In the Matters of: Nordic Maritime Pte. Ltd. and Morten Innhaug, Respondents; Final Decision and Order; Washington, DC 20230, 52312-52320 [2020-18615]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security

[Federal Register Volume 85, Number 165 (Tuesday, August 25, 2020)]
[Notices]
[Pages 52312-52320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18615]


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 DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket Number 17-BIS-0004 (consolidated)]


In the Matters of: Nordic Maritime Pte. Ltd. and Morten Innhaug, 
Respondents; Final Decision and Order; Washington, DC 20230

    This matter is before me a second time to review the Administrative 
Law Judge's (ALJ) decision in this case. On March 11, 2020, I affirmed 
the ALJ's initial recommended decision and order's (Initial RDO) 
findings of liability, modified the denial order to a period of 15 
years, and remanded to the ALJ for a reexamination of the civil 
monetary penalty (Remand Order).\1\ The ALJ did so, resulting in a 
reinstatement of the original $31,425,760 civil monetary penalty by way 
of a July 15, 2020 Recommended Decision and Order (Penalty RDO).\2\
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    \1\ In the Matters of Nordic Maritime Pte. Ltd. & Morten 
Innhaug; Partial Remand and Final Decision and Order, 85 FR 15,414 
(Mar. 18, 2020).
    \2\ I received the certified copy of the record from the ALJ, 
including the original copy of the Penalty RDO, for my review on 
July 20, 2020.
    The Penalty RDO is included as an addendum to this Final 
Decision and Order.
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    With the benefit of the Penalty RDO and additional briefing from 
the parties, this matter is ripe for decision. For the following 
reasons, I conclude that Nordic Maritime Pte. Ltd.'s (Nordic) and 
Morten Innhaug's (Innhaug and, collectively, Respondents) conduct--
including the knowing export of highly controlled equipment to one of 
America's adversaries, coupled with making false and misleading 
statements to the Bureau of Industry and Security (BIS) in the course 
of its investigation into the matter--warrants a significant sanction. 
As a result, I affirm the $31,425,760 civil monetary penalty in its 
entirety and determine that no suspension of the penalty is 
appropriate.

I. Background

    This matter has a thorough procedural history, which is recounted 
in the Remand Order and in the Initial RDO. See 85 FR 15,415-16; see 
also id. at 15,421-28 (the Initial RDO). A brief recap to the extent 
necessary to understand the damages calculation will suffice.
    BIS issued a charging letter to Respondent Nordic on April 28, 
2017, alleging three violations of the Export Administration 
Regulations (EAR or Regulations): \3\ (i) Nordic illegally reexported 
certain seismic survey equipment to Iran that was controlled

[[Page 52313]]

by the EAR for national security and anti-terrorism reasons; (ii) 
Nordic acted knowingly in doing so; and (iii) Nordic made false and 
misleading statements to BIS during its investigation. The unlawful 
export occurred pursuant to a contract between Nordic and Mapna 
International FZE to conduct a seismic survey in Iranian territorial 
waters. See 85 FR 15,415 (citing the charging letter to Nordic). BIS 
also issued a charging letter to Innhaug, alleging he aided and abetted 
Nordic in violating the EAR.
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    \3\ The EAR originally issued under the Export Administration 
Act of 1979, as amended, 50 U.S.C. 4601-4623 (Supp. III 2015) (the 
EAA), which lapsed on August 21, 2001. The President, through 
Executive Order 13,222 of August 17, 2001 (3 CFR, 2001 Comp. 783 
(2002)), which was extended by successive Presidential Notices, 
including the Notice of August 8, 2018 (83 FR 39,871 (Aug. 13, 
2018)), continued the Regulations under the International Emergency 
Economic Powers Act, 50 U.S.C. 1701, et seq. (2012) (IEEPA), 
including during the time period of the violations at issue here. On 
August 13, 2018, the President signed into law the John S. McCain 
National Defense Authorization Act for Fiscal Year 2019, which 
includes the Export Control Reform Act of 2018 (ECRA), 50 U.S.C. 
4801, et seq. While Section 1766 of ECRA repeals the provisions of 
the EAA (except for three sections which are inapplicable here), 
Section 1768 of ECRA provides, in pertinent part, that all rules and 
regulations that were made or issued under the EAA, including as 
continued in effect pursuant to IEEPA, and were in effect as of 
ECRA's date of enactment (August 13, 2018), shall continue in effect 
according to their terms until modified, superseded, set aside, or 
revoked through action undertaken pursuant to the authority provided 
under ECRA.
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    The case proceeded to litigation, and the Respondents alerted the 
ALJ on the eve of trial that they would not participate. See 85 FR at 
15,417. Following a hearing with testimony and exhibits, the ALJ agreed 
with BIS's arguments that the Respondents' conduct warranted a civil 
monetary penalty in the amount of $31,425,760. The ALJ concluded--and I 
affirmed in the Remand Order--that the operative transaction for 
penalty purposes was Nordic's contract with Mapna, which was then 
valued at [euro]11.3 million. See id. at 15,418.\4\ The ALJ then 
doubled the amount of the contract to arrive at the appropriate civil 
monetary penalty. See id.
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    \4\ In the Initial RDO, the ALJ appropriately used the 
conversion date of when Nordic entered into its contract with Mapna. 
See 85 FR 15,417 n.6.
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    The statute permits the imposition of a civil penalty of $307,922 
\5\ or ``an amount that is twice the amount of the transaction that is 
the basis of the violation with respect to the penalty imposed,'' 
whichever is greater. 50 U.S.C. 1705(b). The penalty here was 
calculated by imposing a penalty of twice the value of the transaction, 
namely Nordic's contract for seismic services in Iranian territorial 
waters. In addition to the civil monetary penalty, the Initial RDO 
deemed waived Respondents' inability to pay argument, declined to 
suspend any of the civil monetary penalty, and imposed an indefinite 
denial order that would be lifted when Respondents paid the civil 
monetary penalty. See 85 FR at 15,422 and 15,427.
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    \5\ The maximum civil penalty amount is subject to increase 
pursuant to the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015, Public Law 114-74, 701 (2015). See 15 CFR 
6.4(b)(4).
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    On initial review, I affirmed the ALJ's findings of liability, 
agreed that Respondents waived their inability to pay argument, and 
imposed a 15-year denial order against Respondents. Id. at 15,420-21. I 
also vacated and remanded the civil monetary penalty for reexamination, 
in particular considering whether the penalty was proportional to 
previous penalties imposed in BIS cases. Id.
    The ALJ acted quickly, ordered additional briefing focused on the 
penalty amount, and reaffirmed the $31,425,760 civil monetary penalty. 
The ALJ also determined that no suspension of the civil monetary 
penalty was warranted.

