Chemical Weapons Convention and the Chemical Weapons Convention Implementation Act of 1998; Taking of Samples; Record Keeping and Inspections

[Federal Register Volume 64, Number 139 (Wednesday, July 21, 1999)]
[Proposed Rules]
[Pages 39244-39249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17617]


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DEPARTMENT OF STATE

22 CFR Part 103

[Public Notice 3057]
RIN 1400-ZA01


Chemical Weapons Convention and the Chemical Weapons Convention 
Implementation Act of 1998; Taking of Samples; Record Keeping and 
Inspections

AGENCY: Bureau of Arms Control, Department of State.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of State is proposing to establish regulations 
to implement the provisions of the Convention on the Prohibition of the 
Development, Production, Stockpiling and Use of Chemical Weapons and on 
Their Destruction, also known as the Chemical Weapons Convention (CWC 
or Convention) and the Chemical Weapons Convention Implementation Act 
of 1998 (Act) on the taking of samples and on the enforcement of the 
requirements concerning record keeping and inspections. The Act 
authorizes the United States Government to implement provisions of the 
Convention. These regulations will enable the United States Government 
to execute the relevant provisions of the Convention and the Act.

DATES: Comments must be received on or before August 20, 1999.

ADDRESSES: All comments concerning these proposed regulations should be 
addressed to Michael Coffee, Office of the Legal Adviser (L/ACN), 2201 
C Street, N.W., Washington, DC 20520.

FOR FURTHER INFORMATION CONTACT: Michael Coffee, Office of the Legal 
Adviser (L/ACN), 2201 C Street, N.W., Washington, DC 20520.

SUPPLEMENTARY INFORMATION: On April 25, 1997, the United States 
ratified the Convention on the Prohibition of the Development, 
Production, Stockpiling and Use of Chemical Weapons and on Their 
Destruction, also known as the Chemical Weapons Convention (CWC or 
Convention). The Convention is both an arms control and 
nonproliferation treaty. As such, the Convention bans the development, 
production, stockpiling, and use of chemical weapons, and prohibits 
States Parties from assisting or encouraging anyone to engage in an 
activity prohibited by the Convention. States Parties to the 
Convention, including the United States, have agreed to a comprehensive 
verification regime that provides transparency and ensures that no 
State Party to the Convention is

[[Page 39245]]

engaging in activity prohibited by the Convention. The verification 
regime includes declaration and on-site inspection of facilities 
engaged in activities involving certain chemicals. To further its 
nonproliferation objectives, the Convention requires restrictions on 
the import and export of chemicals.
    Implementation of the CWC requirements will occur pursuant to the 
authority of the Chemical Weapons Convention Implementation Act of 1998 
(Pub. L. 105-277, Div. I) and the International Emergency Economic 
Powers Act. Export control related provisions will be enforced by the 
Departments of State and Commerce under relevant export control 
authorities. While most of the regulatory provisions will be contained 
in the Chemical Weapons Convention Regulations (15 CFR Parts 710-721), 
other State and Commerce Department regulations will contain additional 
or related provisions. The following outline summarizes the scope of 
these implementing and related regulations:

    Chemical Weapons Convention Regulations (CWCR) (15 CFR Parts 
710-721) (Department of Commerce). In accordance with the Chemical 
Weapons Convention Implementation Act of 1998, the Department of 
Commerce is proposing to promulgate regulations that set forth, 
among other things, reporting and inspection requirements and trade 
restrictions that affect U.S. private entities. The CWCR will 
contain recordkeeping requirements and administrative procedures and 
penalties related to violations of reporting and inspection 
requirements and importation restrictions. Finally, the CWCR will 
implement section 211 of the Chemical Weapons Convention 
Implementation Act, which authorizes the revocation of the export 
privileges of any person determined to have violated the chemical 
weapons provision of 18 U.S.C. 229.
    Regulations Implementing Provisions of the Chemical Weapons 
Convention and the Chemical Weapons Convention Implementation Act of 
1998 on the Taking of Samples and on Enforcement of Requirements 
Concerning Reporting and Inspections (22 CFR Part 103) (Department 
of State). These regulations will implement the provisions of the 
Convention and the Chemical Weapons Convention Implementation Act of 
1998 concerning the taking of samples during on-site inspections in 
the United States. These regulations will contain the enforcement 
provisions for violations of the provisions of the Chemical Weapons 
Convention Implementation Act of 1998 concerning reporting and 
inspection requirements.
    Export Administration Regulations (EAR) (15 CFR Parts 730-774) 
(Department of Commerce). The EAR implement the Convention's 
requirements on annual reporting on exports of schedule 1 chemicals, 
advance notification of exports of schedule 1 chemicals, and end-use 
certificate requirements for exports of schedule 2 and 3 chemicals 
to States not Party to the Convention. The EAR include a license 
requirement for all exports of schedule 1 chemicals subject to 
Commerce Department jurisdiction to all destinations, including 
Canada. The EAR also bans the export, after April 28, 2000, of 
schedule 2 chemicals subject to Commerce Department jurisdiction to 
States not Party to the Convention. International Traffic in Arms 
Regulations (ITAR) (22 CFR Parts 120-130) (Department of State).

