Rule2023-00342
Assistance to Foreign Atomic Energy Activities
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 12, 2023
Effective
February 13, 2023
Issuing agencies
Energy Department
Abstract
DOE issues procedures for the imposition of civil penalties for violations of the provisions of the Atomic Energy Act of 1954 (AEA) that restrict participation by U.S. persons in the development or production of special nuclear material outside of the United States. This final rule provides procedures to implement a statutory amendment contained within the John S. McCain National Defense Authorization Act for Fiscal Year 2019.
Full Text
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[Federal Register Volume 88, Number 8 (Thursday, January 12, 2023)]
[Rules and Regulations]
[Pages 1973-1981]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-00342]
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Rules and Regulations
Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 88, No. 8 / Thursday, January 12, 2023 /
Rules and Regulations
[[Page 1973]]
DEPARTMENT OF ENERGY
10 CFR Part 810
RIN 1994-AA05
Assistance to Foreign Atomic Energy Activities
AGENCY: National Nuclear Security Administration (NNSA), Department of
Energy (DOE).
ACTION: Final rule.
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SUMMARY: DOE issues procedures for the imposition of civil penalties
for violations of the provisions of the Atomic Energy Act of 1954 (AEA)
that restrict participation by U.S. persons in the development or
production of special nuclear material outside of the United States.
This final rule provides procedures to implement a statutory amendment
contained within the John S. McCain National Defense Authorization Act
for Fiscal Year 2019.
DATES: This rule is effective February 13, 2023.
FOR FURTHER INFORMATION CONTACT: Ms. Katie Strangis, Senior Policy
Advisor, Office of Nonproliferation and Arms Control (NPAC), National
Nuclear Security Administration, Department of Energy, 1000
Independence Avenue SW, Washington, DC 20585, telephone (202) 586-8623
or email: <a href="/cdn-cgi/l/email-protection#5f143e2b363a710c2b2d3e3138362c1f31312c3e713b303a71383029"><span class="__cf_email__" data-cfemail="c48fa5b0ada1ea97b0b6a5aaa3adb784aaaab7a5eaa0aba1eaa3abb2">[email protected]</span></a>; Mr. Thomas Reilly, Office of the
General Counsel, GC-54, Department of Energy, 1000 Independence Avenue
SW, Washington, DC 20585, telephone (202) 586-3417; or Mr. Zachary
Stern, Office of the General Counsel, National Nuclear Security
Administration, Department of Energy, 1000 Independence Avenue SW,
Washington, DC 20585, telephone (202) 586-8627.
SUPPLEMENTARY INFORMATION:
I. Background
II. Description of Changes in the Final Rule
III. Discussion of Public Comments and the Final Rule
A. Comments Received
B. Communications Between DOE and Alleged Violators
C. Penalty Amounts and Limitations
D. Hearings
E. Other Comments
IV. Regulatory Review
I. Background
DOE's 10 CFR part 810 regulation (part 810) implements section 57
b.(2) of the AEA (42 U.S.C. 2077), as amended. Part 810 controls the
export of unclassified nuclear technology and assistance. It enables
peaceful nuclear trade by helping to ensure that nuclear technologies
exported from the United States will not be used for non-peaceful
purposes. Part 810 controls the export of nuclear technology and
assistance by identifying some activities as ``generally authorized''
by the Secretary of Energy (Secretary), thereby requiring no further
authorization under part 810 by DOE prior to engaging in such
activities. For activities and/or destinations that are not generally
authorized, part 810 requires a ``specific authorization'' by the
Secretary. Part 810 also details a process to apply for specific
authorization from the Secretary and specifies the reporting
requirements for generally and specifically authorized activities
subject to part 810. Violations of section 57 b. of the AEA and part
810 may result in revocation, suspension, or modification of
authorizations, pursuant to 10 CFR 810.10, as well as criminal
penalties, pursuant to 10 CFR 810.15.
Section 3116(b) of the John S. McCain National Defense
Authorization Act for Fiscal Year 2019 (NDAA), Public Law 115-232,
amended section 234 a. of the AEA (42 U.S.C. 2282(a)) to clarify DOE's
authority to impose civil penalties for violations of section 57 b. of
the AEA, as implemented under part 810. On October 3, 2019, DOE
published a notice of proposed rulemaking (NOPR) to update part 810 to
include new procedures to implement this authority. (84 FR 52819) On
November 4, 2019, DOE published a notice extending the deadline for
public comments from November 4, 2019 to December 4, 2019. (84 FR
59315). DOE is issuing the final rule.
II. Description of Changes in the Final Rule
In response to comments from the public, the final rule reflects a
revision of Sec. 810.15 (c)(12) to clarify the burdens of proof that
apply in hearings conducted pursuant to Sec. 810.15(c)(6). The NOPR
stated in Sec. 810.15(c)(12) that ``[t]he person requesting the
hearing has the burden of going forward and of demonstrating that the
decision to impose the civil penalty is not supported by substantial
evidence.'' This section is revised and clarified in the final rule to
state that ``DOE shall have the burden of proving the violation(s) as
set forth in the final notice of violation by a preponderance of the
evidence. The person to whom the notice of violation is addressed shall
have the burden of proving any affirmative defense by a preponderance
of the evidence. The amount of the penalty associated with any
violation which is upheld shall be adopted by the Administrative Judge
unless not supported by the facts.''
In response to public comments concerning the approach to adjusting
civil monetary penalties for inflation, DOE also revised Sec.
810.15(c) to update the maximum penalty amount from the amount that
would have been applicable when the NOPR was published, i.e., $102,522,
to the amount applicable currently, i.e., $112,131. This maximum
penalty amount reflects the current civil penalty amount adjusted from
the original statutory penalty as required to be adjusted annually by
the Federal Civil Penalties Inflation Adjustment Act of 1990, Public
Law 101-410, as amended by the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015 (2015 Act), Public Law 114-74,
129 Stat. 599, codified at 28 U.S.C. 2461 note. Under the 2015 Act, DOE
issues annual inflation adjustments to all of its civil monetary
penalties by rule published in the Federal Register. The final rule is
revised to clarify this point.
