Time Limit for Completion of Voluntary Self-Disclosures and Revised Notice of the Institution of Administrative Enforcement Proceedings, 48601-48606 [2013-19364]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security

[Federal Register Volume 78, Number 154 (Friday, August 9, 2013)]
[Rules and Regulations]
[Pages 48601-48606]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-19364]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 764 and 766

[Docket No. 120207107-3621-02]
RIN 0694-AF59


Time Limit for Completion of Voluntary Self-Disclosures and 
Revised Notice of the Institution of Administrative Enforcement 
Proceedings

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule requires that the final, comprehensive narrative 
account required in voluntary self-disclosures (VSDs) of violations of 
the Export Administration Regulations (EAR) be received by the Office 
of Export Enforcement (OEE) within 180 days of OEE's receipt of the 
initial VSD notification. This rule also authorizes the use of delivery 
services other than registered or certified mail for providing notice 
of the issuance of a charging letter instituting an administrative 
enforcement proceeding under the EAR. It also removes the phrase ``if 
delivery is refused'' from a provision related to determining the date 
that notice of a charging letter's issuance is served based on an 
attempted delivery to the respondent's last known address. The Bureau 
of Industry and Security is making these changes to be better able to 
resolve administrative enforcement proceedings in a timely manner and 
provide more efficient notice of administrative charging letters.

DATES: This rule is effective September 9, 2013.

FOR FURTHER INFORMATION CONTACT: Special Agent Richard Jereski, 
Investigations Division, Office of Export Enforcement, Bureau of 
Industry and Security, US Department of Commerce, Room H4514, 14th 
Street and Pennsylvania Avenue NW., Washington, DC 20230. Tel: (202) 
482-5036. Facsimile: (202) 482-5889.

SUPPLEMENTARY INFORMATION: 

Background

    The Bureau of Industry and Security (BIS), Office of Export 
Enforcement (OEE), investigates possible violations of the Export 
Administration Regulations (EAR) and orders, licenses, and 
authorizations issued thereunder. These investigations may result in 
allegations of violations that may be settled, adjudicated in an 
administrative enforcement proceeding, or referred to the Department of 
Justice for possible criminal prosecution. On November 7, 2012, BIS 
published a proposed rule (77 FR 66777) that set forth three changes to 
the EAR, which are being implemented with some revisions here. One 
change addresses voluntary self-disclosures in connection with OEE's 
conduct of investigations. The other two changes address service of 
notice in administrative enforcement proceedings. This rule also makes 
non-substantive changes to the layout of the regulations to improve 
readability.

Deadline for Completing the Narrative Account Portion of a Voluntary 
Self-Disclosure

    Section 764.5 of the EAR provides a procedure whereby parties that 
believe they may have committed a violation of the EAR can voluntarily 
disclose the facts of potential violations to OEE. Such disclosures 
that meet the requirements of Sec.  764.5 typically are afforded 
``great weight'' by BIS relative to other mitigating factors in 
determining what administrative sanctions, if any, to seek. Section 
764.5 of the EAR requires an initial notification, which is to include 
a description of the general nature and extent of the suspected 
violations and is to be made as soon as possible after the violations 
are discovered, and is followed by a thorough review and the completion 
and submission of a narrative account of the suspected violations, 
including providing all relevant documentation. If the person making 
the initial notification subsequently completes and submits the 
narrative account, the disclosure is deemed to have been submitted to 
OEE on the date of the initial notification. The date of the initial 
notification may be significant because information provided to OEE may 
be considered a voluntary disclosure only if the information ``is 
received by OEE for review prior to the time that OEE or another United 
States Government agency has learned of the same or substantially 
similar information from another source and has commenced an 
investigation or inquiry in connection with that information.'' (15 CFR 
764.5(b)(3)). This rule adds a requirement that the completed narrative 
account be received by BIS within 180 days of BIS's receipt of the 
initial notification for initial notifications received on or after the 
effective date of this rule.
    The Director of OEE may extend this 180-day time deadline at his or 
her discretion if US Government interests would be served by an 
extension or upon a showing by the party making the disclosure that 
more time is reasonably necessary to complete the narrative account. In 
response to public comments discussed below, this final rule includes 
some greater detail about what a request to extend the 180-day deadline 
should contain. Such requests should show specifically that the person 
making the request: (1) Began its review promptly after discovery of 
the violations; (2) has been conducting its review and preparation of 
the narrative account as expeditiously as can be expected, consistent 
with the need for completeness and accuracy; (3) reasonably needs the 
requested extension despite having acted consistently with (1) and (2); 
and (4) has considered whether interim compliance or other corrective 
measures may be needed and has undertaken such measures as appropriate 
to prevent recurring or additional violations. Such requests also 
should set out a proposed