This proposed rule is intended to implement sections 304(f)(1) and 501 
of the Chemical Weapons Convention Implementation Act of 1998, Pub. L. 
105-277, Div. I. These regulations will provide the guidelines under 
which the taking of a sample may be required during an on-site 
inspection conducted pursuant to the Convention. These regulations will 
also establish the civil enforcement regime for a violation of 
Secs. 306 or 405 of the Act.

Administrative Procedure Act Requirements

    Because this proposed rule involves a foreign affairs function of 
the United States, it is not subject to 5 U.S.C. 553 and 554. However, 
the Department is issuing this rule in proposed form and comments are 
encouraged for the development of a final rule.

Form of Comments

    The Department will not accept public comments accompanied by a 
request that a part or all of the material be treated confidentially 
for any reason. All public comments on these regulations will be a 
matter of public record and will be available for public inspection and 
copying. Comments will be available for inspection between 8:15 a.m. 
and 5:00 p.m. at the address listed above. In the interest of accuracy 
and completeness, the Department requires comments in written form. 
Communications from agencies of the United States Government or foreign 
governments will not be made available for public inspection.

Initial Regulatory Flexibility Analysis

    Because this proposed rule involves a foreign affairs function of 
the United States, the Department of State is not required to prepare 
and make available for public comment an initial regulatory flexibility 
analysis.

Executive Order 12866 Determination

    This proposed rule is exempt from Executive Order 12866, but has 
been reviewed internally by the Department to ensure consistency with 
the purposes thereof.

Paperwork Reduction Act Statement

    Section 103.5(b) of this rule states that no person may willfully 
fail or refuse: (1) to establish or maintain any record required under 
the Chemical Weapons Convention Implementation Act or 15 CFR Parts 710 
through 721; (2) to submit any report, notice or other information 
prescribed by the Act or 15 CFR Parts 710 through 721; or (3) to permit 
access to or copying of any record that is exempt from disclosure under 
the Act or 15 CFR Parts 710 through 721.
    Notwithstanding any other provision of law, no person is required 
to, nor shall any person be subject to a penalty for failure to comply 
with a collection of information, subject to the Paperwork Reduction 
Act (PRA), unless that collection of information displays a currently 
valid OMB Control Number. In promulgating 15 CFR Parts 710 through 721, 
the Department of Commerce revised an existing collection of 
information requirement subject to the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq.), which has been submitted for approval to the 
Office of Management and Budget. Accordingly, the Department of State 
will not seek the approval of the Office of Management and Budget. The 
public reporting burdens for the new collections of information are 
estimated to average 9 hours for Schedule 1 chemicals, 7.2 hours for 
Schedule 2 chemicals, 2.5 hours for Schedule 3 chemicals, 5.3 hours for 
Unscheduled Discrete Organic Chemicals, and .17 hours for Schedule 1 
notifications. These estimates include the time required to complete 
the required forms.
    Comments are invited on (a) whether the collection of information 
is necessary for the functions of the agency, including whether the 
information shall have practical utility; (b) the accuracy of the 
agency's estimate of the burden of the proposed collection of 
information; (c) ways to enhance the quality, utility, and clarify the 
information to be collected; and (d) ways to minimize the burden of the 
collection of information on respondents, including through use of 
automated collection techniques or other forms of information 
technology. Send comments regarding these or any other aspects of the 
collection of information to: Nancy Crowe, Regulatory Policy Division, 
Bureau of Export Administration, U.S. Department of Commerce, Room 
2705, 14th Street and Pennsylvania Avenue, N.W., Washington, DC 20230.

