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Export Enforcement Rules Tightened Under New BIS Regulations

Friday, August 09, 2013
Sandler, Travis & Rosenberg Trade Report

The Bureau of Industry and Security has issued a final rule making the following changes to the Export Administration Regulations to better resolve administrative enforcement proceedings in a timely manner and provide more efficient notice of administrative charging letters. This rule will be effective as of Sept. 9 and incorporates several revisions from BIS’s November 2012 proposed rule.

Voluntary Self-Disclosures. The final, comprehensive narrative account required in voluntary self-disclosures of violations of the EAR must be submitted to the Office of Export Enforcement within 180 days of OEE’s receipt of the initial VSD notification. This requirement will apply to initial notifications received on or after Sept. 9. BIS has explained that currently, because there is no time limit, initial notifications are “too often” not promptly followed by comprehensive narrative accounts, requiring the OEE to maintain open files on VSDs for extended periods of time without making sufficient progress toward resolving the matter disclosed.

The 180-day deadline may be extended if warranted, although OEE will be able to place conditions on an extension such as a requirement for the disclosing person to undertake specific interim remedial compliance measures. In response to public comments, the final rule includes greater detail about what a deadline extension request should contain as well as examples of circumstances that may support such a request. BIS notes that it is unlikely to grant extension requests that appear to be “boilerplate” requests not based on the particular facts and circumstances or to grant repeated requests or those that appear to be submitted on a routine basis.

Failure to meet either the 180-day deadline or an extended deadline will not be an additional violation of the EAR but could reduce or eliminate the mitigating impact of the VSD.

Charging Letters. The procedures for instituting administrative enforcement proceedings include issuing a charging letter, which sets forth the essential facts about the alleged violations as well as certain other information about the case and informs the respondent that failure to answer the charges will be treated as a default. BIS is now adding as an authorized method of notifying respondents of the issuance of a charging letter the sending of a copy of the letter to the respondent’s last known address by express mail or by a commercial courier or delivery service.

Respondents are required to answer a charging letter within 30 days of being served with notice of its issuance. Currently the date of service is determined by the date of delivery or of attempted delivery if delivery is refused. BIS is removing the phrase “if delivery is refused,” thus eliminating the requirement that an attempted delivery involve documentation that delivery was refused.

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