[[Page 48602]]

timeline for completion and submission of the narrative account that is 
reasonable under the applicable facts and circumstances. They should 
also designate a contact person, and provide that contact person's 
current business street address, email address, and telephone number, 
for purposes of communicating with OEE regarding the extension request. 
(A similar requirement to designate a contact person is included in 
this rule regarding initial notifications). Extension requests may also 
include additional information that the requestor reasonably believes 
is pertinent to the request under the applicable facts and 
circumstances.
    Some illustrative examples of circumstances that could, depending 
on the overall facts and circumstances, support a request that 
additional time is reasonably necessary include the following:
     Records or information from multiple entities and/or 
jurisdictions are needed to complete the narrative account.
     Material changes occur in the business, such as a 
bankruptcy, large layoffs, or a corporate acquisition or restructuring, 
and present difficulties in gaining access to, or analyzing, 
information needed to complete the narrative account.
     A pending US Government determination (such as a commodity 
jurisdiction determination or a classification request) is needed to 
complete the narrative account.
    The Director of OEE may place conditions on his or her approval of 
an extension. OEE may obtain an agreement to toll the statute of 
limitations at the time that an initial notification is filed. However, 
if a tolling agreement that applies to any violations disclosed in the 
initial notification or discovered during the review conducted to 
prepare the narrative account has not already been obtained at the time 
of a request for an extension, the Director of OEE may require one as a 
condition of approving the extension. The Director of OEE also has 
discretion to require the disclosing person to undertake specific 
interim remedial compliance measures as a condition of granting an 
extension to the 180-day deadline.
    Failure to meet either the 180-day deadline or an extended deadline 
granted by the Director of OEE would not be an additional violation of 
the EAR. However, that failure may reduce or eliminate the mitigating 
impact of the voluntary disclosure. The 180-day deadline serves as an 
incentive to the disclosing party, as meeting the deadline will allow 
information contained in the narrative account to be credited by OEE as 
having been disclosed on the date of the initial notification even if 
the information was not explicitly described in that initial 
notification. This new rule is designed to be consistent with the 
existing requirement in Sec.  764.5(c)(1) that an initial notification 
be made as soon as possible after violations are discovered. Section 
764.5 also will continue to acknowledge that a disclosing party may not 
be able to identify all of the possible violations of the EAR at the 
time an initial notification was made, consistent with Sec.  
764.5(c)(3), and to recommend that the review following the initial 
notification should cover a period of five years prior to the date of 
the initial notification
    Imposing a deadline to complete voluntary disclosures is consistent 
with the practices of other agencies. The International Traffic in Arms 
Regulations administered by the Department of State impose a 60-day 
deadline (22 CFR 127.12(c)). Similarly, the Department of the 
Treasury's Office of Foreign Assets Control also imposes time 
constraints by requiring that disclosures be made within a reasonable 
time following the initial notification. Based on its experience with 
voluntary self-disclosures, BIS believes that 180 days is ample time to 
complete the narrative account in most instances and that requests for 
extensions will normally not be necessary or justified.