[[Page 39246]]

Unfunded Mandates Reform Act Requirements

    No actions are necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

Federalism Assessment

    Because this proposed rule will 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, a Federalism 
Assessment is not warranted.

List of Subjects in 22 CFR Part 103

    Administrative practice and procedures, Chemicals, Foreign 
relations, Freedom of information, International organizations, 
Investigations, National security information, Penalties, Reporting and 
recordkeeping requirements, Treaties.

    For the reasons set forth in the preamble, the Department proposes 
to add to subchapter K the following part 103 to Title 22 of the Code 
of Federal Regulations:

PART 103--REGULATIONS FOR IMPLEMENTATION OF THE CHEMICAL WEAPONS 
CONVENTION AND THE CHEMICAL WEAPONS CONVENTION IMPLEMENTATION ACT 
OF 1998 ON THE TAKING OF SAMPLES AND ON ENFORCEMENT OF REQUIREMENTS 
CONCERNING RECORD KEEPING AND INSPECTIONS

Subpart A--General

Sec.
103.1  Purpose.
103.2  Definitions.

Subpart B--Samples

103.3  Requirement to provide a sample.

Subpart C--Record Keeping and Inspection Requirements

103.4  General.
103.5  Violations.
103.6  Penalties.
103.7  Initiation of administrative enforcement procedures.
103.8  Final agency decisions after administrative proceedings.
103.9  Final agency decision after settlement negotiations.
103.10  Appeals.
103.11  Payment of final assessment.
103.12  Reporting a violation.

    Authority: Pub. L. 105-277, 112 Stat. 2681, Div. I.

Subpart A--General


Sec. 103.1  Purpose.

    This part is intended to implement sections 304(f)(1) and 501 of 
the Chemical Weapons Convention Implementation Act of 1998, Public Law 
105-277, Div. I. The Chemical Weapons Convention Regulations 
promulgated by the Department of Commerce, 15 CFR Parts 710 through 
721, also implement sections of the Act.


Sec. 103.2  Definitions.