II. Review Under Section 766.22

A. Jurisdiction

    The undersigned has jurisdiction under Section 766.22 of the 
EAR.\6\ While this case was pending before the ALJ, the Export Control 
Reform Act of 2018 (ECRA) became law. See Public Law 115-232 (2018) 
(codified at 50 U.S.C. 4801-4852). At the time of the offenses, 
however, the previous statutory scheme, the Export Administration Act 
of 1979, had lapsed and, as noted above, the EAR was kept in effect 
under the International Emergency Economic Powers Act (IEEPA). ECRA 
provided that the authority of the EAR and any judicial or 
administrative proceedings pending on the date of enactment would be 
unaffected. See 50 U.S.C. 4826.
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    \6\ Because the conduct at issue in this case took place in 2012 
and 2013, those versions of the EAR govern the substantive aspects 
of the case. See 85 FR at 15,417 n.7.
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B. Penalties

1. Scope of Review
    In the Remand Order, I made clear that ``Respondents' conduct in 
this case was unquestionably serious, and it warrants a significant 
sanction.'' 85 FR at 15,418. After examining other cases in which the 
civil monetary penalties were small percentages of the total amount 
permitted under the relevant statute, I noted:

    Respondents' conduct was serious, and they should be punished. 
The ALJ was correct that any penalty ``should be such that it 
dissuades future violations of this sort, and acts as a strong 
deterrent against this type of behavior.'' Viewed through this lens, 
it may well be that the civil monetary penalty in case will be 
substantial. Perhaps it will remain unchanged. But the record would 
benefit from further development on the issue of proportionality.

Id. at 15,419 (emphasis added). In addition, the Remand Order explained 
``that penalties in litigated cases should be higher than settlement 
cases based on similar conduct. Indeed, the EAR guidelines on 
settlement gave the respondents notice that `penalties for settlements 
reached after the initiation of litigation will usually be higher than 
those' that settle.'' Id. at 15,418 (citing 15 CFR part 766, Supp. No. 
1).\7\
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    \7\ As noted in the Remand Order, the 2014 version of the 
Regulations guide the penalty analysis in this matter. 85 FR at 
15,418 n.11.
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    The parties' positions on the appropriate penalty are diametrically 
opposed. BIS believes the penalty should be affirmed in its 
entirety.\8\ Respondents believe no civil penalty is in order. If one 
is imposed, however, Respondents argue it should be suspended for a 
two-year period contingent on Respondents' compliance with the EAR and 
then expire.
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    \8\ In its briefing, BIS argues that the statutory maximum is 
much higher than the ALJ's recommendation here. Citing 50 U.S.C. 
1705(a)-(b), BIS notes ``the maximum civil monetary penalty allowed 
by IEEPA is the greater of $307,922 or twice the value of the 
transaction upon which the penalty is imposed, for each violation of 
the Regulations.'' Because Respondents were charged with three 
violations of the EAR, BIS asserts the total statutory maximum is 
$94,277,280; that is, doubling the value of the seismic contract for 
each of the three charges.
    IEEPA provides that it is ``unlawful for a person to violate . . 
. any license, order, regulation, or prohibition issued under this 
chapter,'' and permits ``an amount that is twice the amount of the 
transaction that is the basis of the violation with respect to which 
the penalty is imposed.'' 50 U.S.C. 1705(a)-(b) (emphases added).
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    The ALJ's Penalty RDO examines the civil monetary penalty under 
four general premises: (1) That he need not compare this case ``to all 
previous BIS decisions ever issued'' and that cases with ``dissimilar 
fact patterns should not be considered in a proportionality 
evaluation,'' noting that exports of medical equipment ``should have 
little effect where oil and gas survey services are at issue''; (2) the 
``aged nature of cases'' should be discounted, essentially, because of 
the time value of money; (3) the effectiveness of previous sanctions 
and if penalties in the industry have not been enough historically to 
deter misconduct, a further sanction is warranted; and (4) ``the 
possibility that a case is sui generis, unique among all cases'' that 
``a recommended decision may trailblaze a path where no ALJ has gone 
before.''
    Respectfully, the ALJ's narrow analysis was erroneous. The ALJ's 
single-footnote, summary dismissal of cases not in the oil and gas 
industry is unnecessarily restrictive. As an example, the ALJ 
distinguishes In the Matter of Aiman Ammar, 80 FR 57,572 (Sept. 24, 
2015)--a case both parties believe to be in their favor, and the 
undersigned found instructive in the Remand Order, see 85 FR at 
15,419--as providing ``little guidance'' because the violations in that 
case related to computer equipment export-controlled for National 
Security reasons to another embargoed country (Syria) ``are so

[[Page 52314]]

factually different from the violations at issue'' here such that it 
``simply do[es] not compare and any sanction leveled against Aiman 
Ammar provides no guidance here.'' In addition, with respect to 
``aged'' cases, where similar cases are identified, an appropriate 
point of analysis is the percentage of the penalty against the 
statutory maximum, not simply the dollar amount. Furthermore, the ALJ's 
industry-specific, historical-deterrence factor finds little support in 
the Penalty RDO, IEEPA, or the Regulations. If, instead, this case is 
sui generis in the ALJ's view, I respectfully disagree.
    Respondents focus their arguments on the number of violations and 
average penalty per violation as being dispositive of the penalty 
issue. I disagree. Congress, in both IEEPA and now ECRA, made clear 
that the value of the transaction is the touchstone for determining the 
quantum of the penalty.\9\ Although a significant number of violations 
can be an aggravating factor--potentially probative of senior-level 
involvement, for instance--the value of the transaction is of greater 
importance when assessing the proper amount for a penalty. By providing 
for a penalty scheme that authorized the greater of either $307,922 or 
double the amount of the transaction, Congress's intent to provide a 
genuine disincentive is clear.
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    \9\ See 50 U.S.C. 1705(b) (IEEPA and providing for a per 
violation penalty that is the greater of $307,922 (with adjustment 
for inflation) or twice the value of the transaction that is the 
basis for the violation) and 50 U.S.C. 4819(c)(1)(A) (ECRA, same).
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    Respondents also argue that the ``contract for seismic services 
cannot be the legal basis for a civil penalty under the EAR and any 
penalty must be based only on the value of the U.S. origin goods that 
were used to conduct the survey.'' The statute and Regulations belie 
that claim and permit the use of the transaction value; here, the 
transaction value is the value of the contract. The EAR provides that, 
where ``[t]he quantity and/or value of the exports was high, such that 
a greater penalty may be necessary to serve as an adequate penalty for 
the violation or deterrence of future violations, or to make the 
penalty proportionate to those for otherwise comparable violations 
involving exports of lower quantity or value.'' 15 CFR part 766, Supp. 
No. 1 (2014).
    The ALJ and BIS both point to the EAR's penalty provisions as they 
relate to criminal or other ancillary enforcement actions. The 2014 
version of the EAR provides that ``where a party is receiving 
substantial criminal penalties, BIS may find that sufficient deterrence 
may be achieved by lesser administrative sanctions than would be 
appropriate in the absence of criminal penalties.'' 15 CFR part 766, 
Supp. No. 1 (2014). But the converse is also true, and ``BIS might seek 
greater administrative sanctions in an otherwise similar case where a 
party is not subjected to criminal penalties.'' Id.
    BIS's brief on review properly frames the lens through which the 
penalty should be assessed:

    (1) the destination involved--Iran, (2) the sensitivity of the 
items--which are both National Security (``NS'') and Anti-Terrorism 
(``AT'') controlled,\[10\\]\ (3) the knowledge and awareness of 
senior-level management, including Respondent Innhaug--the company's 
Chairman, and (4) blatantly false statements in a formal submission 
to BIS in an attempt to cover up their actions.
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    \10\ National Security controls are imposed on items ``that 
would make a significant contribution to the military potential of 
any other country or combination of countries that would prove 
detrimental to the national security of the United States.'' 15 CFR 
742.4 (2019).
    Anti-terrorism controls to Iran ``are additional to the nearly 
comprehensive embargo administered by the Treasury Department's 
Office of Foreign Assets Control.'' And ``[l]icenses to export 
covered items to Iran are almost always denied.'' Eric L. 
Hirschhorn, The Export Control and Embargo Handbook 61 (3d ed. 2010) 
(footnote omitted); see also 15 CFR 742.8 (2019) (Anti-terrorism 
controls to Iran).