Institution of Administrative Enforcement Proceedings

    Section 766.3 of the EAR sets forth the procedures for instituting 
administrative enforcement proceedings. Those procedures include 
issuing a charging letter, which constitutes the formal administrative 
complaint. The charging letter sets forth the essential facts about the 
alleged violations and certain other information about the case, and 
informs the respondent that failure to answer the charges will be 
treated as a default. Respondents must be notified of the issuance of a 
charging letter by one of the methods listed in Sec.  766.3(b) of EAR. 
One allowable method is mailing a copy of the letter by registered or 
certified mail to the respondent's last known address. This rule adds, 
as an authorized method of notification, sending a copy of the charging 
letter to the respondent's last known address by express mail or by a 
commercial courier or delivery service. The purpose of this change is 
to facilitate the process of notifying the respondent in cases where 
the respondent's last known address is in a country with a postal 
service that is inefficient or unreliable or in which postal delivery 
tracking information is not available. It also will allow BIS to select 
an efficient and effective method of notifying the respondent of the 
issuance of the charging letter. Moreover, unlike registered and 
certified mail, reputable commercial courier or delivery services and 
the US Postal Service's express mail use point-by-point tracking or 
similar electronic tracking methods to provide detailed records of a 
parcel's delivery or attempted delivery. The use of services that 
provide detailed tracking information for parcels sent outside the 
United States will enable BIS to track and monitor the delivery status 
of pending notifications more efficiently and effectively.
    Respondents are required to answer a charging letter within 30 days 
of being served with notice of its issuance. Prior to the effective 
date of this rule, the date of service of notice is determined under 
Section 766.3(c) by the date of delivery, or of attempted delivery if 
delivery is refused. This rule removes the phrase ``if delivery is 
refused'' from Sec.  766.3(c) of the EAR, eliminating the requirement 
that an attempted delivery must involve documentation that the delivery 
was ``refused.'' The phrase ``is refused'' focuses on registered and 
certified mail, which include a postcard-sized hard-copy receipt that 
is returned to the sender after delivery or attempted delivery. This 
rule provides for the use of reliable mail or delivery services that do 
not use such a hard-copy return receipt system and can efficiently and 
effectively track deliveries and attempted deliveries. In addition, BIS 
has found that in some instances foreign postal services do not return 
the receipt even though the parcel or package has been not been 
returned, including in situations where the respondent subsequently 
contacts BIS about the charging letter. Moreover, some foreign postal 
services do not list ``refused'' as an option on a pre-printed return 
receipt or do not record other information when the package containing 
the charging letter is returned, including in situations when the 
package has been returned unopened. This change to Sec.  766.3(c) would 
better enable BIS to determine the date of service of notice of 
issuance of charging letters sent to entities located in foreign 
countries.

Comments on the Proposed Rule

    BIS received comments from one individual and four organizations. 
Most of the ideas expressed in the comments related to the 180-day 
limit for completing the narrative account. The comments generally 
supported the 180-day limit. However, one commenter

[[Page 48603]]

