cial authorization of the Office of Export Control, be used for any other transaction. Changes of consignors and consignees will be permitted only under the strict provisions of the Export Regulations.

(b) Transfer of dock receipts, bills of lading, or liens-(1) Use of certain export control documents. Paragraph (a) of this section is not to be construed to affect the transfer and other use of dock receipts, bills of lading, or other commercial documents necessary to complete a transaction authorized by the export license, or impair the validity of liens or other security titles or interests created in good faith with respect to commodities or technical data or documents in the course of financing, warehousing, forwarding or transporting commodities or technical data.

(2) Disposition of export. Where the person entitled to the foreclosure of any lien or other security title or interest, or where the exercise of any rights by the holder of the lien or other security title or interest, contemplates an export under the license by someone other than the licensee, or to someone other than the purchaser or ultimate consignee designated in the license, such person must apply for a new license or for an amendment in accordance with the provisions of Part 380 of this subchapter.

§ 387.10 Transactions with persons subject to denial orders.

Without

(a) Prohibited activities. prior disclosure of the facts to, and specific authorization of the Office of Export Control, no person, with knowledge that another person is then subject to an order revoking or denying his export privileges or is then excluded from practice before the Office of Export Control, directly or indirectly, in any manner or capacity:

(1) May apply for, obtain, or use any license, Shipper's Export Declaration, Bill of Lading, or other export control document relating to an export or reexport of commodities or technical data by, to, or for such person denied export privileges; or

(2) May order, buy, receive, use, sell, deliver, store, dispose of, forward, transport, finance, or otherwise service or participate in, any transaction which may involve any commodity or technical data exported or to be exported from the United States, or which is otherwise subject to the Export Control Regulations,

whereby such person denied export privileges may obtain any benefit thereirom or have any interest therein, directly or indirectly.

(b) Definition of "person denied export privileges". For the purpose of this § 387.10, the term "person denied export privileges" is defined to include:

(1) Any person, firm, corporation, or other business organization whose export privileges are revoked or denied by any order of the Office of Export Control or who is excluded by such order from practice before the Bureau of International Commerce; and

(2) Any other person, firm, corporation, or other business organization also denied export privileges or excluded from practice before the Bureau of International Commerce because of his or its relationship to such person denied export privileges through affiliation, ownership, control, position of responsibility, or other connection in the conduct of trade or related services during the period of such order, and whether or not named in such order.

(c) Applicability of orders. Orders of the Office of Export Control which revoke or deny the export privileges of any person or which exclude any person from practice before the Bureau of International Commerce provide that the terms and prohibitions of such orders apply not only to the persons expressly named therein but also, for the purpose of preventing evasion, to any other person, firm, corporation, or other business organization with which such person may then or thereafter (during the term of the order) be related by affiliation, ownership, control, position of responsibility, or other connection in the conduct of trade or related services. See §§ 388.1 and 390.2, and Supplement No. 1 to Part 388 of this subchapter, "Table of Denial and Probation Orders." This table contains orders issued by the Office of Export Control which currently deny export privileges and/or place the person or firm on probation. This list contains the names and addresses of such persons, the effective and expiration dates of the orders, a brief summary of the export privileges affected, and the citations to the volumes and pages of the FEDERAL REGISTER where complete texts of the orders are published. The publication of such orders in the FEDERAL REGISTER constitutes legal notice of the terms thereof to all persons.

(a) Transactions subject to this regulation. This § 387.11 applies to transactions involving exports of commodities or technical data from the United States and any known reexports, transshipments, or diversions of commodities or technical data originally exported from the United States, regardless of whether the export or reexport is made, or proposed to be made, by any person with or without authorization by a validated license, a general license, or any other export authorization. It includes all negotiations connected with such transactions, except that a mere preliminary inquiry or offer to do business and negative response thereto shall not constitute negotiations, unless the inquiry or offer to do business proposes a transaction which a reasonably prudent exporter would believe likely to lead to a violation of Export Orders or Regulations. It includes as well any exports to Canada, if, at any stage in the transaction, it appears that a person in a country other than the United States or Canada has an interest therein or that the commodity or technical data involved is to be reexported, transshipped, or diverted from Canada to another foreign country.

(b) Persons subject to this regulation. Any person in the United States who, as principal or agent (including a forwarding agent), participates in any transaction described in paragraph (a) of this section, and any person in the United States or abroad who is required to make and keep records pursuant to any provisions of the Export Control Regulations, shall keep all the records described in paragraph (c) of this section which are made or obtained by such person, and shall produce them in the manner provided in paragraph (f) of this section. (c) Records to be kept. The records to be kept pursuant to this § 387.11 shall include memoranda, notes, correspondence, books, export control documents, and other written matter pertaining to the transactions described in paragraph (a) of this section, which may be made or obtained by a person described in paragraph (b) of this section. In addition to the records required to be kept by this § 387.11, the provisions of §§ 368.2, 371.22, 372.1, 372.5, 372.6, 373.3, 373.4, 373.5, 373.6, 373.7, 373.8, 374.7, 376.8, 376.10, 378.2, 379.4, 386.3, and 386.6 of the Export Control Regulations of this

subchapter require certain records to be made and kept by persons in the United States or abroad in connection with export transactions. The revocation or revision of any such provision of the Export Control Regulations which requires the making and keeping of records shall not be retroactive in effect unless specifically provided and shall not affect the original requirement to keep such records for the prescribed period.