BIS's framework tracks the EAR. See 15 CFR part 766, Supp. 1 (2014). 
This formulation was also endorsed by Congress in ECRA's penalty 
scheme, and although this case is proceeding under IEEPA authority, 
Congress's recent guidance is instructive.\11\
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    \11\ Generally aligning with BIS's formulation, ECRA includes a 
``Standards for levels of civil penalty.'' 50 U.S.C. 4819(c)(3). 
That subparagraph provides:
    The Secretary may by regulation provide standards for 
establishing levels of civil penalty under this subsection based 
upon factors such as the seriousness of the violation, the 
culpability of the violator, and such mitigating factors as the 
violator's record of cooperation with the Government in disclosing 
the violation.
    Id.
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2. Amount of the Penalty
    Both parties and the ALJ point to BIS's settlement with Weatherford 
International as providing guidance. In that matter, the company and a 
number of its affiliates settled more than 170 violations related to 
exports of oil field equipment to Iran and other embargoed 
destinations. In the Matter of Weatherford Int'l (Settlement Order 
dated Dec. 23, 2013). The oil field equipment at issue there was 
designated as EAR99 \12\ under the Regulations, as compared to the 
National Security- and Anti-Terrorism-level controls with respect to 
Respondents' actions. The value of the equipment in that case was 
approximately $50,136,255, and the company paid a civil monetary 
penalty of $50 million. The company also paid a $50 million penalty to 
the Department of Justice to resolve the company's criminal liability. 
BIS did not require a denial order in Weatherford. In its settlement 
with BIS, there was no mention of senior-level management involvement 
or false statements, as in this case. So, accounting for the BIS and 
criminal resolution, Weatherford paid approximately twice the value of 
the items in a case that was settled and where, unlike here, there was 
no effort to mislead BIS in the course of its investigation.
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    \12\ EAR99 is a designation for items subject to the EAR but not 
listed on the CCL. See 15 CFR 734.3(c) and 772.1.
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    The resolution of In the Matter of Aiman Ammar, 80 FR 57,572 (Sept. 
24, 2015), is also instructive. That case, also a settlement, assessed 
a $7,000,000 civil monetary penalty, but with all but $250,000 
suspended, and denial orders ranging from four to seven years. The 
equipment in Ammar was approximately $3.6 million worth of computer 
equipment and software, ``nearly all'' of which was controlled for 
National Security and Anti-Terrorism reasons. Id. at 57,573. The 
shipments were to Syria, an embargoed country. See id. That case did 
not have the false statements charge present in this case.
    In the Matter of Yantai Jereh Oilfield Services Group Co., Ltd. 
(Settlement Order dated Dec. 10, 2018), also involved the knowing 
export of oil and gas equipment to Iran. The equipment was designated 
as EAR99 and had a value of approximately $381,881. The conduct there 
was led by lower-level personnel--a sales executive and a business 
manager--than present in this case. In settling the matter, the 
respondent paid BIS a civil monetary penalty of $600,000 (the penalty 
paid to BIS only amounts to a multiple of 1.57), in addition to 
$2,774,972 to the Office of Foreign Assets Control. BIS also imposed a 
five-year suspended denial order. Both the ALJ and BIS correctly note 
that, in Jereh, the respondent took additional measures to account for 
its violations including terminating the individuals involved in the 
conduct, obtaining a review by outside counsel of its trade compliance 
program, and establishing an office to run its trade compliance 
program, among other things. None of those remedial measures is present 
here.
    BIS also relies on In the Matters of National Oilwell Varco & Dreco 
Energy Services Ltd. (Settlement Order dated Nov. 8, 2016), as a 
relevant case. As part

[[Page 52315]]