proposed a shorter time limit with possible extensions. Other 
commenters expressed concerns that in some cases 180 days would be 
inadequate.
    Comment: Two commenters expressed approval of the 180-day limit as 
providing adequate time to complete the review and compile the 
narrative account in most cases. Both commenters noted the possibility 
that extensions could be granted in limited circumstances. One 
commenter recommended that the initial limit be set at 60 days, with 
the possibility of successive 30-day extensions and that the acceptable 
reasons for an extension narrow as the time since the initial 
disclosure approaches 180 days. While acknowledging that many VSDs 
likely could not be completed within 60 days, this commenter stated 
that under its proposed procedure disclosing parties would better focus 
on timely completion of voluntary self-disclosures without having to 
request more than one extension. That commenter also asserted that a 
60-day deadline would align BIS's practice with those of the 
Directorate of Defense Trade Controls.
    Response: This final rule does not change the basic time limit of 
180 days. BIS's intent in setting the 180-day limit is to provide a 
basic time limit that is sufficient to complete the narrative 
disclosure in the large majority of voluntary self-disclosures. BIS 
believes that a party who has begun a voluntary self-disclosure process 
should be mindful of the requirements of Sec.  764.5, including the 
deadline imposed by the regulation, and should be capable of organizing 
and managing its activities with the goal of meeting the deadline. 
Similarly, in situations where more than 180 days' time is reasonably 
necessary to complete the task, the disclosing party should be able to 
explain the reasons why that is the case and provide a reasonable 
estimate of the additional time needed. BIS further believes that 
procedures proposed above likely would lead to repeated requests for 
extensions (and related agency determinations and responses) that 
should be unnecessary and would themselves increase the total workload 
for all involved in the voluntary self-disclosure process.
    In addition, BIS does not believe that its deadline needs to be 
``aligned'' in the sense of being identical to those of other 
government agencies. The proposed rule did note that the 180-day 
deadline is consistent with the practices of other agencies and 
regulations, including in the Department of State's International 
Traffic in Arms Regulations and the Department of the Treasury's Office 
of Foreign Assets Control regulations. These examples were intended to 
demonstrate that by proposing a deadline for completion of voluntary 
self-disclosures, BIS is acting in the same general manner as other 
agencies that have a role in export controls. BIS believes prescribing 
a time limit that is reasonable with respect to EAR violations is more 
important than having identical time limits with other programs.
    Comment: Several commenters expressed concern that although the 
180-day deadline should generally be sufficient, there may be instances 
where the time limit would be inadequate. One commenter stated that 
large organizations with operations in multiple countries may need to 
obtain records from and interview employees at multiple locations in 
order to complete an investigation and prepare a thorough final 
narrative. One commenter noted that the proposed rule authorized the 
Director of OEE to act at his or her discretion, which the commenter 
characterized as authorization to act with ``unfettered discretion.'' 
The commenter also stated its belief that the rule would not afford a 
disclosing party a regulatory right to an extension of time even if 
circumstances warranted an extension. Finally, the commenter described 
as ``not comforting,'' BIS's statement in the preamble to the proposed 
rule that requests for extensions would, in most instances, not be 
necessary or justified. Commenters recommended several changes, which 
are described below.
    One such recommendation was to state in the rule the circumstances 
that would justify an extension. Another recommendation was to state in 
the rule that extensions would not be unreasonably refused when more 
time is shown to be reasonably necessary to complete the account. A 
third recommendation was to allow disclosing parties to submit, within 
180 days of the initial disclosure, either a completed narrative 
account or a supplemental filing that indicates the status of the 
company's review, including interim remedial measures it has already 
taken and an action plan with the company's timeline for completion of 
the review and submission of the final narrative account.
    Response: BIS does not believe that it is possible to identify in 
advance all of the circumstances that would make it in the government's 
interest to grant an extension or those that would make an extension 
reasonably necessary to complete the narrative account. The facts and 
circumstances of each matter vary depending on, inter alia, the items, 
destinations and parties involved, the nature and extent of the 
violations, and the size, scope, and structure of disclosing parties 
and their export activities and compliance programs. Therefore, case-
by-case requests by disclosing parties and decisions by an authorized 
official are necessary. This final rule sets out in greater detail the 
types of information that should be included in a request, and as with 
the preamble to the proposed rule, the preamble to this final rule 
provides illustrative examples of the type of circumstances that could 
provide support for a request that additional time is reasonably 
necessary. These examples are not an exclusive list, and extension 
requests and the consideration of those requests will, of necessity, be 
made on a case-by-case basis, but the examples provide guidance about 
the type of situations that, depending on the overall facts and 
circumstances, may justify an extension beyond 180 days. BIS believes 
that in most instances 180 days should be adequate to complete the 
narrative account. However, as discussed above, in appropriate 
instances the Director of OEE may grant an extension to a person 
seeking an extension of time. In most circumstances, tolling agreements 
will be signed and agreed upon prior to the extension being provided.
    Comment: Some commenters expressed a desire for more precision 
concerning the procedures for submitting a voluntary self-disclosure. 
Specifically, they asked that the rule state precisely when the 180-day 
time period begins to run and when during the 180-day period a request 
for extension may be submitted. These commenters also asked for more 
information about the timing of a request for an extension. They asked 
whether a request for an extension may be submitted with the initial 
disclosure, whether a request may be submitted after the 180 days has 
elapsed, and what would happen if a disclosing party submitted a 
request before the 180 days had elapsed, but too late for BIS to make a 
decision and respond within 180 days.
    Response: BIS agrees with the comments summarized in the 
immediately preceding paragraph that it would be more helpful to 
provide more information about the procedures surrounding the 180-day 
deadline and for requesting an extension than was provided in the 
proposed rule. In response to those comments, this final rule provides 
that guidance. This final rule states that, for purposes of calculating 
the 180-day deadline, the date of initial notification is the date that 
the initial notification is received