(d) Reproduction of records-(1) Definition. "Reproduction" for the purpose of this paragraph is defined to include any photographic, photostatic, microfilm, miniature photographic, or other process which accurately durably reproduces the original record.

and

(2) Use of reproductions. Reproductions may be substituted for original documents with respect to all categories of records required to be retained under any provision of the Export Control Regulations or of any order: Provided, That all of the following conditions are met:

(i) Reproductions may not be substituted for any category of records until 12 months after the beginning of the retention period set forth in paragraph (e) of this section;

(ii) All significant information, marks, and/or other characteristics on the original document must be clearly visible and legibly reproduced; and

(iii) Appropriate facilities must be provided and maintained for the preservation of the reproduced records during the retention period and for the ready location and inspection of the records, including a projector for viewing films if needed.

(e) Period of retention. Records required to be kept under this § 387.11 shall be kept for a period of 2 years1 from, whichever is later, the time of: (1) The export from the United States; or (2) Any known reexport, transshipment, or diversion; or (3) Any other termination of the transaction, whether formally in writing or by any other means.

1 Persons subject to this regulation may find it advisable to retain their records longer than the mandatory 3-year retention period because the statute of limitations (Title 18, U.S.C. Sec. 3282) permits criminal actions to be brought under the Export Control Act within 5 years and administrative compliance proceedings may be brought more than 3 years after alleged violations.

(f) Producing and inspecting records. Every person, whether in the United States or abroad, required to keep records by any provision of the Export Control Regulations or of any order shall produce all records or reproductions of records (see paragraph (d) of this section) required to be kept, and make them available for inspection and copying upon request by any authorized agent, official, or employee of the Bureau of International Commerce, the Bureau of Customs, or a U.S. Foreign Service post, or by any other accredited representative of the U.S. Government, without any charge or expense to such agent, official or employee.

[13th Gen. Rev. of Export Regs., 35 F.R. 9198, June 12, 1970, as amended by Amdt. 11, 35 F.R. 18317, Dec. 2, 1970; Amdt. 13, 35 F.R. 19986, Dec. 31, 1970]

§ 388.1 Denial of export privileges and imposition of civil penalties.

(a) Administrative sanctions.1 Any person (respondent) who contravenes or violates any law, order, regulation, license, or other authorization relating to export control is subject to the following administrative sanctions:

(1) Revocation of validated export licenses. Any or all outstanding validated export licenses concerned with or affecting any transaction in which such respondent may have any interest, direct or indirect, may be revoked and ordered returned forthwith to the Office of Export Control.

(2) General denial of export privileges. Such respondent may be denied the privileges of participating, directly or indirectly, in any manner or capacity, in any transaction involving commodities or technical data exported from the United States in whole or in part, or to be exported, or which are otherwise subject to the Export Control Regulations. Without limitation of the generality of such denial of export privileges, participation prohibited in any such transaction either in the United States or abroad may be deemed to include:

(i) Participation as a party or as a representative of a party to any validated export license application;

(ii) Participation in the preparation or filing of any export license application or reexport authorization, or document to be submitted therewith;

(iii) Participation in the obtaining or using of any validated or general export license or other export control documents;

(iv) Participation in the carrying on of negotiations with respect to, or in the receiving, ordering, buying, selling, delivering, storing, using, or disposing of any commodities or technical data; and

(v) Participation in the financing forwarding, transporting, or other servicing of such commodities or technical data.

(3) Exclusion from practice. Such respondent may be excluded from practice before the Bureau of International Commerce.

1 See § 370.7 regarding the unauthorized disposition of foreign excess personal property purchased from the U.S. Armed Forces in foreign countries.

(4) Civil penalty. In addition to the administrative sanctions described above, or in lieu thereof, a civil penalty not to exceed $1,000 may be imposed for each violation. (See § 387.1(b) (3) of this subchapter.)

(b) Applicability to related persons. Any order denying export privileges or excluding persons from practice before the Bureau of International Commerce may be made applicable not only to persons named therein but also, to the extent necessary to prevent evasion, to other persons with whom such named persons may then or thereafter be related by ownership, control, position of responsibility, affiliation, or other connection in the conduct of trade or related services. In addition, the order may contain the substance of § 387.10 of this subchapter.

(c) Definition of law or regulation relating to export control. Any statute, proclamation, executive order, regulation, rule, license, or order applicable to any conduct involving an export transaction shall be deemed to be a "law or regulation relating to export control."

NOTE: This procedure in no way restricts the present practice of referring appropriate cases to the U.S. Department of Justice for criminal prosecution. Violations of Export Control Regulations not only may result in denial of export privileges but also are punishable by a fine or imprisonment as described in § 387.1. Violations may result also in seizure and forfeiture of property under title 22, U.S.C.A. 401.