of a global resolution in that case, the respondents settled 22 
charges, including one knowledge charge, of EAR99 oilfield equipment to 
Iran and one item to Oman controlled for Nuclear Non-Proliferation 
reasons. The total value of the items was just under $2.4 million, and 
the respondents paid BIS a $2.5 million penalty.\13\ In settling the 
case, BIS did not require a denial order. There was one charge of a 
knowing violation, but unlike this case, there was no evidence in that 
settlement agreement of upper-management involvement and no false 
statements to BIS.
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    \13\ I agree with the ALJ that this settlement is somewhat 
confusing. National Oilwell Varco paid a total of $25 million by way 
of a non-prosecution agreement with the Department of Justice for 
several trade-related offenses. The BIS Settlement Order also 
indicates a separate settlement agreement with the Office of Foreign 
Assets Control at the U.S. Department of the Treasury. It is unclear 
from the public record how closely related the conduct is to the 
conduct for the BIS-only portion of the settlement. In any event, 
the BIS-only penalty is significant, and when paired with a $25 
million trade-related global resolution, it is clear that the 
respondents in that case were punished severely. As discussed above, 
there is no related criminal action here, and the EAR permits me to 
take that into account. See 15 CFR part 766, Supp. No. 1 (2014).
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    Having considered a number of settled cases, I turn to a litigated 
case, and it tells a similar story. In In the Matter of Trilogy Int'l, 
83 FR 9259 (Mar. 5, 2018), Under Secretary Ricardel reviewed three 
charges each against the company and its president. The items were 
valued at $76,035, controlled for National Security reasons, and were 
exported to Russia, a non-embargoed country. Under Secretary Ricardel 
imposed a total civil monetary penalty of $200,000, half against each 
respondent, as well as a 10-year denial order. Id. at 9262. The 
similarities in Trilogy are useful for comparison to this case: Items 
controlled for National Security reasons, but to a less-restrictive 
destination; involvement of upper-management of the company; and the 
matter was litigated rather than settled. This case, however, has 
additional aggravating factors not present in Trilogy: The items here 
were exported to an embargoed destination; the charges here included a 
knowledge charge; and, critically, Respondents' false and misleading 
statements to BIS in the course of the investigation.
    The cases above, in particular Trilogy, support a substantial civil 
monetary penalty coupled with a lengthy denial order. Put simply, 
Respondents' conduct in this case was far more harmful to the national 
security interests of the United States than in Trilogy, in particular 
the significant penalty (relative to the value of the transaction at 
issue) and a lengthy denial order.
    As the ALJ described in the Initial RDO and Penalty RDO, 
Respondents' knowing reexport of oil survey equipment to Iran is 
something the U.S. Government should punish harshly. Moreover, 
Respondents' false statements to BIS in the course of its investigation 
likewise deserves a significant sanction. Were it otherwise, federal 
law enforcement would be irreparably hampered.
    In the Remand Order, I listed a number of cases settled with 
proportionally lower penalties to help guide the ALJ on remand. See 85 
FR at 15,419. But, as was clear from the Remand Order, those cases were 
just that: Negotiated resolutions between the parties where respondents 
admitted their liability and enabled BIS to free up resources to pursue 
other matters. See 15 CFR part 766 Supp. No. 1 (2014).\14\ Here, by 
contrast, Respondents put BIS to the burden of litigation and 
Respondents participated in litigation only to a point. After 
Respondents disclaimed further participation on the eve of the hearing, 
BIS was required to put on several witnesses to explain Respondents' 
conduct. The ALJ then wrote a lengthy RDO finding Respondents liable, 
which has now come before the undersigned twice. ``Because the 
effective implementation of the U.S. export control system depends on 
the efficient use of BIS resources, BIS has an interest in encouraging 
early settlement and may take this interest into account in determining 
settlement terms.'' Id. The converse holds true, as well.
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    \14\ The EAR provides: ``[E]arly settlement--for example, before 
a charging letter has been served--has the benefit of freeing 
resources for BIS to deploy in other matters. In contrast, for 
example, the BIS resources saved by settlement on the eve of an 
adversary hearing under Sec.  766.13 are fewer, insofar as BIS has 
already expended significant resources on discovery, motions 
practice, and trial preparation.'' 15 CFR part 766, Supp. No. 1 
(2014).
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    The cases discussed in the Remand RDO lack the combined degree of 
aggravating factors present in this case, including lying to BIS. Even 
the litigated cases cited in the Remand Order had significantly less 
aggravating conduct than in this case. See 85 FR at 15,418-19. In 
addition, the more recent cases demonstrate BIS's commitment to 
vindicating the national interest in a robust system of export-control 
compliance.
    Respondents contend that to affirm the civil monetary penalty would 
be unconstitutional. Citing the Eighth Amendment to the U.S. 
Constitution and United States v. Bajakajian, 524 U.S. 321 (1998), 
Respondents claim that affirming the civil monetary penalty, coupled 
with the 15-year denial order, would be an excessive fine. The Court in 
Bajakajian recognized a broad deference to the legislature to set 
punishments. Id. at 336. Congress has spoken clearly in IEEPA and later 
in ECRA that the appropriate maximum civil penalty is the greater of 
$307,922 (at current inflation) or twice the value of the 
transaction.\15\ With respect to proportionality, the Bajakajian Court 
held that a penalty violates the Excessive Fines Clause of the Eighth 
Amendment ``if it is grossly disproportional to the gravity of the 
offense that it is designed to punish.'' Id. at 332.\16\ As evidenced 
in the settled and litigated cases discussed above, cases of this 
nature--involving shipments to an embargoed country, of sensitive 
National Security-controlled items, with knowledge and involvement of 
company leadership, and then lying to law enforcement about it--warrant 
high penalties, including the imposition of up to the maximum penalty. 
The fact that the monetary penalty is high and that the penalty 
includes an active denial order period does not mean that the penalty 
is grossly disproportionate given the factors at play in this case.
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    \15\ See note 9, supra.
    \16\ See also Newell Recycling Co. v. United States Envt'l Prot. 
Agency, 231 F.3d 204, 210 (5th Cir. 2000) (``No matter how excessive 
(in lay terms) an administrative fine may appear, if the fine does 
not exceed the limits prescribed by the statute authorizing it, the 
fine does not violate the Eighth Amendment.''); Collins v. SEC, 736 
F.3d 521 (D.C. Cir. 2013) (upholding a civil penalty that is more 
than 100 times the amount of the ordered disgorgement, even where 
other SEC cases provided a penalty closer to the amount of the 
disgorgement).
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    Against the backdrop of the cases and legal framework discussed 
above, Respondents' knowing export of sensitive oilfield survey 
equipment to an American adversary, led by the company's chairman, and 
then lying to BIS about it, warrants a civil monetary penalty of twice 
the value of the underlying transaction.
3. Suspension of the Penalty
    Respondents seek a suspension of the civil monetary penalty for two 
years so long as they remain compliant with the EAR.\17\ Respondents 
claimed in their briefing that BIS suspends civil monetary penalties 
43% of the time

[[Page 52316]]

since 2009. See 85 FR 15,419. As in the Remand Order, I need not 
determine whether that is true. The fact remains that, even under 
Respondents' argument, suspending a civil monetary penalty is not the 
norm, and I decline to do so here.
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    \17\ I left this possibility open in the Remand RDO. See 85 FR 
15,419 (``Because I am vacating and remanding the civil monetary 
penalty, I need not decide at this point whether the suspension of 
any portion is appropriate. It may well not be, as the ALJ concluded 
in the [Initial] RDO, but I will leave that issue open for the ALJ 
to consider on remand.'').
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    The EAR permits the suspension of all or part of a civil monetary 
penalty. 15 CFR 764.3 (2014).\18\ Unfortunately, the EAR provides 
limited guidance on the factors one should use to determine whether 
suspension is appropriate. Among the considerations are ``whether the 
party has demonstrated a limited ability to pay''--an argument I 
previously deemed the Respondents waived, see 85 FR 15,417 n.5--and 
``whether, in light of all the circumstances, such suspension or 
deferral is necessary to make the impact of the penalty consistent with 
the impact of BIS penalties on other parties who committed similar 
violations.'' 15 CFR part 766, Supp. No. 1.
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    \18\ The 2014 version of the provision provides, in full: ``The 
payment of any civil penalty may be deferred or suspended in whole 
or in part during any probation period that may be imposed. Such 
deferral or suspension shall not bar the collection of the penalty 
if the conditions of the deferral, suspension, or probation are not 
fulfilled.'' 15 CFR 764.3 (2014).
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    In support of their suspension argument, the only case Respondents 
cite is Aiman Ammar, in which BIS settled with the respondents for $7 
million with all but $250,000 suspended. But that suspension arose in 
the context of a settlement, a fact not present here. As discussed in 
the Remand Order, many of the suspended penalties occurred in cases 
that were settled, an indication that those respondents accepted 
responsibility for their conduct. See 85 FR 15,419 (collecting cases).
    Several facts lead me to conclude that suspending the civil 
monetary penalty would be inappropriate. As is clear from the facts of 
this case, Respondents' conduct was serious: Providing high-level 
export-controlled equipment to benefit one of America's adversaries; 
done at the behest of the head of the company; and then lying to BIS 
about that conduct. Indeed, even at this stage of the proceedings, 
Respondents do not appear to have taken sufficient responsibility for 
their conduct. In their briefing before the undersigned that led to the 
Remand Order, Respondents claim that Nordic made a submission to BIS in 
the course of the investigation, and it ``contained incorrect 
information at the specific request of one of the [BIS Office of Export 
Enforcement] agents involved in the investigation.''
    In short, Respondents offer little to support their request for a 
suspension of the civil monetary penalty other than the penalty is 
sizeable and that Nordic is in ``dire financial condition.'' 
Notwithstanding that Respondents waived this inability to pay argument, 
see 85 FR 15,417 n.5, even if I were to consider it, I have determined 
a suspension is inappropriate. An examination of cases in which a civil 
monetary penalty was suspended shows that they were most often done in 
the settlement context. Indeed, the totality of factors in this case 
confirms that a suspension of the civil monetary penalty is 
unwarranted.
* * * * *
    Accordingly, based on my review of the Initial RDO, the Penalty 
RDO, the parties' briefs relating to the civil monetary penalty, and 
entire record, I affirm the civil monetary penalty in the amount of 
$31,425,760 jointly and severally against each Respondent. In addition, 
I determine that no suspension of the civil monetary penalty is 
warranted.
    Accordingly, it is therefore ordered:
    First, a civil penalty of $31,425,760 shall be assessed jointly and 
severally against each Respondent, the payment of which shall be made 
to the U.S. Department of Commerce within 30 days of the date of this 
Order.
    Second, pursuant to the Debt Collection Act of 1982, as amended (31 
U.S.C. 3701-3720E (2000)), the civil penalties owed under this Order 
accrue interest as more fully described in the attached Notice, and, if 
payment is not made by the due date specified herein, the party that 
fails to make payment will be assessed, in addition to the full amount 
of the civil penalty and interest, a penalty charge and administrative 
charge.
    Third, this Order shall be served on Respondents Nordic Maritime 
Pte. Ltd. and Morten Innhaug and on BIS, and shall be published in the 
Federal Register. In addition, the ALJ's Penalty Recommended Decision 
and Order shall be published in the Federal Register.
    The findings of liability and the denial order, which constitute 
final agency action in this matter, are effective immediately.