The final rule also makes a minor change to Sec. 810.15(c)(5) to
state that the Deputy Administrator for Defense Nuclear
Nonproliferation ``will'' issue a final notice of violation rather than
``may'', as was stated in the proposed rule.
The final rule contains no other changes to the NOPR published on
October 3, 2019.
III. Discussion of Public Comments and the Final Rule
A. Comments Received
On October 3, 2019, DOE published the NOPR. On November 4, 2019,
DOE
[[Page 1974]]
published a notice extending the deadline for public comments from
November 4, 2019 to December 4, 2019. DOE received 16 comments from 16
entities in response to the October 3, 2019 NOPR, including one comment
that was postmarked after the deadline and was not considered. DOE
additionally received one request for extension from the Nuclear Energy
Institute (NEI), which was granted.
NEI provided a comprehensive set of comments, and these comments
were endorsed by eight other commenters: Exelon Generation Company
(Exelon), Duke Energy Corporation (Duke), STARS Alliance (STARS), the
Ad Hoc Suppliers Group (AHSG), the Ad Hoc Utility Group (AHUG),
Precision Custom Components, LLC (PCC), Holtec International
Corporation (Holtec), and BWX Technologies, Inc. (BWXT).
The following six entities also provided timely comments before the
deadline: Florida Power and Light Company (``FPL,'' on behalf of itself
and on behalf of its affiliates, NextEra Energy Seabrook, LLC, NextEra
Energy Duane Arnold, LLC, and NextEra Energy Point Beach, LLC); Morgan,
Lewis & Bockius LLP (Morgan Lewis); Miles & Stockbridge P.C.; a group
of students from Rutgers Law School; Aaron Ahern; and one anonymous
commenter. One comment, postmarked after the deadline, was not
considered in the rulemaking and is not otherwise referenced in the
Discussion of Public Comments.
The 15 comments considered fell into one of four categories:
communications between DOE and alleged violators, penalty amounts and
limitations, hearings, and other comments.
B. Communications Between DOE and Alleged Violators
1. Clarifications on Voluntary Self-Disclosure (VSD)
NEI, BWXT, Duke, Exelon, Holtec, Miles & Stockbridge, PCC, STARS,
and the Rutgers law students requested clarifications from DOE on
voluntary self-disclosure procedures and policy, including the specific
types of information that should be included in a VSD and the
mitigating impact of VSDs on civil penalties. Commenters stated that
this type of information would help incentivize self-disclosures,
improving the effectiveness and efficiency of the part 810 enforcement
program.
DOE has provided information related to VSDs in guidance documents.
DOE guidance regarding self-disclosures of violations of part 810 is
set forth on the part 810 website (<a href="https://www.energy.gov/nnsa/10-cfr-part-810">https://www.energy.gov/nnsa/10-cfr-part-810</a>), under ``Part 810 Frequently Asked Questions,'' and was
referenced in the NOPR. Persons with questions on VSDs can also submit
a request for advice or a request for determination to DOE pursuant to
Sec. 810.5. Based on the comments received, DOE will consider issuing
additional guidance on self-disclosures, but DOE has determined that
these comments do not require changes to the rule itself.
2. Alternative Dispute Resolution, Pre-Decisional Enforcement
Conferences, and Settlement Agreements
AHUG, NEI, Exelon, STARS, AHSG, PCC, Holtec, BWXT, Duke, and Morgan
Lewis expressed concern that the proposed civil penalties procedures
did not provide for alternative dispute resolution (ADR), pre-
decisional enforcement conferences (PEC), or settlement outside the
formal procedures set forth in Sec. 810.15(c). Commenters stated that
ADR and PECs would offer collaborative resolution for violations of
part 810, reducing the need for the civil penalties process which may
be expensive, time-consuming, and contentious. Commenters also
suggested that DOE recognize the possibility of entering into a
settlement agreement prior to or during formal adjudication.
DOE agrees that ADR and PEC are potentially useful tools in
compliance and enforcement. The final rule describes the process for
DOE to impose civil penalties where warranted, but the rule would not
prevent DOE from making use of PEC in advance of issuing a notice of
violation. Similarly, the rule would not prevent DOE from making use of
ADR instead of issuing a notice of violation, nor would it prevent DOE
from reaching settlement agreements with an alleged violator at any
point in the enforcement process. Accordingly, DOE will consider making
use of ADR, PEC, and settlement agreements where appropriate in
implementing this rule, but the comments do not require changes to the
text of the rule itself.
3. ``No Action'', ``Warning,'' ``Zero Penalty'', or ``Closeout''
Notices.
AHUG, NEI, Exelon, STARS, AHSG, PCC, Holtec, BWXT, and Morgan Lewis
asked that DOE state explicitly that possible outcomes of part 810
enforcement actions include not just civil penalties, but also ``no
action,'' ``warning,'' ``zero penalty,'' or ``closeout'' notices. The
commenters observed that the use of such notices would incentivize
companies to self-report violations and would provide DOE with the
flexibility to address violations without penalties where warranted.
DOE agrees that such notices are potentially useful tools in
compliance and enforcement. The final rule describes the process for
DOE to impose civil penalties where warranted and does not prevent DOE
from issuing ``no action,'' ``warning,'' ``zero penalty,'' or
``closeout'' notices instead of a notice of violation, where
appropriate. Accordingly, DOE will consider making use of such notices
where appropriate in implementing this rule, but the comments do not
require changes to the text of the rule itself.