    The following are definitions of terms as used in this part only.
    Administrative law judge (ALJ). The person authorized to conduct 
hearings in administrative enforcement proceedings brought under this 
part.
    Bureau of Export Administration (BXA). The Bureau of Export 
Administration of the United States Department of Commerce, including 
the Office of Export Administration and the Office of Export 
Enforcement.
    Chemical Weapons Convention (CWC or Convention). The Convention on 
the Prohibition of the Development, Production, Stockpiling and Use of 
Chemical Weapons and on Their Destruction, and its annexes opened for 
signature on January 13, 1993, and entered into force on April 29, 
1997.
    CWCIA. The Chemical Weapons Convention Implementation Act of 1998. 
(Pub. L. 105-277, Div. I.)
    CWCR. The Chemical Weapons Convention Regulations promulgated by 
the Department of Commerce. (15 CFR parts 710 through 721.)
    Executive Director. The Executive Director, Office of the Legal 
Adviser, U.S. Department of State.
    Facility agreement. An agreement or arrangement between a State 
Party to the Convention and the Organization for the Prohibition of 
Chemical Weapons relating to a specific facility subject to on-site 
verification pursuant to Articles IV, V, and VI of the Convention.
    Final decision. A decision or order assessing a civil penalty, or 
otherwise disposing of or dismissing a case, which is not subject to 
further review under this part, but which may be subject to collection 
proceedings or judicial review in an appropriate federal court as 
authorized by law.
    Host team. The U.S. Government team that accompanies the inspection 
team during a CWC inspection to which this part applies.
    Host team leader. The head of the U.S. Government team that 
accompanies the inspection team during a CWC inspection to which this 
part applies.
    Inspection team. The group of inspectors and inspection assistant 
assigned by the Director-General of the Technical Secretariat to 
conduct a particular inspection.
    Lead agency. The executive department or agency responsible for 
implementation of the CWC declaration and inspection requirements for 
specified facilities. The lead agencies are the Department of Defense 
(DOD) for facilities owned or leased by DOD, whether DOD-operated or 
contractor-operated; the Department of Energy (DOE) for facilities 
owned or leased by DOE, whether DOE-operated or contractor-operated, 
including the National Laboratories and components of the nuclear 
weapons complex; and the Department of Commerce (DOC) for all 
facilities that are not owned or leased by DOD or DOE or other U.S. 
Government agencies. Other departments and agencies that have notified 
the United States National Authority of their decision to be excluded 
from the CWCR shall also have lead agency responsibilities for 
facilities that they own or lease.
    Office of Chemical and Biological Weapons Conventions. The office 
in the Bureau of Arms Control of the United States Department of State 
that includes the United States National Authority Coordinating Staff.
    Party. The United States Department of State and any person named 
as a respondent under this part.
    Person. Any individual, corporation, partnership, firm, 
association, trust, estate, public or private institution, any State or 
any political subdivision thereof, or any political entity within a 
State, any foreign government or nation or any agency, instrumentality 
or political subdivision of any such government or nation, or other 
entity located in the United States.
    Respondent. Any person named as the subject of a Notice of 
Violation and Assessment (NOVA) proposed order.
    Secretary. The Secretary of State.
    Technical Secretariat. The Technical Secretariat of the 
Organization for the Prohibition of Chemical Weapons established by the 
Chemical Weapons Convention.
    United States National Authority. The Department of State serving 
as the national focal point for effective liaison with the Organization 
for the Prohibition of Chemical Weapons and States Parties to the 
Convention and implementing the provisions of the CWCIA in coordination 
with an interagency group designated by the President consisting of the 
Secretary of Defense, the Attorney General, the Secretary of Commerce, 
the Secretary of Energy, and the heads of agencies considered necessary 
or advisable by the President, or their designees. The Secretary of 
State is the Director of the United States National Authority.

[[Page 39247]]

Subpart B--Samples


Sec. 103.3  Requirement to provide a sample.

