Order Temporarily Denying Export Privileges, 60445-60446 [2014-23878]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security

[Federal Register Volume 79, Number 194 (Tuesday, October 7, 2014)]
[Notices]
[Pages 60445-60446]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-23878]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Order Temporarily Denying Export Privileges

X-TREME Motors LLC a/k/a XTREME Motors, 2496 South 1900 West, West 
Haven, Utah 84401
    and
XTREME Outdoor Store a/k/a XTREME Outdoors, 2496 South 1900 West, 
West Haven, Utah 84401
    and
Tyson Preece, 3930 West Old Highway Road, Morgan, Utah 84050
    and
Corey Justin Preece a/k/a Corey Preece a/k/a Justin Preece, 1245 
South Morgan Valley Drive, Morgan, Utah 84050
    and
Toby Green, 480 West 175 North, Morgan, Utah 84050

    Pursuant to Section 766.24 of the Export Administration Regulations 
(the ``Regulations'' or ``EAR''),\1\ the Bureau of Industry and 
Security (``BIS''), U.S. Department of Commerce, through its Office of 
Export Enforcement (``OEE''), has requested that I issue an Order 
temporarily denying, for a period of 180 days, the export privileges 
under the Regulations of: X-TREME Motors LLC, also known as XTREME 
Motors; XTREME Outdoor Store, also known as XTREME Outdoors; Tyson 
Preece; Corey Justin Preece, also known as Corey Preece or Justin 
Preece; and Toby Green. Corporate filings with the Utah Secretary of 
State list both Preeces and Green as officers of X-TREME Motors LLC. X-
TREME Motors LLC is a Utah-based company that holds itself out as 
selling all-terrain vehicle, dirt bike and snowmobile parts. XTREME 
Outdoors Store is an on-line vendor for tactical gear and equipment 
such as rifle scopes, and shares the same address and phone number with 
X-TREME Motors LLC. Corey Justin Preece is listed as the registrant of 
XTREME Outdoor Store's Web site using the name Justin Preece.
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    \1\ The Regulations are currently codified at 15 CFR parts 730-
774 (2014). The EAR issued under the Export Administration Act of 
1979, as amended (50 U.S.C. app. 2401-2420 (2000)) (``EAA''). 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 7, 2014 (79 FR 46959 
(Aug. 11, 2014)), has continued the Regulations in effect under the 
International Emergency Economic Powers Act (50 U.S.C. 1701, et 
seq.) (2006 & Supp. IV 2010).
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    Pursuant to Section 766.24, BIS may issue an order temporarily 
denying a respondent's export privileges upon a showing that the order 
is necessary in the public interest to prevent an ``imminent 
violation'' of the Regulations. 15 CFR 766.24(b)(1) and 776.24(d). ``A 
violation may be `imminent' either in time or degree of likelihood.'' 
15 CFR 766.24(b)(3). BIS may show ``either that a violation is about to 
occur, or that the general circumstances of the matter under 
investigation or case under criminal or administrative charges 
demonstrate a likelihood of future violations.'' Id. As to the 
likelihood of future violations, BIS may show that the violation under 
investigation or charge ``is significant, deliberate, covert and/or 
likely to occur again, rather than technical or negligent [.]'' Id. A 
``lack of information establishing the precise time a violation may 
occur does not preclude a finding that a violation is imminent, so long 
as there is sufficient reason to believe the likelihood of a 
violation.'' Id.
    In its request, BIS has presented evidence that X-TREME Motors LLC 
and XTREME Outdoors (collectively ``X-TREME'') have repeatedly engaged 
in conducted prohibited by the Regulations by exporting items 
controlled for Crime Control reasons without the required licenses to 
various destinations, including Russia and China. In order to evade 
detection by law enforcement, X-TREME has intentionally provided false 
information on Customs Declarations by stating the packages contain 
various ATV parts. Since September 1, 2014, the U.S. Government has 
identified over 200 shipments exported or intended for export where X-
TREME mislabeled the contents. The U.S. Government has detained 
approximately 50 of those shipments, including approximately 20 
shipments of rifle scopes to destinations that would require an export 
license from BIS. A search of BIS's licensing database reveals no 
licensing history as to any of these shipments of riflescopes.
    For example, one detained shipment from on or about September 4, 
2014, included a Model XPS-3 holographic weapon sight classified under 
ECCN 0A987 and controlled for Crime Control reasons. The shipment was 
destined for Russia, and as such required a Department of Commerce 
license pursuant to Section 742.7 of the Regulations. The Customs 
Declaration submitted to the United States Postal Service falsely 
labeled the contents of the shipment as ``ATV GRIPS.'' X-TREME MOTORS 
LLC was listed as the shipper. Affixed to the product box containing 
the XPS-3 weapon sight is a manufacturer's sticker warning that the 
item ``is controlled under the Export Administration Regulations (EAR) 
[ECCN 0A987]'' and may not be exported without U.S. Department of 
Commerce authorization. (Parenthetical and brackets in original). 
Despite having notice that a license was required to export the item, 
no license was sought or obtained for this attempted export.
    On or about September 10, 2014, the U.S. Government detained 
another shipment destined for Russia containing a Taser Model C2 stun 
gun, classified under ECCN 0A985, and controlled for Crime Control 
reasons. A Department of Commerce license was required to export the 
item to Russia pursuant to Section 742.7 of the Regulations. The 
Customs Declaration listed the shipper as X-TREME MOTORS LLC and again 
falsely indicated that the contents of the shipment were ``ATV GRIPS.'' 
Similarly, no license was obtained.
    A third example involves a shipment detained on or about September 
4, 2014, which included two 16-ounce cans of Oleoresin Capsicum Spray 
(or pepper spray), classified under ECCN 1A984, and controlled for 
Crime Control reasons. The Customs Declaration indicated that the 
shipment was destined for Russia. The export therefore required a 
Department of Commerce license pursuant to Section 742.7 of the 
Regulations. The Customs Declaration identified X-TREME MOTORS LLC as 
the shipper, and again falsely stated that the contents of the shipment 
were ``ATV GRIPS.'' As with the other exports and attempted exports 
referenced above, no license was obtained.
    I find that the evidence presented by BIS demonstrates that a 
violation of the Regulations is imminent in both time and degree of 
likelihood. The numerous repeated and willful violations of the