[[Page 48604]]

by OEE. BIS will notify the disclosing party in writing of the date 
that the initial notification was received. To enable such 
notification, BIS has added a new requirement that parties should 
designate a contact person in their initial notification and provide 
that person's contact information. For the narrative account to be 
considered timely under paragraph (c)(2)(iii) of Sec.  764.5, the 
disclosing party must submit the completed narrative account in time 
for BIS to receive it within 180 days of BIS' receipt of the initial 
notification or, where appropriate, seek and receive an extension from 
BIS. As this rule indicates, however, initial notifications should be 
sent so that they are received by OEE as soon as possible and narrative 
accounts should be complete, accurate, and timely submitted.
    This final rule also states that to be considered, a request for an 
extension of time to submit the narrative account must be received by 
OEE before the deadline for receipt of the narrative account. The 
Director of OEE will evaluate all of the facts and circumstances 
surrounding a request and any related investigation(s) in deciding 
whether to grant an extension. Requests for an extension should be made 
as soon as possible once a disclosing person determines that it will be 
unable to meet the deadline or the extended deadline where an extension 
previously has been granted, and possesses the information needed to 
prepare an extension request in accordance with paragraph 
(c)(2)(iv)(B). Parties who request an extension shortly before the 
deadline incur the risk that the Director of OEE will be unable to 
properly consider and determine the request and communicate his or her 
decision before the deadline. That said, BIS believes that disclosing 
parties typically will need some time after the initial notification to 
acquire the facts that may justify an extension and prepare the 
extension request, including proposing a reasonable extended timeline 
for the completion and submission of the narrative account. BIS expects 
it will be rare for parties to request an extension of time in their 
initial disclosure, because it is unlikely that disclosing parties will 
have at the time of the initial notification all information pertinent 
to an extension request or the ability to show that an extension is 
needed despite prompt and diligent efforts to complete their review and 
prepare a narrative account.
    The Director of OEE also is unlikely to grant extension requests 
that appear be ``boilerplate'' requests not based on the particular 
facts and circumstances, or to grant repeated requests or requests that 
appear to be submitted on a routine, ``it can't hurt to ask'' basis. As 
discussed in the preamble, this final rule provides additional detail 
concerning the contents of an extension request, which should limit the 
number of routine or boilerplate requests.
    Comment: One commenter recommended that BIS impose a reasonableness 
standard as to both tolling agreements and remedial measures that may 
be required when granting an extension. The commenter asserted that 
tolling agreements extending back more than five years prior to the 
initial disclosure have sometimes been required.
    Response: BIS understands that there may be times when meeting the 
180-day deadline will not be possible (see discussion above); however, 
as also discussed, BIS must be able to appropriately remedy matters 
brought to light in a disclosure and will require (in most cases) the 
signing of a tolling agreement to extend the statutory limit. BIS will 
continue its practice of seeking appropriate tolling agreements and 
remedial measures that take into account the specific facts and 
circumstances of each case in requiring a tolling agreement and any 
remedial measures.
    Comment: One commenter recommended that BIS specify what 
constitutes a completed narrative account. The commenter suggested that 
an explicit definition of a completed VSD would ensure consistency and 
uniformity and lead to a more efficient and transparent process for all 
parties. BIS could then request additional information or documentation 
as needed. The commenter proposed that the elements set forth in Sec.  
764.5(c)(3), (4) and (5) should satisfy the requirements of a voluntary 
self-disclosure. This commenter also recommended that a disclosing 
party who ``prepares a VSD in good faith that reasonably addresses all 
applicable elements in Sec.  764.5(c)(3), (4) and (5), . . . should be 
granted the presumption of acceptance as `complete' when received by 
OEE.''
    Response: BIS agrees with this comment to the extent that it may be 
helpful to the disclosing party to know when and how they can meet the 
180-day deadline. To be considered a complete submission for purposes 
of meeting the 180-day deadline (or the extended deadline if one is 
granted by BIS), the voluntary disclosure must meet all of the relevant 
requirements of Section 764.5 of the EAR, including paragraphs (c)(3), 
(c)(4), and (c)(5). In response to public comments on the proposed 
rule, paragraph (c)(2)(iii) of Sec.  764.5 in this final rule so 
provides. In addition, as discussed in the preamble, paragraph 
(c)(2)(iv) provides greater detail concerning the contents of an 
extension request. Under paragraph (c)(2)(iv), a person making an 
extension request may also submit additional information it reasonably 
believes is pertinent under the applicable facts and circumstances. As 
currently with regard to initial notifications and narrative accounts 
submitted to BIS, OEE may seek supplemental information from a person 
making an extension request after its receipt and review of the 
request.
    Comment: BIS received several comments concerning informing the 
disclosing party about the status of the investigation. One 
recommendation was that BIS ``communicate the status of the 
investigation of the voluntary self-disclosure, akin to the status 
updates in SNAP-R'' (the system for electronically submitting export 
license applications and certain other documents to BIS and monitoring 
their status). Another recommendation was that BIS be required to 
acknowledge receipt of a completed disclosure within some reasonable 
time after its receipt. One commenter acknowledged that it is perhaps 
impractical to require BIS to complete all action on a voluntary self-
disclosure within a specified time period, possibly 180 days, but 
stated that it is practical to expect that BIS will dispose of a 
voluntary self-disclosure as promptly as possible given the 
circumstances of the disclosure. This commenter recommended that OEE be 
required to send the disclosing party a status report within 180 days 
of the receipt of the completed VSD and every 90 days thereafter.
    Response: BIS works to resolve voluntary self-disclosures promptly. 
However, voluntary self-disclosures vary in number, size, and 
complexity. In addition, other investigations and activities can affect 
the amount of resources that BIS can devote to resolving voluntary 
self-disclosures. Therefore, BIS cannot set a time limit for completion 
of investigations made in response to voluntary self-disclosures.
    Comment: Two commenters expressed approval of allowing service of 
charging documents by private courier. One noted that doing so would be 
a modernization of BIS procedures.
    Response: BIS concurs.

