Notice2023-12067
Quicksilver Manufacturing, Inc., 8209 Market St #A173, Wilmington, NC 28411; Rapid Cut LLC, 8209 Market St #A173, Wilmington, NC 28411; US Prototype, Inc., 8209 Market St #A173, Wilmington, NC 28411; Order Renewing Temporary Denial of Export Privileges
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
June 6, 2023
Issuing agencies
Commerce DepartmentIndustry and Security Bureau
Full Text
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<title>Federal Register, Volume 88 Issue 108 (Tuesday, June 6, 2023)</title>
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[Federal Register Volume 88, Number 108 (Tuesday, June 6, 2023)]
[Notices]
[Pages 37007-37009]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-12067]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
Quicksilver Manufacturing, Inc., 8209 Market St #A173,
Wilmington, NC 28411; Rapid Cut LLC, 8209 Market St #A173, Wilmington,
NC 28411; US Prototype, Inc., 8209 Market St #A173, Wilmington, NC
28411; Order Renewing Temporary Denial of Export Privileges
Pursuant to section 766.24 of the Export Administration
Regulations, 15 CFR parts 730-774 (2021) (``EAR'' or ``the
Regulations''),\1\ I hereby grant the request of the Office of Export
Enforcement (``OEE'') to renew the temporary denial order (``TDO'')
issued in this matter on December 5, 2022. I find that renewal of this
order is necessary in the public interest to prevent an imminent
violation of the Regulations.
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\1\ 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, 50 U.S.C.
4801-4852 (``ECRA''). While section 1766 of ECRA repeals the
provisions of the Export Administration Act, 50 U.S.C. app. 2401 et
seq. (``EAA''), (except for three sections which are inapplicable
here), section 1768 of ECRA provides, in pertinent part, that all
orders, rules, regulations, and other forms of administrative action
that were made or issued under the EAA, including as continued in
effect pursuant to the International Emergency Economic Powers Act,
50 U.S.C. 1701 et seq. (``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. Moreover, section 1761(a)(5) of ECRA authorizes the
issuance of temporary denial orders. 50 U.S.C. 4820(a)(5).
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I. Procedural History
On June 7, 2022, an order was issued denying the export privileges
under the Regulations of Quicksilver Manufacturing, Inc.
(``Quicksilver''), Rapid Cut LLC (``Rapid Cut''), and US Prototype,
Inc. (``US Prototype'') (collectively Respondents) for a period of 180
days on the ground that issuance of the order was necessary in the
public interest to prevent an imminent violation of the Regulations.
The order was issued ex parte, pursuant to section 766.24(a) of the
Regulations and was effective upon issuance.\2\ This temporary denial
order was subsequently renewed on December 5, 2022, in accordance with
section 766.24(d) of the Regulations.\3\
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\2\ The TDO was published in the Federal Register on June 15,
2022 (87 FR 36104).
\3\ The TDO was published in the Federal Register on December 9.
2022 (87 FR 75587).
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On May 10, 2023, BIS, through OEE, submitted a written request for
renewal
[[Page 37008]]
of the TDO that was issued on December 5, 2022. The written request was
made more than 20 days before the TDO's scheduled expiration. A copy of
the renewal request was sent to Respondents in accordance with sections
766.5 and 766.24(d) of the Regulations. On May 26, 2023, Respondents
made a written submission for consideration by BIS.
II. Renewal of the TDO
A. Legal Standard
Pursuant to section 766.24, BIS may issue an order temporarily
denying a respondent's export privileges upon a showing that the order
is necessary in the public interest to prevent an ``imminent
violation'' of the Regulations, or any order, license or authorization
issued thereunder. 15 CFR 766.24(b)(1) and 766.24(d). ``A violation may
be `imminent' either in time or degree of likelihood.'' 15 CFR
766.24(b)(3). BIS may show ``either that a violation is about to occur,
or that the general circumstances of the matter under investigation or
case under criminal or administrative charges demonstrate a likelihood
of future violations.'' Id. As to the likelihood of future violations,
BIS may show that the violation under investigation or charge ``is
significant, deliberate, covert and/or likely to occur again, rather
than technical or negligent[.]'' Id. A ``lack of information
establishing the precise time a violation may occur does not preclude a
finding that a violation is imminent, so long as there is sufficient
reason to believe the likelihood of a violation.'' Id.