    (a) Notification of requirement to provide a sample. The host team 
leader will notify the owner or operator, occupant or agent in charge 
of an inspected premises of any requirement to provide a sample 
pursuant to a request, in accordance with paragraph (j) of this 
section, of an inspection team of the Technical Secretariat under 
paragraph (b) or (d) of this section.
    (b) Requirement to provide a sample. Pursuant to section 304(f)(1) 
of the CWCIA, unless a consultation occurs pursuant to paragraph (c) of 
this section, the owner or operator, occupant or agent in charge of the 
premises to be inspected is hereby required to provide a sample 
pursuant to a request, in accordance with paragraph (j) of this 
section, of an inspection team of the Technical Secretariat that a 
sample be taken in accordance with the applicable provisions contained 
in the Chemical Weapons Convention and the CWCIA.
    (c) Consultations with the United States National Authority. After 
consulting with the host team leader, a lead agency that finds that the 
following conditions, unless they have been modified pursuant to 
paragraph (i) of this section, may not have been satisfied shall 
promptly advise the United States National Authority, which, in 
coordination with the interagency group designated by the President in 
section 2 of Executive Order 13128, shall make a decision.
    (1) The taking of a sample is consistent with the inspection aims 
under the Convention and with its Confidentiality Annex;
    (2) The taking of a sample does not unnecessarily hamper or delay 
the operation of a facility or affect its safety, and is arranged so as 
to ensure the timely and effective discharge of inspection team's 
functions with the least possible inconvenience and disturbance to the 
facility;
    (3) The taking of samples is consistent with the applicable 
facility agreement. In particular:
    (i) Samples will be taken at sampling points agreed to in the 
relevant facility agreement; and
    (ii) Samples will be taken according to procedures agreed to in the 
relevant facility agreement;
    (4) In the absence of a facility agreement, due consideration is 
given to existing sampling points used by the owner or operator, 
occupant or agent in charge of the premises, consistent with any 
procedures developed pursuant to the CWCR (15 CFR parts 710 through 
721);
    (5) The taking of samples does not affect the safety of the 
premises and will be consistent with safety regulations established at 
the premises, including those for protection of controlled environments 
within a facility and for personal safety;
    (6) The taking of the sample does not pose a threat to the national 
security interests of the United States; and
    (7) The taking of the sample is consistent with any conditions 
negotiated pursuant to paragraph (i) of this section.
    (d) Determination by United States National Authority. If, after 
consulting with the lead agency pursuant to paragraph (c) of this 
section, the United States National Authority, in coordination with the 
interagency group designated by the President to implement the 
provisions of the CWCIA, determines that the conditions of paragraph 
(c) are satisfied and that a sample shall be required, then the owner 
or operator, occupant or agent in charge of the premises shall provide 
a sample pursuant to a request of the inspection team of the Technical 
Secretariat.
    (e) Person to take a sample. If a sample is required, the owner or 
the operator, occupant or agent in charge of the inspected premises 
will determine whether the sample will be taken by a representative of 
the premises, the inspection team, or any other individual present.
    (f) Requirement that samples remain in the United States. No sample 
collected in the United States pursuant to an inspection permitted by 
the CWCIA may be transferred for analysis to any laboratory outside the 
territory of the United States.
    (g) Handling of samples. Samples will be handled in accordance with 
the Convention, the CWCIA, other applicable law, and the provisions of 
any applicable facility agreement.
    (h) Failure to comply with this section. Failure by any person to 
comply with this section may be treated as a violation of section 306 
of the Act and Sec. 103.5(a).
    (i) Conditions that restrict sampling activities during challenge 
inspections. During challenge inspections within the inspected premises 
the host team may negotiate conditions that restrict activities 
regarding sampling, e.g., conditions that restrict where, when, and how 
samples are taken, whether samples are removed from the site, and how 
samples are analyzed. Samples taken during challenge inspections within 
the inspected premises will be analyzed only for substances relevant to 
the inspection mandate.
    (j) Format of inspection team request. It is the policy of the 
United States Government that inspection team requests for samples 
should be in written form from the head of the inspection team. When 
necessary, before a sample is required to be provided, the host team 
leader should seek a written request from the head of the inspection 
team.

Subpart C--Record Keeping and Inspection Requirements


Sec. 103.4  General.

    This subpart implements the enforcement of the civil penalty 
provisions of section 501 of the Chemical Weapons Convention 
Implementation Act of 1998 (CWCIA), and sets forth relevant 
administrative proceedings by which such violations are adjudicated. 
Both the Department of State (in this subpart), and the Department of 
Commerce (in part 719 of the CWCR at 15 CFR parts 710 through 721) are 
involved in the implementation and enforcement of section 501.


Sec. 103.5  Violations.

    (a) Refusal to permit entry or inspection. No person may willfully 
fail or refuse to permit entry or inspection, or to disrupt, delay or 
otherwise impede an inspection, authorized by the CWCIA.
    (b) Failure to establish or maintain records. No person may 
willfully fail or refuse:
    (1) To establish or maintain any record required by the CWCIA or 
the Chemical Weapons Convention Regulations (CWCR, 15 CFR parts 710 
through 721) of the Department of Commerce; or
    (2) To submit any report, notice, or other information to the 
United States Government in accordance with the CWCIA or CWCR; or
    (3) To permit access to or copying of any record required by the 
CWCIA or regulations thereunder, including information that is exempt 
from disclosure under the Freedom of Information Act pursuant to 
section 103(g) or section 404 of the CWCIA or Sec. 711.2 or Supplement 
1 of Part 711 of the CWCR.


Sec. 103.6  Penalties.