§ 388.2

Compliance Commissioner.

The Director of the Bureau of International Commerce will designate one or more persons to act as Compliance Commissioners, who shall have the powers and duties provided herein. Compliance Commissioners shall not be responsible to or subject to the supervision or direction of any officer, employee, or agent engaged in the performance of investigative or prosecuting functions.

§ 388.3 Institution of administrative proceedings.

(a) Charging letters. The Investigations Division, Office of Export Control, with the approval of the Office of the General Counsel, may initiate proceedings for the imposition of one or more of the following sanctions against any per son who it has reason to believe has

violated any law or regulation relating to export control: (1) Denial of export privileges, (2) denial of privileges of practice, or (3) civil penalties. Such proceedings are initiated by service of a charging letter. The charging letter shall allege the essential facts constituting the specific violations charged, including reference to the particular regulatory or other provisions alleged to have been violated, and shall give notice that, if the respondent is found to have committed the alleged violations, his export privileges may be denied, his privilege of practice may be denied, or a civil penalty may be imposed. The charging letter shall inform the respondent that he is required to answer the allegations therein contained within 30 days, as provided in § 388.5, and that if he fails to answer as so provided he will be in default and the allegations will be deemed admitted. It shall inform the respondent that he is entitled to an oral hearing provided that he files a written demand therefor with his answer or within 7 days after service of his answer, and that he may, if he so desires, be represented by counsel of his own choosing. Charging letters may be amended from time to time, upon reasonable notice.

(b) Service. A charging letter shall be deemed served upon a respondent: (1) If he is a resident of the United States, when mailed in a wrapper addressed to him at his last known address, or when left with him or his agent or employee, or when left at his dwelling with some person of suitable age and discretion then residing therein; or (2) if he is a nonresident of the United States, when served upon him by any of the foregoing means, or if such method of service is not practicable or appropriate by reason of arrangements or understandings between the U.S. Government and the Government of the country wherein the respondent resides, when it is tendered for service upon him to an official of the Government of the country wherein the respondent resides.

missioner who shall consider the same in such manner and upon such evidence as he may decide is appropriate. Any order thereafter issued shall have the same effect as an order issued following the disposition of contested charges.

(b) Application to set aside defaults. Any respondent against whom an order has been issued upon his default may apply, upon good cause shown, together with evidentiary data in support thereof, to set aside his default and vacate the order entered thereon. Such application shall be duly sworn before an officer qualified to take oaths and shall be submitted in duplicate to the Director, Office of Export Control (Attention: 840), U.S. Department of Commerce, Washington. D.C. 20230, who shall then refer it to the Compliance Commissioner for consideration and recommendation as to what disposition thereof ought to be made. The Compliance Commissioner shall consider the application and may, if he so decides, require the respondent to attend a hearing or submit further evidence in support of his request. The filing of an application to set aside a default does not in any manner affect an order entered upon default and such order continues in full force and effect unless a further order is made modifying or terminating it.

§ 388.5

Answer and demand for oral hearing.

(a) When to answer. The respondent shall answer the allegations of the charging letter within 30 days after service of the charging letter upon him.

(b) Contents of answer. An answer shall be responsive to the charging letter and shall fully and completely set forth the nature of the respondent's defense or defenses. In addition, it shall, by separate paragraphs, admit or deny specifically and in detail each and every separate allegation of the charging letter, unless the respondent is without knowledge, in which case, his answer shall so state and the statement shall operate as a denial. A failure to deny or controvert any particular allegation shall be deemed an admission thereof. The respondent may, in his answer, set forth such additional or new matter as he may regard as supporting a defense to or claim of mitigation of the charges. Any defenses or partial defenses not specifically set forth in an answer shall be deemed waived, and evidence offered thereon by the respondent at a hearing

may be refused unless good cause is shown for its receipt. If the respondent does not demand an oral hearing, he shall transmit, within 7 days after the service of his answer, originals or photocopies of all correspondence, papers, records, affidavits, and other documentary or written evidence having any bearing upon or connection with the matters at issue and, if any such materials are in a language other than English, translations into English shall be submitted at the same time.

(c) Submission of answer. The answer, written demand for oral hearing, and supporting evidence required by paragraph (b) of this section shall be in duplicate and mailed or delivered to the Compliance Commissioner, Bureau of International Commerce (Attention: 814), U.S. Department of Commerce, Washington, D.C. 20230.

(b) Interrogatories and requests for admissions of facts. In any compliance proceeding, the Investigations Division, Office of Export Control, or the Compliance Commissioner may serve on any respondent or his attorney interrogatories or requests for admissions of facts, and if, without good cause being shown, there is a failure or refusal to respond to the questions or requests for admissions, the Compliance Commissioner, on his own motion or motion of the Investigations Division, and upon such notice to the respondent as the Compliance Commissioner may direct, may strike respondent's answer and declare him in default, or make any other ruling which he deems necessary and just under the circumstances. Interrogatories and requests may be served in the same manner as provided in § 388.3(b) for service of a charging letter.