    Issued this 19th day of August, 2020.
Cordell A. Hull,
Acting Under Secretary of Commerce for Industry and Security.

United States Department of Commerce, Bureau of Industry and Security, 
Washington, DC

    In the Matters of: Nordic Maritime Pte. Ltd. and Morten Innhaug, 
Respondents.

Docket Number, 17-BIS-0004 (consolidated)

Certificate of Service

    I hereby certify that, on August 19, 2020, I caused the foregoing 
Final Decision and Order to be served upon:

Gregory Michelsen, Esq., Zachary Klein, Esq., U.S. Department of 
Commerce, Office of Chief Counsel for Industry and Security, 14th & 
Constitution Avenue NW, Washington, DC 20230, [email protected], 
[email protected] (Electronically).
Douglas N. Jacobson, Esq., Jacobson Burton Kelley PLLC, 1725 I Street 
NW--Suite 300, Washington, DC 20006, [email protected] 
(Electronically).
Honorable Dean C. Metry, Administrative Law Judge, U.S. Coast Guard, 
U.S. Courthouse, 601 25th St., Suite 508A, Galveston, TX 77550, 
[email protected] (Electronically).
ALJ Docketing Center, Attention: Hearing Docket Clerk, 40 S Gay Street, 
Room 4124, Baltimore, MD 21202-4022, [email protected] 
(Electronically).

-----------------------------------------------------------------------
Office of the Under Secretary for Industry and Security

    The Recommended Penalty Order On Remand follows as Appendix A.

Appendix A

United States Department of Commerce, Bureau of Industry and Security, 
Washington, DC

    In the Matters of: Nordic Maritime Pte. Ltd., and Morten Innhaug, 
Respondents.

Docket No. 17-BIS-0004

Recommended Penalty Order on Remand

    On March 11, 2020, the Acting Under Secretary of Commerce for 
Industry and Security issued a Partial Remand and Final Denial Order 
(Remand). In the Remand, the Under Secretary affirmed in part, modified 
in part, and vacated in part the undersigned Administrative Law Judge's 
(ALJ) Recommended Decision and Order (RDO) issued on February 7, 2020. 
Specifically, the

[[Page 52317]]

Under Secretary affirmed the findings of liability, and agreed 
Respondents committed the violations alleged in the charging letters. 
The Under Secretary modified the denial order to a period of 15 years 
and vacated the $31,425,760.00 penalty recommended against Respondents. 
In the Under Secretary's view, the record did not support the penalty, 
and the penalty did not appear to be proportional to sanctions imposed 
in similar, previous cases. Remand Order at 15.
    Thereafter, the undersigned instructed the parties to brief the 
proportionality issue. Both parties timely field briefs and this matter 
is ripe for a recommended decision on remand.

Preliminary Issue

    Upon review of the parties' post-Remand submissions, the 
undersigned notes both parties made arguments beyond the scope of the 
undersigned's briefing order. The court's briefing order was perfectly 
clear ``[T]he parties shall brief the penalty issue remanded to the 
undersigned, but only regarding proportionality with previous [Bureau 
of Industry and Security's] BIS' decisions.'' Brief Scheduling Order 
after Partial Remand at 2 (emphasis added). Accordingly, the 
undersigned will only consider the parties' arguments addressing 
proportionality.

Proportionality

    As set forth in the Remand, the Under Secretary affirmed the RDO's 
analysis concerning the aggravating and mitigating factors in 15 CFR 
part 766, Supp. No. 1. Therefore, the undersigned will not repeat that 
analysis here; it is the law of the case. Sim v. Republic of Hungary,--
F.Supp.3d--2020 WL 1170485 (D.D.C. 2020) (discussing law of the case 
doctrine).\19\ Instead, the undersigned will review previous BIS 
decisions and recommend a sanction proportional to those previously 
imposed by BIS, as instructed in the Remand.
---------------------------------------------------------------------------

    \19\ LaShawn A. v. Barry, 87 F.3d 1389, 1393 (D.C. Cir. 1996) 
(``When there are multiple appeals taken in the course of a single 
piece of litigation, law-of-the-case doctrine holds that decisions 
rendered on the first appeal should not be revisited on later trips 
to the appellate court.''); id. at 1395 n.7 (``If a party fails to 
raise a point he could have raised in the first appeal, the `waiver 
variant' of the law-of-the-case doctrine generally precludes the 
court from considering the point in the next appeal of the same 
case.'').
---------------------------------------------------------------------------