    (a) Civil penalties--(1) Civil penalty for refusal to permit entry 
or inspection. Any person that is determined to have willfully failed 
or refused to permit entry or inspection, or to have disrupted, delayed 
or otherwise impeded an inspection authorized by the CWCIA, in 
violation of Sec. 103.5 (a) of this part, shall pay a civil penalty in 
an

[[Page 39248]]

amount not to exceed 9$25,000 for each violation. Each day the 
violation continues constitutes a separate violation.
    (2) Civil penalty for failure to establish or maintain records. Any 
person that is determined to have willfully failed or refused to 
establish or maintain any record required by the CWCIA or CWCR (15 CFR 
parts 710 through 721), or to submit any report, notice, or other 
information, required by the CWCIA or the CWCR, or to permit access to 
or copying of any record exempt from disclosure under the CWCIA or 
CWCR, in violation of Sec. 103.5 (b) of this part, shall pay a civil 
penalty in an amount not to exceed $5,000 for each violation.
    (b) Criminal penalties--Fine or imprisonment for refusal to permit 
entry or inspection. Any person that knowingly violates the CWCIA by 
willfully failing or refusing to permit entry or inspection, or by 
disrupting, delaying or otherwise impeding an inspection authorized by 
the CWCIA, or that knowingly violates the CWCIA by willfully failing or 
refusing to establish or maintain any required record, or to submit any 
required report, notice, or other information, or by willfully failing 
or refusing to permit access to or copying of any record exempt from 
disclosure under the CWCIA or CWCR, shall, in addition to or in lieu of 
any civil penalty that may be imposed, be fined under Title 18 of the 
United States Code, or be imprisoned for not more than one year, or 
both.
    (c) Other remedial action--(1) Injunction. The United States may, 
in a civil action, obtain an injunction against:
    (i) The conduct prohibited under 18 U.S.C. 229 or 229C; or
    (ii) The preparation or solicitation to engage in conduct 
prohibited under 18 U.S.C. 229 or 229D.
    (2) In addition, the United States may, in a civil action, restrain 
any violation of section 306 or section 405 of the CWCIA, or compel the 
taking of any action required by or under the CWCIA or the Convention.


Sec. 103.7  Initiation of administrative enforcement proceedings.

    (a) Issuance of Notice of Violation and Assessment (NOVA). The 
Director of the Office of Export Enforcement, Bureau of Export 
Administration, Department of Commerce, may request that the Secretary 
initiate an administrative enforcement proceeding. If the request is in 
accordance with applicable law, the Secretary of State shall initiate 
an administrative enforcement proceeding under 15 CFR 719.1(a)(2) by 
providing notice of the initiation of proceedings through issuance of a 
Notice of Violation and Assessment (NOVA), so long as the initiation of 
such a proceeding is in accordance with applicable law. The Office of 
Chief Counsel for Export Administration, Department of Commerce shall 
serve the NOVA as directed by the Secretary.
    (b) Content of NOVA. The NOVA shall constitute a formal complaint, 
and will set forth the basis for the issuance of the proposed order. It 
will set forth the alleged violation(s) and the essential facts with 
respect to the alleged violation(s), reference the relevant statutory, 
regulatory or other provisions, and state the amount of the civil 
penalty to be assessed. The NOVA will inform the respondent of the 
right to request a hearing pursuant to the CWCR (15 CFR parts 710 
through 721) at 15 CFR 719.6, inform the respondent that failure to 
request such a hearing shall result in the proposed order becoming 
final and unappealable on signature of the Secretary of State and 
provide payment instructions. A copy of this section, and the 
Department of Commerce regulations that govern the administrative 
proceedings, will accompany the NOVA.
    (c) Proposed order. A proposed order shall accompany every NOVA. It 
will briefly set forth the substance of the alleged violation(s) and 
the statutory, regulatory or other provisions violated. It will state 
the amount of the civil penalty to be assessed.
    (d) Notice of initiation of proceedings. The Secretary shall 
notify, via the Department of Commerce, the respondent (or respondent's 
agent for service of process, or attorney) of the initiation of 
administrative proceedings by sending, via overnight mail, facsimile, 
or by personal delivery, the NOVA and proposed order to the respondent 
(or respondent's agent for service of process or attorney).
    (e) Demand for hearing and answer. If the respondent wishes to 
contest the NOVA and proposed order, the respondent must demand a 
hearing in writing within 15 days from the date of the NOVA, and must 
answer the NOVA within 30 days from the date of the demand for hearing.
    (f) Waiver. The failure of the respondent to file a request for a 
hearing and an answer within the times provided constitutes a waiver of 
the respondent's right to appear and contest the allegations set forth 
in the NOVA and proposed order. If no hearing is requested or no answer 
is provided, the Secretary will sign the proposed order, which shall, 
upon signature, become a final and unappealable order.
    (g) Administrative procedures. The regulations that govern the 
administrative procedures that apply when a hearing is requested are 
set forth in the CWCR at 15 CFR part 719.