4. Explanation of the Amount of a Proposed Civil Penalty
NEI commented that Sec. 810.15(c)(5) should be amended to include
a requirement that the Deputy Administrator for Defense Nuclear
Nonproliferation specify in a final notice of violation how the factors
enumerated at Sec. 810.15(c)(5)(i) through (viii) support the amount
of the civil penalty. The commenter stated that this change is
necessary for the alleged violator to have a meaningful opportunity to
appeal the final notice.
The regulation has been updated to clarify that each notice of
violation and final notice of violation will include an explanation of
how the factors at Sec. 810.15(c)(5) were considered. The person to
whom the notice of violation is addressed may contest any factual
allegations underlying that analysis at a hearing held pursuant to
Sec. 810.15(c)(6). However, the hearing is to contest the allegations
in the final notice of violation and does not extend to the
discretionary determination regarding the amount of the civil penalty
based on those allegations. With regard to that discretionary
determination, application of the factors in Sec. 810.15(c)(5)
involves the exercise of policy-informed judgment, which is the
province of DOE officials, not of the Administrative Judge. Thus, if
the Administrative Judge concludes that a violation has occurred, the
Administrative Judge will not amend the applicable penalty for that
violation unless it is not supported by the facts, in which event the
Administrative Judge will include such information in the
Administrative Judge's recommended decision to the Under Secretary.
C. Penalty Amounts and Limitations
1. Clarification on ``Continuing Violations''
AHUG, NEI, Exelon, Duke, FPL/NextEra, STARS, AHSG, PCC, Holtec,
BWXT, and Morgan Lewis requested
[[Page 1975]]
clarification on what constitutes a ``continuing violation.'' For
example, NEI asked whether an unauthorized export of Part 810-
controlled information through a single email to a foreign entity would
constitute a single violation, or a continuing violation for each day
that the foreign entity subsequently held or processed the data. Some
commenters requested revisions to the rule in this regard, while other
commenters merely requested clarification from DOE on the issue. For
example, FPL/Next Era suggested ``that NNSA publish guidance to outline
in advance the factors that will govern its decision making'' with
regards to the issue of continuing violations.
In the NOPR, Sec. 810.15(c) stated that, ``[i]f any violation is a
continuing one, each day from the point at which the violating activity
began to the point at which the violating activity was suspended shall
constitute a separate violation for the purpose of computing the
applicable civil penalty.'' In this case, ``violating activity'' refers
to an action by a person that violates section 57 b. of the AEA. In the
example cited in the comment from NEI the person committed a single
violation on the day that they sent the email, and the maximum penalty
in this case would be $100,000, as adjusted for inflation. By contrast,
a U.S. company that granted a foreign national access for five
successive days to a facility wherein the foreign national had access
to part 810-controlled information without the required specific
authorization from DOE would have committed a continuing violation.
DOE acknowledges that examples of this kind provide clarity to the
regulated community as to how DOE intends to implement this final rule.
However, DOE has determined that it would not be appropriate to modify
the text of the rule itself to include such examples. Instead, DOE has
provided clarifying guidance through this preamble statement, and DOE
will consider providing additional information in a future guidance
document describing the agency's implementation of this rule.
Some commenters also recommended that, when continuing violations
do occur, DOE should only apply its authority to impose a separate
penalty for each day of the violation for especially severe violations,
that the application of daily penalties should be otherwise limited to
certain circumstances, or that DOE should refrain from imposing daily
penalties altogether.
DOE notes its authority under section 234 of the AEA to impose
civil penalties for each day of a continuing violation is not limited
to violations of any particular type or severity. However, when
continuing violations are identified, DOE will not mechanistically
apply daily penalties, but rather will use the factors described in
Sec. 810.15(c)(5) to determine an appropriate penalty that may be
equal to or less than the maximum.
2. Detailed Determination Criteria for Penalty Levels
AHUG, AHSG, NEI, FPL/NextEra, Morgan Lewis, and STARS commented
that DOE should provide more detailed criteria for determining the
amount of a monetary civil penalty, including mitigating and
aggravating factors. Some commenters cited specific factors that should
have a mitigating impact on penalties, such as corrective actions and
self-disclosure. AHUG and AHSG also requested that the rule be revised
to state that DOE will not exercise its civil penalty authority until
the agency has provided more guidance on penalty determination
criteria.
DOE recognizes that effective regulation sometimes involves
issuance of guidance documents that explain how the agency will
implement the rule. In this case, some commenters requested that more
detailed penalty determination criteria be added to the rule itself,
while other commenters requested that the information be provided in
separate guidance.
After due consideration of these comments, DOE has decided not to
add more detailed penalty calculation criteria to the rule itself,
beyond the eight factors already listed at Sec. 810.15(c)(5)(i)
through (viii). Adopting a mechanistic formula for calculating civil
penalties within the rule itself would make it extremely difficult for
DOE to ensure that penalty amounts are appropriate in each case and
could result in excessive penalty amounts in many cases.
In response to these comments, DOE may develop and issue subsequent
guidance that provides additional detail on how DOE will implement
Sec. 810.15(c)(5)(i) through (viii) for the calculation of civil
penalties, based on due consideration of the commenters' suggestions
and experience in implementing the rule. However, given the level of
detail that is already included in this rule, DOE will not delay the
implementation of its legal and regulatory enforcement authority
pending completion of the guidance document that the commenters
requested.
3. Limiting Penalties to Certain Types of Violations
AHUG, AHSG, Duke, and FPL/NextEra commented that civil penalties
should only be applied in the case of willful violations, or that other
types of violations should be exempted from civil penalties, such as
violations that occur within a certain ``grace period'' after the
effective date of this rule, violations related to the unauthorized
transfers of technology related to light-water nuclear reactors,
actions committed by individual employees of a company in violation of
policies and procedures, or violations that do not constitute a ``clear
unauthorized transfer of technology.''