Non-substantive Changes to Layout To Improve Readability

    In addition to the changes proposed in the proposed rule and those 
made in

[[Page 48605]]

response to the public comments, this final rule reorganizes Sec.  
764.5(c)(2) by breaking it into multiple designated paragraphs, each 
addressing separate topics, with italicized headers to improve 
readability.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). This rule 
is consistent with the goals of Executive Order 13563. This rule has 
been determined not to be a significant rule for purposes of Executive 
Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 
3501, et seq., unless that collection of information displays a 
currently valid Office of Management and Budget (OMB) control number. 
This rule involves an approved information collection entitled 
``Procedure for Voluntary Self-Disclosure of Violations'' (OMB control 
number 0694-0058). BIS believes that the changes to the voluntary 
disclosure procedures that this rule describes would have no material 
effect on the burden imposed by this collection. Send comments 
regarding this burden estimate or any other aspect of this collection 
of information, including suggestions for reducing the burden to 
Jasmeet Seehra, Office of Management and Budget (OMB), by email to 
jseehra@omb.eop.gov or by fax to (202) 395-7285; and to the Regulatory 
Policy Division, Bureau of Industry and Security, Department of 
Commerce, Room 2099B, 14th Street and Pennsylvania Ave. NW., 
Washington, DC 20230 or by email to publiccomments@bis.doc.gov 
referencing RIN 0694-AF59 in the subject line.
    3. The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 601 et 
seq., generally requires an agency to prepare a regulatory flexibility 
analysis of any rule subject to the notice and comment rulemaking 
requirements under the Administrative Procedure Act (5 U.S.C. 553) or 
any other statute. Under section 605(b) of the RFA, however, if the 
head of an agency certifies that a rule will not have a significant 
impact on a substantial number of small entities, the statute does not 
require the agency to prepare a regulatory flexibility analysis. 
Pursuant to section 605(b), the Chief Counsel for Regulations, 
Department of Commerce, submitted a memorandum to the Chief Counsel for 
Advocacy, Small Business Administration, certifying that this rule will 
not have a significant impact on a substantial number of small 
entities. This final rule adds a new requirement that parties that 
decide to submit an initial notification should include their name and 
contact information with the notification. This request for contact 
information was not in the proposed rule. However, because the 
requirement to include contact information in any voluntarily submitted 
initial notification will not have a significant additional impact on a 
substantial number of small entities or increase the economic burden 
more than a nominal amount, no changes were necessary to the rationale 
for the certification in the proposed rule (77 FR 66777, 66778, 
November 7, 2012). BIS received no comments on that rationale and it is 
not being changed for this final rule. Therefore it is not repeated 
here.
    On August 21, 2001, the Export Administration Act of 1979, as 
amended, expired and the President, through Executive Order 13222 of 
August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), as amended by Executive 
Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013), and as 
extended most recently by the Notice of August 15, 2012, 77 FR 49699 
(August 16, 2012), has continued the EAR in effect under the 
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.). 
BIS continues to carry out the provisions of the Export Administration 
Act, as appropriate and to the extent permitted by law, pursuant to 
Executive Order 13222.