    First, the undersigned notes that other than the well-reasoned 
explanation provided by the Under Secretary's Remand, there is little 
BIS guidance on exactly how an ALJ should analyze proportionality. The 
obvious first step is to compare prior decisions to the case at bar. 
But it goes without saying that an ALJ need not compare the instant 
case to all previous BIS decisions ever issued. For example, cases with 
dissimilar fact patterns should not be considered in a proportionality 
evaluation, i.e., cases involving the sale of medical goods should have 
little effect on a case where oil and gas survey services are at issue. 
Thus, the first factor when considering proportionality is how closely 
the proffered cases' facts mirror the case in question.
    Common sense also dictates the undersigned consider the aged nature 
of a previous case and its temporal proximity to the case at bar. 
Within this same consideration, the ALJ should also consider any 
changes in BIS regulations and/or congressional enactments controlling 
BIS operations. For example, a $20,000.00 sanction imposed by BIS in 
1995 may not be equal to a $20,000.00 sanction imposed today simply 
because of inflation and/or a congressional intent to ratchet up 
penalties.
    An ALJ should also consider the effectiveness of previous 
sanctions. For example, if BIS imposed a $35,000.00 penalty for a 
violation, but that sanction does not sufficiently deter similar 
conduct in the industry, an ALJ would be right to recommend the Under 
Secretary ratchet up the penalty to adjust for the lack of deterrent 
effect in the regulated community.
    Lastly, the undersigned notes that there is the possibility that a 
case is sui generis, unique among all cases, and that its facts are so 
different than those preexisting in the body of BIS case law addressing 
the issue, that a recommended decision may trailblaze a path where no 
ALJ has gone before. Admittedly, these cases would be rare, but an ALJ 
should be prepared to levy an appropriate sanction unlike any 
previously imposed when necessary, particularly where a respondent's 
conduct poses a grave threat to the United States.
    With this non-exclusive list of considerations in mind, the 
undersigned turns to: (1) The cases cited in the Remand; (2) BIS' 
citation of cases; and (3) Respondents' arguments addressing the 
proportionality issue. I address each in turn.

Cases Cited in the Under Secretary's Remand

    A review of most of the cases cited by the Under Secretary shows 
that while many involved intentional violations, like the case at bar, 
the similarities end there. For example, In the Matter of Ali Asghar 
Manzarpour, BIS sought to punish the export of a single-engine aircraft 
to Iran. 73 FR 12,073 (Mar. 6, 2008). Similarly, In the Matter of 
Teepad Electronic General Trading and In the matter of Swiss Telecom 
involved the export of telecommunication devices to Iran and the latter 
included an export of technical information violation. 71 FR 34,596 
(June 15, 2006); 71 FR 32,920 (June 7, 2006).\20\ Clearly, none of 
these cases includes facts even remotely similar to Respondents' 
conduct here; they simply do not even begin to have the long lasting 
ramifications as do the violations in this case.
---------------------------------------------------------------------------

    \20\ For similar reasons, the undersigned finds the following 
cases insufficiently similar to provide any instruction on 
proportionality of an appropriate sanction in this case:
    In the Matter of Jabal Damavand General Trading Company, 67 FR 
32,009 (May 13, 2002) involving equipment used in ferrography ``an 
analytical method of assessing machine health by quantifying and 
examining ferrous wear particles suspended in the lubricant or 
hydraulic fluid.'' Termination for Default, 2005-JAN ARMLAW 94 
(2005).
    In the Matter of Arian Transportvermittlungs GmbH, 69 FR 28,120 
(May 18, 2004) involving reexporting of computers and encryption 
software.
    In the Matter of Aiman Ammar, 80 FR 57,572 (September 24, 2015) 
involving a conspiracy to export and reexport computer equipment and 
software designed for use in monitoring and controlling web traffic 
and of other associated equipment.
    In the Matter of Yavuz Cizmeci, 80 FR 18,194 (April 3, 2015) 
involving a transaction of a Boeing 747.
    In the Matter of Manoj Bhayana, 76 FR 18,716 (April 5, 2011) 
involving the prohibited sale of graphite rods and pipes.
    In the matter of William Kovacs, 72 FR 8,967 (February 28, 2007) 
involving illegal export of an industrial furnace to China.
    In the matter of Saeid Yahya Charkhian, 82 FR 61,540 (December 
28, 2017) illegal exports including masking wax, lithium batteries, 
and zirconia crucibles.
    In the Matter of Berty Tyloo, 82 FR 4,842 (January 17, 2017) 
involving misrepresentation and concealment of facts in the course 
of an investigation related to unlicensed exports and reexports of 
goods to Syria.
    In the Matter of Eric Baird, 83 FR 65,340 (December 20, 2018) 
involving felony smuggling and 166 violations of the EAR, with no 
knowledge charges, and none related to gas/oil exploration.
    In the matter of Access USA Shipping, LLC, Order dated February 
9, 2017, involving illegally shipped rifle scopes, night vision 
lenses, weapons parts and EAR99 items.
    In the Matter of Petrom GmbH International Trade, 70 FR 32,743 
(June 6, 2005) involving export of check valves, regulatory valves, 
test kits, electrical equipment, ship tire curing bladders, and 
other spare parts, all of which were classified as EAR99 items under 
the Regulations.
---------------------------------------------------------------------------

    At the risk of repeating the RDO's analysis, the undersigned again 
highlights that not only are Respondents' actions intentional, but the 
blatant violations resulted in the use of U.S. equipment to survey the 
Forouz B natural gas field--a vast natural resource controlled by Iran, 
a fierce American adversary. It goes without saying; these oil and gas 
surveys pave the way for Iran, through companies like

[[Page 52318]]

MAPNA, to develop natural resources and in turn help fund antagonistic 
entities (including terrorists) intent on harming the U.S., her allies, 
and interests. Thus, this is not a case where mere equipment changed 
hands to Iran or Iranian entities, nor simply equipment that might be 
used in antagonistic ways. This is a case where American equipment was 
used to develop an enemies' money making abilities through surveying a 
natural gas field. The monetary penalty should reflect that specific 
conduct and long lasting effects which could span decades. Again, 
Respondents did not simply procure equipment, they secured a charter 
party and helped effect the survey equipment's use to Iran's benefit.
    Unlike most of the cases cited in the Remand, In the Matter of 
Adbulamir Mahdi, is factually akin to this matter--it involved a 
conspiracy to export ``oil field equipment'' from the United States to 
Iraq and Iran. 68 FR 57,406 (Oct. 3, 2003).\21\ There, BIS imposed a 
penalty denying respondent's export privileges for 20 years, but did 
not impose a monetary sanction.
---------------------------------------------------------------------------

    \21\ The undersigned observes the decision uses both ``oil filed 
equipment'' and ``oil field equipment'' and believes the former to 
be a mere typo.
---------------------------------------------------------------------------

    At first blush, Mahdi seems to support the argument that a 20-year 
denial order without monetary penalty would be fitting in this case; 
the facts are similar, at least to the extent the oil field equipment 
could be analogized to the survey equipment here and both being used by 
notorious U.S. enemies to develop lucrative natural resources. On the 
other hand, a closer look guides the undersigned in the opposite 
direction. A review of Mahdi shows the respondent did not simply 
receive a 20-year denial order, he also spent 51 months incarcerated in 
an American prison.
    Obviously, the fairest way to make Respondents' penalty in this 
case proportional to Mahdi would be to incarcerate Respondent-Innhaug 
for 51 months, perhaps more since the Remand order only issued a 15 
year denial order. However, as all parties know, this is a civil 
proceeding, and the power to incarcerate EAR violators is beyond the 
undersigned's authority. But the question remains: How then should the 
undersigned consider Mahdi's precedential value in a proportionality 
analysis here? The answer lies in a careful perusal of 15 CFR 
Supplemental 1 part 766 (2012), which makes specific accounting for 
related criminal convictions by providing:
    Where an administrative enforcement matter under the EAR involves 
conduct

giving rise to related criminal or civil charges, BIS may take into 
account the related violations, and their resolution, in determining 
what administrative sanctions are appropriate under part 766. . . . 
In appropriate cases where a party is receiving substantial criminal 
penalties, BIS may find that sufficient deterrence may be achieved 
by lesser administrative sanctions than would be appropriate in the 
absence of criminal penalties. Conversely, BIS might seek greater 
administrative sanctions in an otherwise similar case where a party 
is not subjected to criminal penalties.