[[Page 60446]]

Regulations by X-TREME that have occurred since September 1, 2014, are 
strong indicators that future violations are likely absent the issuance 
of a TDO. As such, a TDO is needed to give notice to persons and 
companies in the United States and abroad that they should cease 
dealing with X-TREME in export transactions involving items subject to 
the EAR. Such a TDO is consistent with the public interest to preclude 
future violations of the EAR.
    Additionally, Section 766.23 of the Regulations provides that 
``[i]n order to prevent evasion, certain types of orders under this 
part may be made applicable not only to the respondent, but also to 
other persons then or thereafter related to the respondent by 
ownership, control, position of responsibility, affiliation, or other 
connection in the conduct of trade or business. Orders that may be made 
applicable to related persons include those that deny or affect export 
privileges, including temporary denial orders. . . .'' 15 CFR 
766.23(a). As stated above, both Preeces and Green are both listed as 
officers of X-TREME Motors LLC on corporate filings with the Utah 
Secretary of State's office, and Corey Justin Preece is also listed as 
the registrant of the XTREME Outdoor Store Web site. Other open source 
information indicates that Green and Tyson Preece are listed as 
principals or owners of X-TREME Motors LLC. As such, I find that both 
Preeces and Green are related to X-TREME Motors LLCs based on their 
positions of responsibility and that their additions to the order is 
necessary to prevent evasion.
    Accordingly, I find that an order denying the export privileges of 
X-TREME Motors LLC, XTREME Outdoor Store, Tyson Preece, Corey Justin 
Preece, and Toby Green is necessary, in the public interest, to prevent 
an imminent violation of the EAR.
    This Order is being issued on an ex parte basis without a hearing 
based upon BIS's showing of an imminent violation in accordance with 
Section 766.24 of the Regulations.
    It is therefore ordered:
    First, that X-TREME MOTORS LLC, a/k/a XTREME MOTORS, 2496 South 
1900 West, West Haven, Utah 84401; XTREME OUTDOOR STORE, a/k/a XTREME 
OUTDOORS, 2496 South 1900 West, West Haven, Utah 84401; TYSON PREECE, 
3930 West Old Highway Road, Morgan, Utah 84050; COREY JUSTIN PREECE, a/
k/a COREY PREECE, a/k/a JUSTIN PREECE, 1245 South Morgan Valley Drive, 
Morgan, Utah 84050; and TOBY GREEN, 480 West 175 North, Morgan, Utah 
84050, and when acting for or on their behalf, any successors or 
assigns, agents, or employees (each a ``Denied Person'' and 
collectively the ``Denied Persons'') 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 Export Administration Regulations (``EAR''), or in any 
other activity subject to the EAR 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 EAR, or in any other activity 
subject to the EAR; 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 EAR, or in any other activity subject to the EAR.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of a Denied Person any item 
subject to the EAR;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by a Denied Person of the ownership, possession, or control 
of any item subject to the EAR that has been or will be exported from 
the United States, including financing or other support activities 
related to a transaction whereby a 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 a Denied Person of any item subject to 
the EAR that has been exported from the United States;
    D. Obtain from a Denied Person in the United States any item 
subject to the EAR 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 EAR 
that has been or will be exported from the United States and which is 
owned, possessed or controlled by a Denied Person, or service any item, 
of whatever origin, that is owned, possessed or controlled by a Denied 
Person if such service involves the use of any item subject to the EAR 
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 EAR, any other person, firm, corporation, or 
business organization related to a 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.
    In accordance with the provisions of Section 766.24(e) of the EAR, 
X-TREME Motors LLC and/or XTREME Outdoor Store may, at any time, appeal 
this Order by filing a full written statement in support of the appeal 
with the Office of the Administrative Law Judge, U.S. Coast Guard ALJ 
Docketing Center, 40 South Gay Street, Baltimore, Maryland 21202-4022. 
In accordance with the provisions of Sections 766.23(c)(2) and 
766.24(e)(3) of the EAR, Tyson Preece, Corey Justin Preece and/or Toby 
Green may, at any time, appeal their inclusion as a related person by 
filing a full written statement in support of the appeal with the 
Office of the Administrative Law Judge, U.S. Coast Guard ALJ Docketing 
Center, 40 South Gay Street, Baltimore, Maryland 21202-4022.
    In accordance with the provisions of Section 766.24(d) of the EAR, 
BIS may seek renewal of this Order by filing a written request not 
later than 20 days before the expiration date. X-TREME Motors LLC and/
or XTREME Outdoor Store may oppose a request to renew this Order by 
filing a written submission with the Assistant Secretary for Export 
Enforcement, which must be received not later than seven days before 
the expiration date of the Order.
    A copy of this Order shall be sent to X-TREME Motors LLC, XTREME 
Outdoor Store, and each related person, and shall be published in the 
Federal Register.
    This Order is effective upon issuance and shall remain in effect 
for 180 days.

    Dated: September 30, 2014.
David W. Mills,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2014-23878 Filed 10-6-14; 8:45 am]
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