Willful violations of the statute are subject to criminal
enforcement under section 222 of the AEA. Pursuant to section 234 of
the AEA, any person who violates any provision of section 57 of the AEA
shall be subject to a civil penalty. This provision of law establishes
strict liability and does not require that violations be willful. DOE
cannot change the statutory standard of culpability by rule exempting
inadvertent violators, nor would the Department seek to do so, given
that a negligent violation of part 810 can be as damaging to national
security as a willful violation. Similarly, DOE cannot categorically
exempt any other category of violation from such penalties. As such,
DOE will not revise the rule in response to this comment. However,
pursuant to Sec. 810.15(c)(5), DOE will consider the degree of
culpability and the gravity of the violation, among other factors, in
determining the amount of the civil penalty to be imposed.
4. Statute of Limitations for Part 810 Civil Penalties
AHUG and AHSG recommended that DOE's enforcement policy or
procedures specify that there is a 5-year statute of limitations for
violations subject to civil penalties, pursuant to 28 U.S.C. 2462. DOE
agrees that its authority to impose civil penalties is subject to this
limitation and will consider including this information in a subsequent
guidance document. However, this comment does not require changes to
the text of the rule, because the statute of limitations applies.
5. Penalties for Violations Occurring Prior to Adoption of the Rule
NEI, STARS, Holtec, BWXT, PCC, and Morgan Lewis commented that DOE
should only impose civil penalties for violations that occur after the
final rule enters into force. The commenters observed that the
imposition of civil
[[Page 1976]]
penalties retroactively is not authorized under the AEA, and in some
cases they recommended that the text of the rule be changed to specify
that it does not apply to violations that preceded the rule's entry
into force.
As required by existing law, DOE will only impose civil penalties
for violations that occur after this final rule enters into force. In
the event that DOE learns of a continuing violation that began prior to
this rule's effective date but continued thereafter, DOE may impose a
civil penalty only for the period of the continuing violation that
followed the effective date of this rule. Given that DOE does not have
the legal authority to impose retroactive penalties, DOE has determined
that no changes are required to the text of the rule in this regard.
6. Inflation Adjustment for the Maximum Penalty
NEI, FPL/NextEra, Holtec, STARS, PCC, BWXT, Morgan Lewis, and Miles
& Stockbridge expressed concern that DOE would calculate inflation
adjustments so as to make the maximum penalty $265,815, as opposed to
$102,522.
The NOPR's preamble discussed alternate approaches for calculating
the maximum civil penalty. However, DOE does not intend to adopt this
alternate calculation method or to revise the maximum penalty listed in
Sec. 810.15(c), except to make ongoing, incremental adjustments for
inflation on an annual basis in accordance with OMB guidance.
DOE updated Sec. 810.15(c) to reflect the maximum civil penalty
amount of $112,131 (See 87 FR 1061). This amount was calculated using a
formula established in the Federal Civil Penalties Inflation Adjustment
Act Improvements Act of 2015 by which all Federal agencies undertake an
annual inflation adjustment to existing civil monetary penalties. DOE
will undertake future annual adjustments to this maximum penalty amount
under that 2015 Act. All future annual adjustments will be made by rule
and published in the Federal Register. DOE also updated Sec. 810.15(c)
to clarify this point.
7. Effective Date of Rule
Duke, Holtec, and Exelon commented that this rule should not become
effective until six months after publication to allow time for
companies to adjust to and understand the rule. DOE has reviewed this
comment and notes that this final rule establishes procedures for
imposing monetary civil penalties for violations of Part 810, but the
rule does not alter persons' long-standing obligation to comply with
the regulation itself. As such, DOE has determined that it is
reasonable and appropriate for this rule to become effective 30 days
after its publication.
D. Hearings
1. Burden of Proof
NEI, AHUG, AHSG, Exelon, Duke, STARS, PCC, Holtec, BWXT, Morgan
Lewis, and Miles & Stockbridge commented that, with regards to hearings
conducted pursuant to Sec. 810.15(c)(6), the text of the proposed rule
did not expressly place the burden of proof on DOE, the proponent of
the civil penalty, as required by the Administrative Procedure Act
(APA).
The NOPR stated in Sec. 810.15(c)(12) that ``[t]he person
requesting the hearing has the burden of going forward and of
demonstrating that the decision to impose the civil penalty is not
supported by substantial evidence.'' In response to the comments
received, DOE has revised this section in the final rule to state the
following: ``DOE shall have the burden of proving the violation(s) as
set forth in the final notice of violation by a preponderance of the
evidence. The person to whom the notice of violation is addressed shall
have the burden of proving any affirmative defense by a preponderance
of the evidence. The amount of the penalty associated with any
violation which is upheld shall be adopted by the Administrative Judge
unless not supported by the facts.'' This change addresses the concerns
raised by the commenters regarding burden of proof.
2. Role of the Under Secretary
NEI, Exelon, BWXT, STARS, PCC, and Holtec expressed concern that,
after a hearing has been conducted and the Administrative Judge has
forwarded their recommended decision to the Under Secretary, the Under
Secretary might impose a steeper monetary penalty than that imposed by
the Administrative Judge, find a violation when the Administrative
Judge did not, or otherwise impose a harsher punishment than the
Administrative Judge imposed. The text of the proposed rule at Sec.
810.15(c)(14) would expressly give the Under Secretary the power to
compromise, mitigate, or remit the recommended penalty of the
Administrative Judge, but does not give the Under Secretary the
authority to increase the penalty. Given that the text comports with
the comments, DOE has determined that no change to the text in the
final rule is required.
3. Appeal Sep Between the Recommended and Ultimate Decisions
Rutgers Law School students commented that the proposed rule should
be revised to create an additional appellate review step between the
Administrative Judge's decision and the final decision by the Under
Secretary. The commenters argue that a different DOE regulation
includes such an intermediate step, and that use of an intermediate
appellate step in the part 810 civil penalties process could decrease
the number of legal challenges to DOE penalty decisions and increase
DOE's chances of success in court when challenged. Additionally, AHUG
and AHSG commented that DOE should designate the Under Secretary to
hear appeals of the Administrative Judge's decision, which would
constitute an additional appeal step beyond the process described in
this rule.