Sec. 103.8  Final agency decisions after administrative proceedings.

    (a) Review of initial decision--(1) Petition for review. Any party 
may, within 3 days of the Administrative Law Judge's (ALJ) 
certification of the initial decision, petition the Secretary for 
review of the initial decision. A petition for review shall be 
addressed to and served on Executive Director of the Office of the 
Legal Adviser, U.S. Department of State, 2201 C Street, N.W., Room 
5519, Washington D.C. 20520, and shall also be served on the Chief 
Counsel for Export Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Room H-3839, Washington, D.C. 
20230, and all other parties. Petitions for review may be based only on 
one or more of the following grounds:
    (i) A finding of material fact is clearly erroneous based on the 
evidence in the record;
    (ii) A necessary legal conclusion is contrary to law or precedent;
    (iii) A substantial and important question of law, policy, or 
discretion is involved (including the amount of the civil penalty); or
    (iv) A prejudicial procedural error has occurred.
    (2) Content of petition for review. The petition must specifically 
set forth the reason that review is requested and be supported by 
citations to the record, statutes, regulations, and principal 
authorities. Issues of fact or law not argued before the Administrative 
Law Judge may not be raised on review unless they were raised for the 
first time in the initial decision and could not reasonably have been 
foreseen and raised by the parties during the hearing. New or 
additional evidence that is not a part of the record before the ALJ 
will not be considered.
    (3) Decision to review. Review of the initial decision by the 
Secretary is discretionary, and is not a matter of right. The Secretary 
shall accept or decline review of the initial decision within 3 days 
after a petition for review is filed. If no such petition is filed, the 
Secretary may, on his or her own initiative, notify the parties within 
6 days after the ALJ's certification of the initial decision that he or 
she intends to exercise his or her discretion to review the initial 
decision.
    (4) Effect of decision to review. The initial decision is stayed 
until further

[[Page 39249]]

order of the Secretary upon a timely petition for review, or upon 
action to review taken by the Secretary on his or her own initiative.
    (5) Review declined. If the Secretary declines to exercise 
discretionary review, such order will be served on all parties 
personally, by overnight mail, or by registered or certified mail, 
return receipt requested. The Secretary need not give reasons for 
declining review.
    (6) Review accepted. If the Secretary grants a petition for review 
or decides to review the initial decision on his or her own initiative, 
he or she will issue an order confirming that acceptance and specifying 
any issues to be briefed by all parties within 12 days after the order. 
Briefing shall be limited to the issues specified in the order. Only 
those issues specified in the order will be considered by the 
Secretary. The parties may, within 5 days after the filing of any brief 
of the issues, file and serve a reply to that brief. No oral argument 
will be permitted. The Department of Commerce shall review all written 
submissions, and, based on the record, make a recommendation to the 
Secretary as to whether the ALJ's initial decision should be modified 
or vacated. The Secretary will make a final decision within 30 days 
after the initial decision.
    (b) Factors considered in assessing penalties. In reviewing the 
amount of the civil penalty determined by the ALJ, the Secretary shall 
take into account the nature, circumstances, extent and gravity of the 
violation(s), and, with respect to the respondent, the respondent's 
ability to pay the penalty, the effect on the respondent's ability to 
continue to do business, the respondent's history of prior violations, 
the respondent's degree of culpability, the existence of an internal 
compliance program, and such other matters as justice may require.
    (c) Final decision. Unless the Secretary, within 30 days after the 
date of the initial decision and order, modifies or vacates the 
decision and order, with or without conditions, the ALJ's initial 
decision and order shall become effective as the final decision and 
order of the United States Government. If the Secretary does modify or 
vacate the initial decision and order, that decision and order of the 
Secretary shall become the final decision and order of the United 
States Government. The final decision and order shall be served on the 
parties and will be made available to the public.


