Regulatory Blast – Drinking from a Firehose!
The recent regulatory landscape is ever changing. In fact, I am finding it hard to stay up to date – and I am what some may say “experienced”! The other day, I told a colleague that I had not had an easy question to answer that week! In fact, I also said the same thing to a BIS licensing officer who agreed that there are not many simple answers in this landscape.
The Numbers:
To date there have been 39 Federal Registers notices published specific to the U.S. Department of Commerce, Bureau of Industry and Security (BIS). In 2023 there were 44 Federal Registers issued from BIS. There have been 52 Federal Register notices for the Directorate of Defense Trade Controls of the U.S. Department of State. And not to be outdone, The Office of Foreign Assets Control (OFAC) has issued 191 Federal Register notices!
These Federal Register notices involve enforcement actions, proposed rules, final rules, additions and in some limited cases removal of entities/parties from various restricted party lists. Specifically, there have been changes to ECCNs, new License Exceptions, new License Exemptions, proposed expansions of Activities of U.S. Persons and end use and end user controls. Bottom line, it is a lot to keep up with – but we are here to help!
Common trends:
- Increased Enforcement Actions
- To date OFAC has issued $65 Million in penalties.
- BIS has issued 48 Penalty Cases.
- Updated “Don’t Let This Happen to You” enforcement publication from BIS earlier this spring.
- BIS Implements Regulatory Changes to Voluntary Self-Disclosure Process and Penalty Guidelines
- Penalty Examples:
- The Department of State concluded settlement with RTX/Raytheon to resolve 750 violations of the ITAR that resulted in a 36-month Consent Agreement and a civil penalty of $200 million.
- Boeing also concluded a settlement to resolve 199 violations resulting in a 36-month Consent Agreement and a civil penalty of $51 million.
- BIS imposed a $5.8 million penalty against a Pennsylvania company for shipments of low-level items t parties tied to China’s hypersonic, UAV and military electronics program.
- Proposed expansion of Military End Use and End User Controls
- Proposed expansion of Activities of U.S. Persons
- Continuing focus on Foreign Direct Processing Rules
- Continuing focus on Advanced Computing and Semiconductor Manufacturing Items to China
- Expansion of the Validated End User (VEU) Program
- Additions to Restricted Parties List
- Enhanced control structure for firearms and related items
- International Agreement – G7 Announces Industry Guidance on Preventing Evasion of Export Controls and Sanctions Imposed on Russia
- BIS and DDTC Changes to Space and Space Related Controls
- Australia, United Kingdom and the U.S. DDTC License Exemption
- Removal of some export controls for United Kingdom and Australia – BIS
- BIS Issued Guidance to Financial Institutions on Best Practice for Compliance with the EAR
While we don’t have a crystal ball (maybe it is a task for the Magic 8 Ball), we should expect to continue to see both expanded regulations and enforcement with those regulations, paying special attention to trade with China, Russia, Venezuela and Iran. Certain activities of U.S. persons that may directly or indirectly support military, crime control or human rights may also be controlled to items that may not even be subject to the regulations. One thing that is apparent is that exporters need to stay up to date with the regulations to ensure that you are compliant. The regulations are already complicated, and compliance will require exporters to understand the regulations, their business and enact due diligence to support their business in maintaining strong compliance.
How do you do this?
Update your Export Management Compliance Program or relevant work instructions, SOPs, etc.
Ask Questions – We are here to help!
Stay informed:
- Subscribe to the Federal Register for both DDTC, BIS and OFAC.
- https://www.federalregister.gov/reader-aids/office-of-the-federal-register-announcements/2011/04/email-notifications-now-available
- Subscribe to both DDTC, BIS and OFAC RSS Feed
- Subscribe to Export Solutions Blog – subscribe here: https://www.exportsolutionsinc.com/resources/blog-digest/
Do you need help with setting up an export compliance program? Schedule a no-charge consultation with one of our team members today.
Rebecca Yeager is a Trade Compliance Consultant for Export Solutions -- a full-service consulting firm that specializes in helping companies comply with U.S. and international import/export regulations.