The Bureau of Industry and Security (“BIS”) recently released documents detailing a settlement that it entered into with Mattson Technologies relating to Mattson’s unlicensed exports of pressure transducers classified under ECCN 2B230. That ECCN covers pressure transducers with pressure sensing elements made of aluminum, nickel or certain alloys thereof and which meet a certain standard of accuracy set forth in the ECCN. Transducers of those specifications are needed for centrifuges producing weapons-grade uranium, and there is some evidence that the Iranians are actively acquiring or trying to acquire such devices.

The violations were voluntarily disclosed by Mattson. According to an SEC filing, the disclosure occurred in 2008 and the violations were said to be “inadvertent.” None of the transducers were shipped to Iran. However, transducers were shipped to Israel, Malaysia, Singapore, PRC and Taiwan and were valued at “approximately $78,000″ according to the Charging Letter.

BIS disputed that the exports were inadvertent and claimed that, even though “in May 2006, one of Mattson’s supply chain partners informed it that pressure transducers that Mattson [used] required export licenses when shipped to Mattson customers in certain foreign countries,” Mattson went ahead and shipped these items without license. As a result, BIS fined Mattson $850,000, suspending all but $250,000 of that fine, which is still a hefty fine for matters that involved $78,253 in exports and were voluntarily disclosed. (I know, I know, the agency could have fined Mattson 43 trillion dollars — actually $11,750,000 at $250,000 for each of the 47 counts — but decided to cut Mattson some slack.)

One interesting takeaway from this case — other than that VSDs can be expensive — is how it appears that Mattson got into trouble here. Mattson, according to its website, “designs, manufactures, and markets semiconductor wafer processing equipment used in the fabrication of integrated circuits.” Apparently, these machines utilize pressure transducers; and it is likely that the transducers at issue were shipped as spare or replacement parts for these machines to foreign customers that had purchased Mattson’s processing equipment. The machines themselves may have been classified as EAR99. Often companies do not realize that even if a system may not require an export license, its component parts might when shipped separately from the system. That is an understandable area of confusion and likely what, at least in part, happened here. An essential part of export training is to teach employees that parts and components may have different ECCNs from the equipment to which those parts and components belong.

Back when the Bureau of Industry and Security (“BIS”) was begging Congress to give it authority to increase the amount of penalties it could impose, it said that higher penalties would avoid the need for creative charging letters which allege that a single action constitutes four, five, six or more separate violations. For a while, BIS seemed to stick to its word after Congress essentially gave BIS the power to fine exporters in amounts equal to the gross domestic products of certain small countries.

But good intentions, like party balloons, are ephemeral. Look at the settlement documents recently released by BIS pursuant to which Dresser, Inc. agreed to pay $88,000 to settle charges of export violations. In that charging letter, BIS resurrects from its deserved grave the old practice, thought to be forsworn, of adding a separate count for an S.E.D. violation to each and every export count. The first ten counts allege export of control valves classified as ECCN 2B350 without a license. The next 10 counts are for S.E.D. violations for each of the ten preceding export violations. For nine of the ten S.E.D. violations, the only alleged misstatement was “N.L.R.,” or “No License Required” when in fact licenses were required. Of course, every export violation where an S.E.D. is required and the exporter fails to get a license will necessarily involve this same S.E.D. violation, effectively increasing the maximum penalty for export violations from $250,000 to $500,000.

One of the charged S.E.D. violations also involves an alleged failure by the company to state the correct ECCN on the S.E.D. It’s not entirely clear what ECCN was listed. If the incorrect ECCN charged was EAR99, then this will necessarily occur with every export violation. It also seems likely that the other nine S.E.Ds showed EAR99 as the ECCN, making it unclear as to why just one instance of this was singled out.

Also puzzling here was why BIS engaged in this piling on of charges where the ultimate penalty was $88,000 and didn’t require these charging gymnastics. Where the exporter has purposefully given a false description of the item exported in order to export it without a license, I can see some justification for adding an S.E.D. charge. But there is absolutely nothing in this case to suggest that the S.E.D.s called the exported items anything but what they were: control valves.