B. The TDO and BIS's Request for Renewal
OEE's request for renewal is based upon the facts underlying the
issuance of the initial TDO, as well as evidence developed over the
continuing course of this investigation. The initial TDO, issued on
June 7, 2022, was based on evidence that Respondents engaged in conduct
prohibited by the Regulations by exporting or causing the export from
the United States of technology controlled on national security and/or
missile technology grounds to China for 3D printing without the
required U.S. government authorization.\4\ ``Export'' is defined in the
EAR as an ``actual shipment or transmission out of the United States,
including the sending or taking of an item out of the United States, in
any manner.'' 15 CFR 734.13(a)(1).\5\
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\4\ The June 7, 2022 TDO also detailed the export of technical
specifications to China controlled under United States Munitions
List Category XX (Submersible Vessels and Related Articles), section
(d), without the required U.S. Department of State authorization.
\5\ ``Item'' means ``commodities, software, and technology. 15
CFR 772.1. Further, ``technology'' may be in any tangible or
intangible form, such as written or oral communications, blueprints,
drawings, photographs, plans, diagrams, models, formulae, tables,
engineering designs and specifications, computer-aided design files,
manuals or documentation, electronic media or information revealed
through visual inspection. Id.
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In its November 10, 2022 request for renewal of the TDO, BIS
submitted evidence that Respondents' export compliance failures were
broader in scope than the investigation initially revealed, as well as
evidence related to new concerns raised by actions taken after the
issuance of the June 7, 2022 TDO. Specifically, BIS's evidence and
further investigation identified additional U.S. companies that engaged
in business with Respondents involving the unlicensed export of
technical specifications to China related to firearm components (ECCN
0E501.a) and space-rated items (ECCN 9E515.a), both of which are
controlled on national security and regional stability grounds, as well
as numerous additional suspected export control-related violations
between 2017 and 2022. BIS's renewal request was also based upon
concerns related to Respondents' initial attempts at compliance
following the issuance of the June 7, 2022 TDO, including the provision
of potentially inaccurate information to customers about the scope of
items subject to the Regulations. In its November 10, 2022, BIS also
submitted evidence that a China-based individual, known to operate
<a href="/cdn-cgi/l/email-protection#c8a9a688baa9b8a1acabbdbce6aba7a5"><span class="__cf_email__" data-cfemail="7b1a153b091a0b121f180e0f55181416">[email protected]</span></a> email address to facilitate Rapid Cut's business
operations, may have violated the TDO shortly after its issuance by
providing customer information on how to complete and fulfill pending
orders, despite the issuance of the TDO. Such information included
instructions to cancel existing Rapid Cut orders and reissue purchase
orders to China Company No. 1, in an apparent attempt to avoid the
restrictions of the TDO.\6\
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\6\ Respondents' November 29, 2022 submission asserts that the
individual who sent the above-described emails was not an employee
of Rapid Cut but rather an employee of China Company No. 1, a
separate legal entity. Rapid Cut markets and sells China Company No.
1's manufacturing capabilities in North America, and China Company
No. 1 pays Rapid Cut commissions on these sales.
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The May 10, 2023 request for renewal of the December 5, 2022 TDO is
also based on evidence related to the nature and scope of BIS's
continuing investigation. This includes the circumstances surrounding
the access by China-based employees to Respondents' email accounts, as
detailed above, which remain under investigation. The renewal request
is also based on evidence provided by additional U.S. companies that
engaged in business with Respondents involving the unlicensed export of
technical specifications to China, including information received as
recently as April 2023. In sum, and as detailed in the renewal request,
BIS's investigation is ongoing, the entirety of Respondents' misconduct
remains unknown, and a final written disclosure of prior violations has
not yet been submitted.\7\
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\7\ Respondents' May 26, 2023, submission to BIS provided
updates on its efforts to review and submit a written disclosure to
BIS detailing prior violations.
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Additionally, BIS's request for renewal also includes a request to
modify the TDO to exclude EAR99 commodities and technology from its
scope of coverage. As also noted in the request, such items generally
do not require a license to China and were not the basis for the
violations currently under investigation.
III. Findings
Under the applicable standard set forth in section 766.24 of the
Regulations and my review of the entire record, including Respondents'
May 26, 2023 submission, I find that the evidence presented by BIS
demonstrates that Respondents have acted in violation of the
Regulations; that such violations have been significant, deliberate and
covert; and that given the foregoing and the nature of the matters
under investigation, there remains a concern of imminent violations.