DOE has reviewed the comments and determined that it has developed
a robust administrative process for adjudicating appeals of its civil
penalty determinations, notwithstanding the potential use of such
intermediate steps in any other DOE regulatory process. As such, DOE
has determined that an additional appellate step is not necessary in
this case, because the rule already includes two separate opportunities
for individuals to appeal or otherwise contest an alleged violation,
pursuant to Sec. 810.15(c)(2) and (6). The rule also includes a third
opportunity for penalties to be mitigated through the Under Secretary's
review of the Administrative Judge's decision under Sec.
810.15(c)(14). Accordingly, DOE has determined that no change to the
rule is required in this case.
4. Conducting Hearings Prior to the Imposition of Civil Penalties
AHUG and AHSG commented that DOE should provide the alleged
violator with a full administrative hearing before determining that a
civil penalty should be imposed. The commenters argue that such an
approach is required under the APA. These observations are closely
linked to the commenters' contention that the hearing process described
in Sec. 810.15(c)(12) would place the burden of proof on the alleged
violator, rather than DOE. As described above, in response to the
comments received from AHUG, AHSG, and others, DOE has revised Sec.
810.15(c)(12) in this final rule to clarify the issue of the burden of
proof.
In addition, DOE has concluded that, with the revision to Sec.
810.15(c)(12) described above, the hearing process in this rule is
fully consistent with the
[[Page 1977]]
requirements of the APA. The process described in this rule provides
all persons with the option to request a hearing, but also allows
alleged violators to address violations without a hearing by either
paying the proposed penalty or by contesting the proposed penalty in
writing. After careful consideration, the request from the commenters
that a hearing take place at the beginning of the civil penalty process
would unnecessarily limit the flexibility of both DOE and the alleged
violator, and would increase legal costs and burdens on both sides.
5. Confidentiality of Hearings
Morgan Lewis commented that DOE should maintain its procedures as
set forth in the NOPR for protecting classified information, and other
information protected from public disclosure by law or regulation,
during hearings. This final rule makes no changes to these provisions
and therefore comports with the comment.
E. Other Comments
1. Guidance on Authority To Impose Civil Penalties for Violations of
Part 810
Morgan Lewis commented that the National Defense Authorization Act
for Fiscal Year of 2016 directed DOE to issue guidance with respect to
the use of the clear and intended authority of the Secretary of Energy
under section 234 of the Atomic Energy Act of 1954 to impose civil
penalties, including fines. Morgan Lewis recommended that DOE issue
such guidance ``no later than concurrently with the final rule on civil
monetary penalties.'' DOE has reviewed the comment and determined that
no additional guidance is required at this time. Accordingly, DOE will
make no change to the text of the rule in response to this comment, and
the effective date of the rule will not be delayed.
2. Clarification on the Scope of the Part 810 Regulation
Morgan Lewis, NEI, FPL/NextEra, Duke, AHSG, STARS, and an anonymous
commenter stated that the scope of the part 810 regulation is ambiguous
and requested that DOE clarify the regulation. In some cases, the
commenters requested that DOE delay issuing a final rule on monetary
civil penalties until these clarifications have been made.
These comments relate to the existing scope of the part 810
regulation, as issued as a final rule on February 23, 2015, as opposed
to the NOPR at hand. Comments and suggestions outside the scope of this
rulemaking regarding other aspects of the part 810 program will not be
addressed here.
IV. Regulatory Review
A. Executive Order 12866
The final rule has been determined to not be a significant
regulatory action under Executive Order 12866, ``Regulatory Planning
and Review,'' 58 FR 51735 (October 4, 1993). Accordingly, this action
was not subject to review under that Executive Order by the Office of
Information and Regulatory Affairs (OIRA) of the Office of Management
and Budget (OMB).
B. National Environmental Policy Act
DOE has determined that the rule is covered under the Categorical
Exclusion found in DOE's National Environmental Policy Act regulations
at paragraph A5 of appendix A to subpart D, 10 CFR part 1021, which
applies to a rulemaking that amends an existing rule or regulation and
that does not change the environmental effect of the rule or regulation
being amended. Accordingly, neither an environmental assessment nor an
environmental impact statement is required.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published
procedures and policies on February 19, 2003, to ensure that the
potential impacts of its rules on small entities are properly
considered during the rulemaking process (68 FR 7990). DOE has made its
procedures and policies available on the Office of the General
Counsel's website: <a href="https://www.energy.gov/gc/office-general-counsel">https://www.energy.gov/gc/office-general-counsel</a>.
This rule would update 10 CFR 810.15 to include procedures for the
imposition of civil penalties. DOE has reviewed the changes under the
provisions of the Regulatory Flexibility Act and the procedures and
policies published on February 19, 2003. The changes do not expand the
scope of activities currently regulated under 10 CFR part 810.
DOE has conducted a review of the potential small businesses that
may be impacted by this rule. This review consisted of an analysis of
the number of businesses impacted generally in Fiscal Years 2016 and
2017, and a determination of which of those are considered ``small
businesses'' by the Small Business Administration. Small businesses
impacted by part 810 generally fall within two North American Industry
Classification System codes: engineering services (541330) and computer
systems designs services (541512). Often, their requests for
authorization include the transfer of computer codes or other similar
products. A total of 89 businesses and other entities submitted reports
and applications pursuant to the regulation during this time period.
DOE estimates that approximately 10% of those entities impacted by part
810 are small businesses. As such, of those 89 entities that submitted
reports and applications under part 810, approximately 9 are estimated
to be small businesses.
