On 11 September 2013 the Department of Commerce’s Bureau of Industry and Security (BIS) proposed significant revisions to the Unverified List (UVL) provisions in the Export Administration Regulations (EAR). See Revisions to the Export Administration Regulations (EAR): Unverified List (UVL), 78 Fed. Reg. 55664 (Sep. 11, 2013). BIS proposes to amend the EAR by: (1) requiring exporters to file an Automated Export System (AES) record for all exports subject to the EAR involving entities listed on the UVL even if the transaction is otherwise eligible for an exemption from reporting; (2) suspending the availability of license exceptions for exports, reexports, and transfers (in-country) involving entities listed on the UVL; (3) requiring exporters, reexporters, and transferors (in-country) to obtain an end-user statement from UVL-listed entities before proceeding with exports, reexports, and transfers (in-country); and (4) adding to the EAR procedures to request removal or modification of a UVL entry.

BIS has proposed these changes in order to increase its own awareness of transactions involving UVL entities, and to encourage exporters to apply more scrutiny to transactions involving UVL-listed entities. Companies doing business with UVL entities should review their current compliance procedures.

The proposed changes are as follows:

  • Exporters would be required to file an AES record for all exports involving an entity on the UVL. Under current regulations, an AES filing is only required for UVL-listed entities if an export license is required under the EAR (or under other export control regulations) or if the transaction is above US$2,500. Going forward, AES filings will be required for all exports, regardless of the items being exported or their value, to UVL-listed entities.
  • The rule would suspend license exceptions for exports, reexports, and transfers (in-country) of U.S.-origin items involving UVL entities. When an export, reexport, or transfer (in-country) is otherwise eligible for a license exception, if a party to the transaction is a UVL entity, the use of license exceptions is not authorized and the exporter must apply to BIS for a license.
  • BIS would require that exporters obtain a signed UVL statement from UVL entities before proceeding with any export, reexport, or transfer (in-country) involving such entities and when the item at issue is subject to the EAR but does not require a license under the EAR. The rule would require that the statement certify the end use, end user, and country of ultimate destination of the items, and set forth the entity’s consent to an end-use check by the U.S. Government. The UVL entity would also be required to include its complete contact information in the UVL statement, including its physical address. However, a UVL statement would not be needed for transactions requiring a license. BIS’s rationale for this change is to establish that the UVL-listed entity knows that it is required to comply with the EAR and agrees to an end-use check, to provide some assurance that the U.S.-origin item would be delivered to an identified end user and end use in compliance with the EAR, and to assist in the event of non-compliance.
  • The rule proposes to modify the procedures for requesting removal of an entity listed on the UVL by adding decisions on requests to remove or modify a UVL entry to the list of administrative actions that are not subject to Part 756 appeals. Decisions regarding the removal or modification of UVL listings would now be made by the Deputy Assistant Secretary for Export Enforcement, based on a demonstration by the listed entity of its bona fides.

BIS will be accepting comments on the proposed rule through 11 October 2013. A copy of the rule is available at: http://www.gpo.gov/fdsys/pkg/FR-2013-09-11/pdf/2013-21996.pdf.