Sec. 103.9  Final agency decision after settlement negotiations.

    (a) Settlements based on letter of intent to charge--(1) Approval 
of settlement. Pursuant to Sec. 719.5(b)(2) of the CWCR (15 CFR parts 
710 through 721), the Department of Commerce may notify a respondent by 
letter of the intent to charge. If, following the issuance of such a 
letter of intent to charge, the Department of Commerce and respondent 
reach an agreement to settle a case, the Department of Commerce will 
submit the draft NOVA, proposed order and a recommended settlement 
agreement signed by a representative of the Department of Commerce and 
respondent to the Secretary for approval and signature, if the 
recommended settlement agreement is in accordance with applicable law. 
No action is required by the ALJ in cases where the Secretary issues 
such an order.
    (2) Refusal to approve settlement. If the Secretary refuses to 
approve the settlement, the Secretary will notify the parties and the 
case will proceed as though no settlement proposal had been made.
    (b) Settlements reached during administrative proceedings--(1) 
Approval of settlement. When the Department of Commerce and respondent 
reach an agreement to settle the allegations after administrative 
proceedings have been initiated before an ALJ, the Department of 
Commerce will submit the NOVA, the proposed order, and the recommended 
settlement agreement signed by a representative of the Department of 
Commerce and respondent to the Secretary of State for approval and 
signature, if the recommended settlement agreement is in accordance 
with applicable law. If the Secretary approves the settlement, the 
Secretary shall notify the ALJ that the case is withdrawn from 
adjudication.
    (2) Refusal to approve settlement. If the Secretary of State 
refuses to approve the settlement, the Secretary of State will notify 
the parties of the disapproval, and settlement negotiations will resume 
or the case will proceed to adjudication by the ALJ as though no 
settlement proposal had been made. See CWCR at 15 CFR 719.19.
    (c) Scope of settlement. Any respondent who agrees to an order 
imposing any administrative sanction does so solely for the purpose of 
resolving the claims in the administrative enforcement proceeding 
brought pursuant to this part. This reflects the fact that the 
Government officials involved have neither the authority nor the 
responsibility for initiating, conducting, settling, or otherwise 
disposing of criminal proceedings. That authority and responsibility is 
vested in the Attorney General and the Department of Justice.
    (d) Finality. Cases that are settled may not be reopened or 
appealed.


Sec. 103.10  Appeals.

    Any person adversely affected by a final order respecting an 
assessment may, within 30 days after the order is issued, file a 
petition in the Court of Appeals for the District of Columbia Circuit, 
or in any other circuit in which the person resides or transacts 
business, to appeal the order. No other reopening or appeal is 
permitted.


Sec. 103.11  Payment of final assessment.

    (a) Time for payment. Full payment of the civil penalty must be 
made within 30 days of the date upon which the final order becomes 
effective, or within the time specified in the order. Payment shall be 
made in the manner specified in the NOVA.
    (b) Enforcement of order. The Secretary, through the Attorney 
General, may file suit in an appropriate district court if necessary to 
enforce compliance with a final order issued pursuant to this part. 
This suit will include a claim for interest at current prevailing rates 
from 30 days after a final order was issued or, if an appeal was filed 
pursuant to Sec. 103.10 of this part, from the date of final judgment 
of the court of appeals pursuant to Sec. 103.10 of this part.
    (c) Offsets. The amount of any civil penalty imposed by a final 
order may be deducted from any sum(s) owed by the United States to a 
respondent.


Sec. 103.12  Reporting a violation.

    If a person learns that a violation of the Convention, the CWCIA, 
or the CWCR (15 CFR parts 710 through 721) has occurred or may occur, 
that person may notify: United States National Authority, Office of 
Chemical and Biological Weapons Conventions, Bureau of Arms Control, 
U.S. Department of State, Washington, DC 20520, Telephone: (703) 235-
1204, Facsimile: (703) 235-1065.
J. Michael Lekson,
Deputy Assistant Secretary of State for Multilateral Conventional Arms 
Control, Bureau of Arms Control.
[FR Doc. 99-17617 Filed 7-20-99; 8:45 am]
BILLING CODE 4710-27-P