    Applying this provision here, the undersigned notes the record 
concerning Respondents is devoid of any facts relating to criminal 
incarceration and/or sentencing. Accordingly, to make Respondents' 
sanction proportional to Mahdi, the undersigned is inclined to again 
recommend a hefty monetary penalty equivalent to approximately 51 
months' incarceration.
    Having reviewed the decisions in the Remand, the undersigned turns 
to the arguments advanced by BIS.

BIS' Arguments

    In its post-Remand briefing, BIS argues, ``Few, if any, 
administrative enforcement cases involve the combined degree of 
willfulness and the breadth of other aggravating factors . . . .'' BIS 
Post-Remand Brief at 10. In other words, BIS argues this case is 
uniquely egregious given its involvement with: Iran; the sensitivity of 
the survey equipment; the awareness of senior level management; the 
sensitivity of the items, both of which are controlled for national 
security and anti-terrorism reasons; and the blatant false statements 
made by Respondent-Innhaug in an attempt to cover up Respondents' 
violations. Id. BIS asserts these reasons, as compared to relevant 
precedent, merit a high-end penalty.
    In support of its argument, BIS first cites In the Matter of Yantai 
Jereh Oilfield Services Group Co., LTD, a case resulting in the 
respondents paying over 3 million dollars prior to litigation, which 
related to ``much less sensitive oil and gas field equipment. . . .'' 
\22\ Id. A close review of that settlement shows the respondent there 
agreed to do more than just pay a fine, but in addition agreed to: 
Terminate three individuals responsible for the violations; hire and/or 
engage outside counsel and personnel; hold training sessions; and 
implement various training and compliance procedures to prevent future 
violations. Accordingly, a closer review of Yantai Jereh shows it 
stands in stark contrast with the case at hand. There, the respondents 
expressed a willingness to come into compliance with their exporting 
obligations, and exhibited a cooperative attitude in preventing future 
violations. Ultimately, this cooperative attitude combined with the 
willingness to pay over 3 million in penalties renders Yantai Jereh a 
perfect decision when considering an appropriate settlement, but is 
difficult to apply to the case sub judice, where Respondents self-
reported a violation to BIS, lied in the self-reporting document, and 
then proceeded to litigation.
---------------------------------------------------------------------------

    \22\ https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20181212_jereh_settlement.pdf.
---------------------------------------------------------------------------

    For similar reasons, In the Matters of National Oilwell Varco and 
Dreco Energy Services Ltd., (NOV) is also of limited value. That case 
also involved oil and gas equipment and reflects a settlement where the 
respondents agreed to pay over 2.5 million dollars in penalties.\23\ 
BIS notes that the items at issue there were valued at 2.3 million 
dollars, and respondents agreed to joint and several liability for 2.5 
million.
---------------------------------------------------------------------------

    \23\ https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20161114_varco.pdf.
---------------------------------------------------------------------------

    Unfortunately, NOV provides little precedential guidance. First, 
that settlement agreement appears to be somewhat confusing. The 
beginning of the document notes the parties agreed to settle the 
potential civil liability for approximately 5.9 million dollars. In the 
body of the settlement description, BIS notes the statutory maximum 
penalty was approximately 37 million dollars and the ``base penalty 
amount'' was approximately 8.5 million. But at the end of that same 
document, the description reads as follows: ``NOV's $5,976,028 
settlement with OFAC will be deemed satisfied by its payment of 
$25,000,000 as specifically set forth in the NPA arising out of the 
same pattern of conduct.'' Ultimately, the undersigned can make nec 
caput nec pedes on how BIS reached its calculations and is unable to 
draw instruction from that case.
    BIS also cites to In the Matter of Weatherford International Ltd. 
et al., (``Weatherford'' Settlement Order dated December 23, 2013). 
There, respondents agreed to pay BIS a 50 million dollar penalty to 
resolve allegations of knowingly exporting EAR99 oil field equipment to 
Iran, Syria, and Cuba and the unlicensed reexport of items controlled 
for Non-Proliferation purposes to Venezuela and Mexico. There, the 
value of the equipment was also approximately 50 million dollars. 
Again, however, there was a collateral action where Weatherford also 
received a 48 million dollar penalty pursuant to

[[Page 52319]]

a deferred prosecution, with an additional 2 million in criminal fines. 
Curiously, the total amount the respondents ended up paying was 
approximately double the amount of the transaction involved in the 
violations. It bears repeating, BIS may consider collateral criminal 
prosecutions and adjust civil penalties where appropriate and in the 
absence of those proceedings may seek higher sanctions. Accordingly, 
this case could be read as supporting a similar sanction here, i.e., 
double the amount of the transaction involved.
    In this same line of cases, BIS also cites to Schlumberger Oilfield 
Holdings, where a defendant pled guilty to a conspiracy to violate the 
International Emergency Economic Powers Act (IEEPA) for its willful 
provision of oilfield services and equipment to customers in Iran and 
Sudan.\24\ Ultimately, the defendant agreed to a 77.5 million criminal 
forfeiture and a 155 million criminal fine--twice the value of the 
underlying violation. Persuasively, BIS notes the then-Under 
Secretary's unrelenting commitment to aggressively prosecute violations 
involving embargoed destinations. BIS Post-Remand Brief at 12.\25\ 
However, the undersigned does note the conduct in that case spanned 
approximately 6 years and involved sustaining Iranian and Sudanese 
oilfield operations. To this end, Schlumberger could be characterized 
as one of the most egregious violations ever recorded in the export 
industry, even more so than the incident in this case.
---------------------------------------------------------------------------

    \24\ https://www.justice.gov/opa/pr/schlumberger-oilfield-holdings-ltd-agrees-plead-guilty-and-pay-over-2327-million-violating-us.
    \25\ BIS cites to other decisions too factually dissimilar to 
the case at hand, and therefore, the undersigned does not address 
the proportional value those decisions have here.
---------------------------------------------------------------------------

    Finally, BIS argues many of the decisions cited in the Remand's 
proportionality discussion address pre-2008 violations. In BIS' view, 
those cases are of little value because they were decided under a 
substantially different penalty regime. BIS argues that when Congress 
enacted the IEEPA Enhancement Act in 2007, it did so to intensify the 
sanctions imposed on export violators by increasing the civil penalty 
cap from $50,000 per violation to $250,000, or twice the amount of the 
transaction at issue, whichever is greater. In BIS' view, cases 
prosecuted before these changes usually did not include monetary 
sanctions because the deterrent effect of the lower monetary amounts 
were not as effective as other sanctions.
    The undersigned agrees the IEEPA Enhancement Act demonstrates 
congressional intent to impose higher penalties in export violation 
cases and the like. Thus, I agree that cases before 2008 do not express 
Congress' most recent penalty preferences and are of limited value when 
determining an appropriate monetary sanction in this case.