Small businesses exporting nuclear technology like all other
regulated entities, would be subject to civil penalties for violations
of part 810. Further, the requirements for small businesses exporting
nuclear technology would not substantively change because the proposed
revisions to this rule do not add new burdens or duties to small
businesses. The obligations of any person subject to the jurisdiction
of the United States who engages or participates directly or indirectly
in the production of special nuclear material outside the United States
have not changed in a manner that would provide any significant
economic impact on small businesses. Because the changes to this rule
would not alter the businesses' standards or processes for receiving
part 810 authorization, there would be no impact on these businesses'
ability to comply with part 810 in the same manner they have
previously.
On the basis of the foregoing, DOE certifies that the rule would
not have a significant economic impact on a substantial number of small
entities. Accordingly, DOE has not prepared a regulatory flexibility
analysis for this rulemaking. DOE's certification and supporting
statement of factual basis will be provided to the Chief Counsel for
Advocacy of the Small Business Administration pursuant to 5 U.S.C.
605(b).
D. Paperwork Reduction Act
The collection of information requirements have been approved under
OMB Control Number 1901-0263. The rule would provide procedures for
imposing civil penalties for a violation
[[Page 1978]]
of part 810. There would be no collection of information under the
rule.
E. Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and tribal governments, and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For regulatory actions likely to result in a rule that may cause the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year
(adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy (2
U.S.C. 1532(a),(b)). UMRA also requires a Federal agency to develop an
effective process to permit timely input by elected officers of State,
local, and tribal governments on a ``significant intergovernmental
mandate,'' and requires an agency plan for giving notice and
opportunity for timely input to potentially affected small governments
before establishing any requirements that might significantly or
uniquely affect them. On March 18, 1997, DOE published a statement of
policy on its process for intergovernmental consultation under UMRA. 62
FR 12820. (This policy is also available at <a href="https://energy.gov/gc/office-general-counsel">https://energy.gov/gc/office-general-counsel</a>.) DOE examined this rule according to UMRA and
its statement of policy and has determined that the rule contains
neither an intergovernmental mandate, nor a mandate that may result in
the expenditure by State, local, and tribal government, in the
aggregate, or by the private sector, of $100 million or more in any
year. Accordingly, no further assessment or analysis is required under
UMRA.
F. Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform'' 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b), Executive Order 12988
specifically requires that Federal agencies make every reasonable
effort to ensure that the regulation: (1) clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under guidelines issued by the Attorney
General. Section 3(c) of Executive Order 12988 requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met, or it
is unreasonable to meet one or more of them. DOE has completed the
required review and determined that to the extent permitted by law,
this rule meets the relevant standards of Executive Order 12988.
G. Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999)
imposes certain requirements on agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the States and carefully assess the
necessity for such actions. DOE has examined this rule and has
determined that it would not preempt State law and would not have a
substantial direct effect on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government. No further
action is required by Executive Order 13132.
H. Treasury and General Government Appropriations Act, 1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any proposed rule that may affect family
well-being. The rule would have no impact on the autonomy or integrity
of the family as an institution. Accordingly, DOE has concluded that it
is not necessary to prepare a Family Policymaking Assessment.
I. Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy, Supply, Distribution, or Use,'' 66 FR
28355 (May 22, 2001) requires Federal agencies to prepare and submit to
OMB a Statement of Energy Effects for any significant energy action. A
``significant energy action'' is defined as any action by an agency
that promulgated or is expected to lead to promulgation of a final
rule, and that: (1) is a significant regulatory action under Executive
Order 12866, or any successor order; and (2) is likely to have a
significant adverse effect on the supply, distribution, or use of
energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed statement of any adverse effects on
energy supply, distribution, or use should the proposal be implemented,
and of reasonable alternatives to the action and their expected
benefits on energy supply, distribution, and use. This regulatory
action would not have a significant adverse effect on the supply,
distribution, or use of energy and is therefore not a significant
regulatory action. Accordingly, DOE has not prepared a Statement of
Energy Effects.
J. Treasury and General Government Appropriations Act, 2001
The Treasury and General Government Appropriations Act, 2001 (44
U.S.C. 3516 note) provides for agencies to review most disseminations
of information to the public under guidelines established by each
agency pursuant to general guidelines issued by OMB. OMB's guidelines
were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines
were published at 67 FR 62446 (October 7, 2002). DOE has reviewed this
rule under the OMB and DOE guidelines and has concluded that it is
consistent with applicable policies in those guidelines.
K. Congressional Review
As required by 5 U.S.C. 801, DOE will submit to Congress a report
regarding the issuance of this final rule prior to the effective date
set forth at the outset of this rulemaking. The report will state that
it has been determined that the rule is not a ``major rule'' as defined
by 5 U.S.C. 801(2).
List of Subjects in 10 CFR Part 810
Foreign relations, Nuclear energy, Reporting and recordkeeping
requirements.
Signing Authority
This document of the Department of Energy was signed on December
23, 2022, by Jennifer Granholm, Secretary of Energy. That document with
the original signature and date is maintained by
[[Page 1979]]
DOE. For administrative purposes only, and in compliance with
requirements of the Office of the Federal Register, the undersigned DOE
Federal Register Liaison Officer has been authorized to sign and submit
the document in electronic format for publication, as an official
document of the Department of Energy. This administrative process in no
way alters the legal effect of this document upon publication in the
Federal Register.
Signed in Washington, DC, on January 6, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons set forth in the preamble, the Department of Energy
amends part 810 of chapter III, title 10 of the Code of Federal
Regulations as set forth below.
PART 810--ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES
0
1. The authority citation for part 810 is revised to read as follows:
Authority: Secs. 57, 127, 128, 129, 161, 222, 232, and 234 AEA,
as amended by the Nuclear Nonproliferation Act of 1978, Pub. L. 95-
242, 68 Stat. 932, 948, 950, 958, 92 Stat. 126, 136, 137, 138 (42
U.S.C. 2077, 2156, 2157, 2158, 2201, 2272, 2280, 2282), the
Intelligence Reform and Terrorism Prevention Act of 2004, Pub. L.
108-458, 118 Stat. 3768, and sec. 3116 of the John S. McCain
National Defense Authorization Act for Fiscal Year 2019, Pub. L.
