamentos committed one violation of § 764.2(e) of the Regulations.

D. Penalty Recommendation

[REDACTED SECTION]

E. Conclusion

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

Dated: January 31, 2007.

The Honorable Joseph N. Ingolia,

Chief Administrative Law Judge.

CERTIFICATE OF SERVICE

I hereby certify that I have served the foregoing RECOMMENDED DECISION AND ORDER by First Class Mail, Postage Prepaid to the following person:

Peter R. Klason, Esq., Office of Chief Counsel for Industry and Security, U.S. Department of Commerce, Room H-3839, 14th Street and Constitution Avenue, NW., Washington, DC 20230, Telephone: [phone], Facsimile: [phone].

Jenny L. Collins,

Hearing Docket Clerk.

Done and dated this 2nd day of February, 2007, Baltimore, Maryland.

Footnotes

1.  The violations charged occurred in 2002. The Regulations governing the violations at issues are found in the 2002 version of the Code of Federal Regulations (15 CFR Parts 730-774 (2002)). The 2006 Regulations establish the procedures that apply to this matter.

2.  From August 21, 1994 through November 12, 2000, the Act was in lapse. During that period, the President, through Executive Order 12924, which had been extended by successive Presidential Notices, the last of which was August 3, 2000 (3 CFR, 2000 Comp. 397 (2001)), continued the Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. 1701-1706 (2000)) (“IEEPA”). On November 13, 2000, the Act was preauthorized and it remained in effect through August 20, 2001. Since August 21, 2001, the Act has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), which has been extended by successive Presidential Notices, the most recent being that of August 3, 2006 (71 FR 44,551 (August 7, 2006)), has continued the Regulations in effect under IEEPA.

1.  

The charged violations occurred during 2002. The Regulations governing the violations at issue are found in the 2002 version of the Code of Federal Regulations (15 CFR Parts 730-774 (2002)). The 2006 Regulations establish the procedures that apply to this matter.

2.  

Since August 21, 2001, the Act has been in lapse and the President, through Executive Order 13,222 of August 17, 2001, 3 CFR, 2001 Comp. 783 (2002), as extended by the Notice of August 3, 2006 (71 FR 44,551 (August 7, 2006)), has continued the Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. §§ 1701-1706 (2000)).