List of Subjects

15 CFR Part 764

    Administrative practice and procedure, Exports, Law enforcement, 
Penalties.

15 CFR Part 766

    Administrative practice and procedure, Confidential business 
information, Exports, Law enforcement, Penalties.

    For the reasons stated in the preamble, parts 764 and 766 of the 
Export Administration Regulations (15 CFR parts 730-774) are amended as 
follows.

PART 764--[AMENDED]

0
1. The authority citation for part 764 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
15, 2012, 77 FR 49699 (August 16, 2012).


0
2. Revise Sec.  764.5(c)(2) to read as follows:


Sec.  764.5  Voluntary self-disclosure.

* * * * *
    (c) * * *
    (2) Initial notification. (i) Manner and content of initial 
notification. The initial notification should be in writing and be sent 
to the address in paragraph (c)(7) of this section. The notification 
should include the name of the person making the disclosure and a brief 
description of the suspected violations, and should designate a contact 
person regarding the initial notification and provide that contact 
person's current business street address, email address, and telephone 
number. The notification should describe the general nature and extent 
of the violations. OEE recognizes that there may be situations where it 
will not be practical to make an initial notification in writing. For 
example, written notification may not be practical if a shipment leaves 
the United States without the required license, yet there is still an 
opportunity to prevent acquisition of the items by unauthorized 
persons. In such situations, OEE should be contacted promptly at the 
office listed in paragraph (c)(7) of this section.
    (ii) Initial notification date. For purposes of calculating when a 
complete narrative account must be submitted under paragraph 
(c)(2)(iii) of this section, the initial notification date is the date 
the notification is received by OEE. OEE will notify the disclosing 
party in writing of the date that it receives the initial notification. 
At OEE's discretion, such writing from OEE may be on paper, or in an 
email message or facsimile transmission from OEE, or by any other 
method for the transmission of written communications. Where it is not 
practical to make an initial notification in writing, the person making 
the notification should confirm the oral notification in writing as 
soon as possible.
    (iii) Timely completion of narrative accounts. The narrative 
account required by paragraph (c)(3) of this section must be received 
by OEE within 180 days of the initial notification date for purposes of 
paragraph (b)(3) of this section, absent an extension from the Director 
of OEE. If the person making

[[Page 48606]]