115-232; Sec. 104 of the Energy Reorganization Act of 1974, Pub. L.
93-438; Sec. 301, Department of Energy Organization Act, Pub. L. 95-
91; National Nuclear Security Administration Act, Pub. L. 106-65, 50
U.S.C. 2401 et seq., as amended.
0
2. Section 810.1 is amended by adding paragraph (d) to read as follows:
Sec. 810.1 Purpose.
* * * * *
(d) Specify civil penalties and enforcement proceedings.
0
3. Section 810.15 is amended by adding paragraph (c) to read as
follows:
Sec. 810.15 Violations.
* * * * *
(c) In accordance with section 234 of the AEA, any person who
violates any provision of section 57 b. of the AEA, as implemented
under this part, shall be subject to a civil penalty, not to exceed
$112,131 per violation, such amount to be adjusted annually for
inflation pursuant to the Federal Civil Penalties Inflation Adjustment
Act Improvements Act of 2015. If any violation is a continuing one,
each day from the point at which the violating activity began to the
point at which the violating activity was suspended shall constitute a
separate violation for the purpose of computing the applicable civil
penalty. The mere act of suspending an activity does not constitute
admission that the activity was a violation and does not waive the
rights and processes outlined in paragraphs (c)(4) through (14) of this
section or otherwise impact the right of the person to appeal any civil
penalty that may be imposed.
(1) In order to begin a proceeding to impose a civil penalty under
this paragraph (c), the Deputy Administrator for Defense Nuclear
Nonproliferation or his/her designee, shall notify the person by a
written notice of violation sent by registered or certified mail to the
last known address of such person, of:
(i) The date, facts, and nature of each act or omission with which
the person is charged;
(ii) The particular provision or provisions of section 57 b. of the
AEA, as implemented under this part, involved in each alleged
violation;
(iii) The penalty which DOE proposes to impose, including an
explanation of how the factors at paragraph (c)(5) of this section were
considered;
(iv) The opportunity of the person to submit a written reply within
30 calendar days of receipt of such preliminary notice of violation
showing why such penalty should not be imposed; and
(v) The possibility of collection by civil action upon failure to
pay the civil penalty.
(2) A reply to the notice of violation must:
(i) State any facts, explanations, and arguments which support a
denial of the alleged violation;
(ii) Demonstrate any extenuating circumstances or other reason why
a proposed penalty should not be imposed or should be mitigated;
(iii) Discuss the relevant authorities which support the position
asserted;
(iv) Furnish full and complete answers to any questions set forth
in the notice of violation; and
(v) Include copies of all relevant documents.
(3) If a person fails to submit a written reply within 30 calendar
days of receipt of a notice of violation, the notice of violation,
including any penalties therein, constitutes a final decision, and
payment of the full amount of the civil penalty assessed in the notice
of violation is due 30 calendar days after receipt of the notice of
violation. Such failure to submit a reply constitutes a waiver of the
rights and processes outlined in paragraphs (c)(4) through (14) of this
section.
(4) The Deputy Administrator for Defense Nuclear Nonproliferation
or his/her designee, at the written request of a person notified of an
alleged violation, may extend in writing, for a reasonable period, the
time for submitting a reply.
(5) If a person submits a timely written reply to the notice of
violation, the Deputy Administrator for Defense Nuclear
Nonproliferation will make a final determination whether the person
violated or is continuing to violate a requirement of section 57 b. of
the AEA, as implemented under this part. Based on a determination that
a person has violated or is continuing to violate a requirement of
section 57 b., as implemented under this part, the Deputy Administrator
for Defense Nuclear Nonproliferation will issue to that person a final
notice of violation that concisely states the violation, the amount of
the civil penalty imposed, including an explanation of how the factors
in this paragraph were considered, further actions necessary by or
available to the person, and that upon failure to timely pay the civil
penalty, the penalty may be collected by civil action. The Deputy
Administrator for Defense Nuclear Nonproliferation will send such a
final notice of violation by registered or certified mail to the last
known address of the person. The amount of the civil penalty will be
based on:
(i) The nature, circumstances, extent, and gravity of the violation
or violations;
(ii) The violator's ability to pay;
(iii) The effect of the civil penalty on the person's ability to do
business;
(iv) Any history of prior violations;
(v) The degree of culpability;
(vi) Whether the violator self-disclosed the violation;
(vii) The economic significance of the violation; and (viii) Such
other factors as justice may require.
(6) Any person who receives a final notice of violation under
paragraph (c)(5) of this section may request a hearing concerning the
allegations contained in the notice. The person must mail or deliver
any written request for a hearing to the Under Secretary for Nuclear
Security within 30 calendar days of receipt of the final notice of
violation. If the person does not request a hearing within 30 calendar
days, the final notice of violation, including any penalties therein,
constitutes a final decision, and payment of the full amount of the
civil penalty assessed in the final notice of violation is due 45
calendar days after receipt of the final notice of violation.
[[Page 1980]]
(7) Upon receipt from a person of a written request for a hearing,
the Under Secretary for Nuclear Security or his/her designee, shall:
(i) Appoint a Hearing Counsel; and
(ii) Forward the request to the DOE Office of Hearings and Appeals
(OHA). The OHA Director shall appoint an OHA Administrative Judge to
preside at the hearing.
(8) The Hearing Counsel shall be an attorney employed by DOE, and
shall have all powers necessary to represent DOE before the OHA.
(9) In all hearings under this paragraph (c):
(i) The parties have the right to be represented by a person of
their choosing, subject to possessing an appropriate information access
authorization for the subject matter. The parties are responsible for
producing witnesses on their behalf, including requesting the issuance
of subpoenas, if necessary;
(ii) Testimony of witnesses is given under oath or affirmation, and
witnesses must be advised of the applicability of 18 U.S.C. 1001 and 18
U.S.C. 1621, dealing with the criminal penalties associated with false
statements and perjury;
(iii) Witnesses are subject to cross-examination;
(iv) Formal rules of evidence do not apply, but OHA may use the
Federal Rules of Evidence as a guide; and
(v) A court reporter will make a transcript of the hearing.
