DOE Introduces Monetary Penalties for Nuclear Export Violations

The Energy Department issued a final rule this month that will allow it to impose monetary penalties for illegal exports of certain nuclear items, including technology. The rule implements a provision in the FY 2019 National Defense Authorization Act that clarified DOE’s ability to impose penalties for violations of Part 810 of the Atomic Energy Act, the agency said, which places controls on exports of “unclassified nuclear technology and assistance.” The agency also issued a set of frequently asked questions to provide guidance on the change.

Although DOE believes U.S. exporters “generally comply” with its restrictions, the rule “establishes procedures for DOE to impose monetary civil penalties in the event of a violation,” said Corey Hinderstein, deputy administrator for defense nuclear nonproliferation at the agency’s National Nuclear Security Administration. “This supports America’s goal of reducing the theft of U.S. technology by foreign competitors, supports U.S. jobs, and protects the valuable intellectual property of every U.S. nuclear energy organization.”

The rule takes effect Feb. 13, and DOE said it will impose penalties only on violations that occur after the rule is effective. But if DOE “learns of a continuing violation that began prior to this rule's effective date but continued thereafter,” the agency may impose a penalty “only for the period of the continuing violation that followed the effective date of this rule.”

Before this rule, DOE's Part 810 regulations didn’t explicitly include provisions to allow the agency to impose civil monetary penalties for export violations. Now, the agency can impose penalties after proving a violation occurred, it said. DOE set the maximum penalty amount at $112,131, which will be adjusted for inflation.

DOE finalized the change after issuing a proposed rule in 2019, which described procedures the agency will take before and after issuing a penalty, penalty calculation criteria and more. The agency said it issued the final rule after undertaking a “careful review and consideration” of public comments and making several changes to the proposed language.

One revision will clarify the “burdens of proof that apply in hearings” relating to export violations. DOE said it “shall have the burden of proving the violation(s) as set forth in the final notice of violation by a preponderance of the evidence,” and the person who committed the alleged violation “shall have the burden of proving any affirmative defense by a preponderance of the evidence.” In the proposed rule, DOE stated only that the person requesting the hearing had the burden of “going forward and of demonstrating that the decision to impose the civil penalty is not supported by substantial evidence.”

Another change eliminated some ambiguity surrounding the agency’s issuance of penalties. DOE revised the rule 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.”

In response to comments, DOE also clarified that it may issue “no action” or “warning” notices to certain exporters in lieu of penalties. The agency also said it will include an “explanation” for each violation to provide insight on its penalty calculation.

Other commenters asked the agency to clarify what it meant by a “continuing violation.” The agency said in its proposed rule that it will consider a violation that occurs over multiple days a continuing violation, meaning that each day would constitute a “separate violation for the purpose of computing the applicable civil penalty.”

Commenters said this was unclear. The Nuclear Energy Institute, for example, asked whether an illegal export of 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.”

In this instance, DOE said the person “committed a single violation on the day that they sent the email.” In contrast, a U.S. company that allows a foreign national to access a facility with export controlled information for five successive days is committing a continuing violation, DOE said. The agency said it may issue more guidance surrounding continuing violations and how it determines penalty amounts.