the initial notification subsequently completes and submits to OEE the 
narrative account required by paragraph (c)(3) of this section such 
that OEE receives it within 180 days of the initial notification date, 
or within the additional time, if any, granted by the Director of OEE 
pursuant to paragraph (c)(2)(iv) of this section, the disclosure, 
including violations disclosed in the narrative account that were not 
expressly mentioned in the initial notification, will be deemed to have 
been made on the initial notification date for purposes of paragraph 
(b)(3) of this section if the initial notification was made in 
compliance with paragraphs (c)(1) and (2) of this section. Failure to 
meet the deadline (either the initial 180-day deadline or an extended 
deadline granted by the Director of OEE) would not be an additional 
violation of the EAR, but such failure may reduce or eliminate the 
mitigating impact of the voluntary disclosure under Supplement No. 1 to 
this part. For purposes of determining whether the deadline has been 
met under this paragraph, a complete narrative account must contain all 
of the pertinent information called for in paragraphs (c)(3), (c)(4), 
and (c)(5) of this section, and the voluntary self-disclosure must 
otherwise meet the requirements of this section.
    (iv) Deadline extensions. The Director of OEE may extend the 180-
day deadline upon a determination in his or her discretion that U.S. 
Government interests would be served by an extension or that the person 
making the initial notification has shown that more than 180 days is 
reasonably needed to complete the narrative account.
    (A) Conditions for extension. The Director of OEE in his or her 
discretion may place conditions on the approval of an extension. For 
example, the Director of OEE may require that the disclosing person 
agree to toll the statute of limitations with respect to violations 
disclosed in the initial notification or discovered during the review 
for or preparation of the narrative account, and/or require the 
disclosing person to undertake specified interim remedial compliance 
measures.
    (B) Contents of Request. (1) In most instances 180 days should be 
adequate to complete the narrative account. Requests to extend the 180-
day deadline set forth in paragraph (c)(2)(iii) of this section will be 
determined by the Director of OEE pursuant to his or her authority 
under this paragraph (c)(2)(iv) based upon his consideration and 
evaluation of U.S. Government interests and the facts and circumstances 
surrounding the request and any related investigations. Such requests 
should show specifically that the person making the request:
    (i) Began its review promptly after discovery of the violations;
    (ii) Has been conducting its review and preparation of the 
narrative account as expeditiously as can be expected, consistent with 
the need for completeness and accuracy;
    (iii) Reasonably needs the requested extension despite having begun 
its review promptly after discovery of the violations and having 
conducted its review and preparation of the narrative account as 
expeditiously as can be expected consistent with the need for 
completeness and accuracy; and
    (iv) Has considered whether interim compliance or other corrective 
measures may be needed and has undertaken such measures as appropriate 
to prevent recurring or additional violations.
    (2) Such requests also should set out a proposed timeline for 
completion and submission of the narrative account that is reasonable 
under the applicable facts and circumstances, and should also designate 
a contact person regarding the request and provide that contact 
person's current business street address, email address, and telephone 
number. Requests may also include additional information that the 
person making the request reasonably believes is pertinent to the 
request under the applicable facts and circumstances.
    (C) Timing of requests. Requests for an extension should be made 
before the 180-day deadline and as soon as possible once a disclosing 
person determines that it will be unable to meet the deadline or the 
extended deadline where an extension previously has been granted, and 
possesses the information needed to prepare an extension request in 
accordance with paragraph (c)(2)(iv)(B) of this section. Requests for 
extension that are not received before the deadline for completing the 
narrative account has passed will not be considered. Parties who 
request an extension shortly before the deadline incur the risk that 
the Director of OEE will be unable to consider the request, determine 
whether or not to grant the extension, and communicate his or her 
decision before the deadline, and that any subsequently submitted 
narrative account will be considered untimely under paragraph 
(c)(2)(iii) of this section.
* * * * *

PART 766--[AMENDED]

0
3. The authority citation paragraph for part 766 continues to read as 
follows:

    Authority:  50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
15, 2012, 77 FR 49699 (August 16, 2012).


0
4. Section 766.3 is amended by revising paragraphs (b)(1) and (c) to 
read as follows:


Sec.  766.3  Institution of administrative enforcement proceedings.

* * * * *
    (b) * * *
    (1) By sending a copy by registered or certified mail or by express 
mail or commercial courier or delivery service addressed to the 
respondent at the respondent's last known address;
    * * *
    (c) The date of service of notice of the issuance of a charging 
letter instituting an administrative enforcement proceeding, or service 
of notice of the issuance of a supplement or amendment to a charging 
letter, is the date of its delivery, or of its attempted delivery, by 
any means described in paragraph (b)(1) of this section.

    Dated August 5, 2013.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2013-19364 Filed 8-8-13; 8:45 am]
BILLING CODE 3510-33-P