Additionally, I have considered OEE's request to narrow the scope of
the TDO going forward to only prohibit transactions involving items
that are listed on the Commerce Control List. Based on the totality of
circumstances, including Respondents' submissions regarding compliance
remediation measures taken to date and a written disclosure to BIS that
demonstrates a significant effort to provide a detailed account of past
violations, I find OEE's recommendation to be both measured and
appropriate. Accordingly, renewal of the TDO with modification is
necessary in the public interest to prevent imminent violation of the
Regulations and to give notice to companies and individuals in the
United States and abroad that they should avoid dealing with
Respondents in connection with exports, reexports, and transfers (in-
country) involving items listed on the Commerce Control List.
[[Page 37009]]
IV. Order
It is therefore ordered:
First, that Quicksilver Manufacturing, Inc., with an address at
8209 Market St #A173, Wilmington, NC 28411; Rapid Cut LLC, with an
address at 8209 Market St #A173, Wilmington, NC 28411; and US
Prototype, Inc., with an address at 8209 Market St #A173, Wilmington,
NC 28411 (collectively Respondents), when acting for or on their
behalf, any successors or assigns, agents, or employees may not,
directly or indirectly, participate in any way in any transaction
involving any commodity, software or technology (hereinafter
collectively referred to as ``item'') exported or to be exported from
the United States that is listed on the Commerce Control List as set
forth in Supplement No. 1 to 15 CFR part 774, or in any other activity
involving an item listed on the Commerce Control List including, but
not limited to:
A. Applying for, obtaining, or using any license, license
exception, or export control document involving an item listed on the
Commerce Control List;
B. Carrying on negotiations concerning, or ordering, buying,
receiving, using, selling, delivering, storing, disposing of,
forwarding, transporting, financing, or otherwise servicing in any way,
any transaction involving any item exported or to be exported from the
United States that is listed on the Commerce Control List; or
C. Benefitting in any way from any transaction involving any item
exported or to be exported from the United States that is listed on the
Commerce Control List.
Second, that no person may, directly or indirectly, do any of the
following:
A. Export, reexport, or transfer (in-country) to or on behalf of
Respondents any item listed on the Commerce Control List;
B. Take any action that facilitates the acquisition or attempted
acquisition by Respondents of the ownership, possession, or control of
any item listed on the Commerce Control List that has been or will be
exported from the United States, including financing or other support
activities related to a transaction whereby Respondents acquires or
attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition
or attempted acquisition from Respondents of any item listed on the
Commerce Control List that has been exported from the United States;
D. Obtain from Respondents in the United States any item listed on
the Commerce Control List, with knowledge or reason to know that the
item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item listed on the
Commerce Control List, that has been or will be exported from the
United States and which is owned, possessed or controlled by
Respondents or service any item, of whatever origin, that is owned,
possessed or controlled by Respondents if such service involves the use
of any item listed on the Commerce Control List, that has been or will
be exported from the United States. For purposes of this paragraph,
servicing means installation, maintenance, repair, modification, or
testing.
Third, that, after notice and opportunity for comment as provided
in section 766.23 of the EAR, any other person, firm, corporation, or
business organization related to Respondents by ownership, control,
position of responsibility, affiliation, or other connection in the
conduct of trade or business may also be made subject to the provisions
of this Order.
In accordance with the provisions of sections 766.24(e) of the EAR,
Respondents may, at any time, appeal this Order by filing a full
written statement in support of the appeal with the Office of the
Administrative Law Judge, U.S. Coast Guard ALJ Docketing Center, 40
South Gay Street, Baltimore, Maryland 21202-4022.
In accordance with the provisions of section 766.24(d) of the EAR,
BIS may seek renewal of this Order by filing a written request not
later than 20 days before the expiration date. A renewal request may be
opposed by Respondents as provided in section 766.24(d), by filing a
written submission with the Assistant Secretary of Commerce for Export
Enforcement, which must be received not later than seven days before
the expiration date of the Order.
A copy of this Order shall be provided to Respondents and shall be
published in the Federal Register.
This Order is effective immediately and shall remain in effect for
180 days.
Dated: June 1, 2023.
Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2023-12067 Filed 6-5-23; 8:45 am]
BILLING CODE 3510-DT-P
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