Respondents' Proportionality Argument

    Like the Remand and BIS' brief, Respondents cite to several BIS 
decisions in support of its position that the recommended sanction is 
disproportionate with other BIS decisions. Respondents first argues 
Aiman Ammar, et al., 80 FR 57,572 (September 24, 2015) where BIS 
assessed the respondent with a 7 million dollar penalty and denial 
orders of 4 to 7 years.\26\ A review of Aiman Ammar shows that case 
involved the illegal reexport of computer equipment and software 
designed for use in monitoring and controlling web traffic and of other 
associated equipment. As noted above, the undersigned can draw little 
guidance from these types of violations because they are so factually 
different from the violations at issue. While the illicit sale of the 
equipment in Aiman Ammar certainly could be used against American 
interests, the undersigned finds that conduct pales in comparison to 
Respondents' conduct here, surveying a rich natural resource which 
could fund Iranian interests, and possible terrorist activity, in 
untold amounts. The cases simply do not compare and any sanction levied 
against Aiman Ammar provides no guidance here.
---------------------------------------------------------------------------

    \26\ Respondents also cite to In the Matters of Nordic Maritime, 
et al., Partial Remand and Final Denial Order (Mar. 18, 2020) and 
United States v. Bajakajian, 524 U.S. 321, 328 (1998). The Under 
Secretary's Remand is discussed toughly above, and I need not 
revisit it here. The undersigned does not address Bajakajian given 
Respondent relies on it to make a constitutional argument beyond the 
scope of the briefing order.
---------------------------------------------------------------------------

    Respondents next cite to In the Matter of Yavuz Cizmeci, 80 FR 
18,194 (April 3, 2015). Having already distinguished that case above, 
the undersigned need not revisit that analysis here.
    Respondents next cite United Medical Instruments, Inc. which 
involved exports of medical devices to Iran. In that case, BIS settled 
with the export violator, suspended and waived a $500,000 civil penalty 
with a 2-year denial period. However, BIS suspended both the monetary 
penalty and the 2-year probationary period contingent upon the 
respondent complying with the settlement agreement.\27\ The undersigned 
draws little guidance from this case. Illicitly exporting/reexporting 
medical equipment is a far cry from assisting Iran in developing its 
natural resources, which generate revenue. Moreover, this case advanced 
to litigation and is not being disposed of by a settlement agreement. 
Accordingly, Respondents' argument that this case should somehow guide 
the undersigned to a lesser sanction here is unpersuasive.
---------------------------------------------------------------------------

    \27\ https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2013/887-e2346/file.
---------------------------------------------------------------------------

    For similar reasons, Respondents' reliance on Chemical Partners 
Europe S.A., where BIS entered into a settlement for the illegal export 
of ``coatings, pigments and paints'' is unpersuasive.\28\ Likewise, 
Respondents' citation to Millitech, Inc., where BIS entered into a 
settlement for the illegal export of items to Russia and China are 
simply too dissimilar to provide guidance here.\29\ Those cases cannot 
compare to what Respondents did--help Iran develop access to its oil 
and gas reservoirs.
---------------------------------------------------------------------------

    \28\ https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2016/1049-e2452/file.
    \29\ https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2017/1135-e2520/file.
---------------------------------------------------------------------------

Conclusion

    Upon review of the file, the Remand's affirmance of the aggravating 
and mitigating factors, and after comparing this case to prior BIS 
decisions, the undersigned, without reservation, again recommends the 
Under Secretary impose a lofty monetary penalty. Respondents' conduct 
in this case cannot be understated. At the risk of replowing the same 
ground, the undersigned again reiterates that Respondents' export 
violations could foster efforts to harm America, her citizens and 
allies. As poignantly described by the late Honorable Peter Fitzpatrick 
addressing similar conduct, American officials need to always be 
mindful that:

    There is an on-going war against terrorism. The events of 
September 11, 2001 reveal that international terrorism is a real 
threat to the national security of the United States. To limit and 
curtail the financial support of terrorism the United States 
established an embargo against Iran. The Respondents circumvention 
of the embargo by exporting goods destined for Iran . . . cannot be 
tolerated. The facts show that in order to achieve their objective 
Respondents made false statements, or caused false statements to be 
made.

Abdulamir Mahdi, 2003 WL 22257992 (emphasis added).


[[Page 52320]]


    Judge Fitzpatrick's observations ring ever true in this case. 
Considering Respondents' actions, which no doubt promoted Iran's 
financial interests, the undersigned, without hesitation, recommends 
the highest penalty permitted by Congress. If the Under Secretary 
adopts this decision, there will be absolutely no doubt in this export 
industry, where you break American export law by illicitly helping Iran 
develop its natural resources, you help fund terrorism and you will pay 
the gravest of prices. Accordingly, the undersigned recommends that the 
Acting Under Secretary of Commerce impose a sanction in this case at 
the highest possible amount, i.e., two times the value of the 
transaction at issue, i.e., $31,425,760.00.
    So Ordered.
    [GRAPHIC] [TIFF OMITTED] TN25AU20.002
    
Certificate of Service

    I hereby certify that I have served the foregoing document as 
indicated below to the following parties:

Cordell A. Hull, Acting Under Secretary of Commerce for Industry and 
Security, Bureau of Industry and Security, U.S. Department of Commerce, 
Room 3896, 1401 Constitution Ave. NW, Washington, DC 20230, Sent by 
Federal Express.
EAR Administrative Enforcement Proceedings, U.S. Coast Guard, ALJ 
Docketing Center, Attn: Hearing Docket Clerk, 40 S Gay Street, Room 
412, Baltimore, MD 21202-4022, Sent electronically: 
[email protected] & U.S. First-Class Mail.
Gregory Michelsen, Esq., Zachary Klein, Esq., Attorneys for Bureau of 
Industry and Security, Office of Chief Counsel for Industry and 
Security, U.S. Department of Commerce, 14th Street & Constitution 
Avenue NW, Room H-3839, Washington, DC 20230, Sent electronically: 
[email protected]; [email protected] & U.S. First-Class Mail.
Douglas N. Jacobson, Esq., JACOBSON BURTON KELLEY PLLC, 1725 I Street 
NW, Suite 300, Washington, DC 20006, Sent electronically: 
[email protected] & U.S. First-Class Mail.
[GRAPHIC] [TIFF OMITTED] TN25AU20.003

[FR Doc. 2020-18615 Filed 8-24-20; 8:45 am]
BILLING CODE 3510-DT-P