(vi) The Administrative Judge has all powers necessary to regulate
the conduct of proceedings:
(vii) The Administrative Judge may order discovery at the request
of a party, based on a showing that the requested discovery is designed
to produce evidence regarding a matter, not privileged, that is
relevant to the subject matter of the complaint;
(viii) The Administrative Judge may permit parties to obtain
discovery by any appropriate method, including deposition upon oral
examination or written questions; written interrogatories; production
of documents or things; permission to enter upon land or other property
for inspection and other purposes; and requests for admission;
(ix) The Administrative Judge may issue subpoenas for the
appearance of witnesses on behalf of either party, or for the
production of specific documents or other physical evidence;
(x) The Administrative Judge may rule on objections to the
presentation of evidence; exclude evidence that is immaterial,
irrelevant, or unduly repetitious; require the advance submission of
documents offered as evidence; dispose of procedural requests; grant
extensions of time; determine the format of the hearing; direct that
written motions, documents, or briefs be filed with respect to issues
raised during the course of the hearing; ask questions of witnesses;
direct that documentary evidence be served upon other parties (under
protective order if such evidence is deemed confidential); and
otherwise regulate the conduct of the hearing;
(xi) The Administrative Judge may, at the request of a party or on
his or her own initiative, dismiss a claim, defense, or party and make
adverse findings upon the failure of a party or the party's
representative to comply with a lawful order of the Administrative
Judge, or, without good cause, to attend a hearing;
(xii) The Administrative Judge, upon request of a party, may allow
the parties a reasonable time to file pre-hearing briefs or written
statements with respect to material issues of fact or law. Any pre-
hearing submission must be limited to the issues specified and filed
within the time prescribed by the Administrative Judge;
(xiii) The parties are entitled to make oral closing arguments, but
post-hearing submissions are only permitted by direction of the
Administrative Judge;
(xiv) Parties allowed to file written submissions, or documentary
evidence must serve copies upon the other parties within the timeframe
prescribed by the Administrative Judge;
(xv) The Administrative Judge is prohibited, beginning with his or
her appointment and until a final agency decision is issued, from
initiating or otherwise engaging in ex parte (private) discussions with
any party on the merits of the complaint;
(xvi) The Administrative Judge is responsible for determining the
date, time, and location of the hearing, including whether the hearing
will be conducted via video conference; and
(xvii) The Administrative Judge shall convene the hearing within
180 days of the OHA's receipt of the request for a hearing, unless the
parties agree to an extension of this deadline by mutual written
consent, or the Administrative Judge determines that extraordinary
circumstances exist that require a delay.
(10) Hearings shall be open only to Hearing Counsel, duly
authorized representatives of DOE, the person and the person's counsel
or other representatives, and such other persons as may be authorized
by the Administrative Judge. Unless otherwise ordered by the
Administrative Judge, witnesses shall testify in the presence of the
person but not in the presence of other witnesses.
(11) The Administrative Judge must use procedures appropriate to
safeguard and prevent unauthorized disclosure of classified information
or any other information protected from public disclosure by law or
regulation, with minimum impairment of rights and obligations under
this part. The classified or otherwise protected status of any
information shall not, however, preclude its being introduced into
evidence. The Administrative Judge may issue such orders as may be
necessary to consider such evidence in camera including the preparation
of a supplemental recommended decision to address issues of law or fact
that arise out of that portion of the evidence that is classified or
otherwise protected.
(12) DOE shall have the burden of proving the violation(s) as set
forth in the final notice of violation by a preponderance of the
evidence. The person to whom the notice of violation is addressed shall
have the burden of proving any affirmative defense by a preponderance
of the evidence. The amount of the penalty associated with any
violation which is upheld shall be adopted by the Administrative Judge
unless not supported by the facts, in which event the Administrative
Judge will include such information in the Administrative Judge's
recommended decisions to the Under Secretary for reconsideration of the
amount of the penalty based on the Administrate Judge's resolution of
the factual issues.
(13) Within 180 days of receiving a copy of the hearing transcript,
or the closing of the record, whichever is later, the Administrative
Judge shall issue a recommended decision. The recommended decision
shall contain findings of fact and conclusions regarding all material
issues of law, as well as the reasons therefor. If the Administrative
Judge determines that a violation has occurred and that a civil penalty
is appropriate, the recommended decision shall set forth the amount of
the civil penalty based on the factors in paragraph (c)(5) of this
section.
(14) The Administrative Judge shall forward the recommended
decision to the Under Secretary for Nuclear Security. The Under
Secretary for Nuclear Security shall make a final decision as soon as
practicable after completing his/her review. This may include
compromising, mitigating, or remitting the penalties in accordance with
section 234 a. of the AEA, as amended. DOE shall notify the person of
the Under Secretary for Nuclear Security's final decision or other
action
[[Page 1981]]
under this paragraph in writing by certified mail, return receipt
requested. The person against whom the civil penalty is assessed by the
final decision shall pay the full amount of the civil penalty assessed
in the final decision within 30 calendar days unless otherwise
determined by the Under Secretary for Nuclear Security.
(15) If a civil penalty assessed in a final decision is not paid as
provided in paragraphs(c)(3), (6), or (14) of this section, as
appropriate, the Under Secretary for Nuclear Security may request the
Department of Justice to initiate a civil action to collect the penalty
imposed under this paragraph in accordance with section 234 c. of the
AEA.
(16) The Under Secretary for Nuclear Security or his/her designee
may publish redacted versions of notices of violation and final
decisions.
[FR Doc. 2023-00342 Filed 1-11-23; 8:45 am]
BILLING CODE 6450-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.