In a Federal Register notice dated August 9, 2013, the Department of Commerce, Bureau of Industry and Security (BIS) issued a final rule amending § 764.5 of the Export Administration Regulations (EAR) to require that final voluntary self-disclosures (VSDs) of EAR violations be received by the Office of Export Enforcement (OEE) within 180 days of OEE’s receipt of an initial VSD. BIS published a proposed rule with the same 180-day deadline on November 7, 2012. The 180-day deadline only applies to initial notifications received by OEE on or after the effective date of this final rule, which is September 9, 2013. The deadline does not apply to VSDs submitted to BIS’s Office of Antiboycott Compliance under § 764.8.
While an initial notification of a VSD is not explicitly required by the EAR, the timeliness of a VSD is important because BIS will only consider it as a mitigating factor for EAR violations if OEE receives the VSD before the government obtains the information from another source and commences an investigation into the matter. Section 764.5 provides that an initial notification of VSD may be submitted describing the general nature and extent of suspected violations soon after discovery, to be supplemented by a more fulsome, final VSD, following a full review of the circumstances. BIS typically will notify the disclosing party in writing of the date on which an initial notification is received. The new rule clarifies that BIS would not consider a failure to meet the 180-day deadline (or an extended deadline granted by the Director of OEE) to be an additional violation of the EAR, but a late submission may reduce or eliminate the mitigating impact of the VSD. A final VSD that fulfills the requirements of § 764.5 is deemed to have been submitted to OEE on the date that BIS receives the initial notification.
The new rule provides the Director of OEE with discretion to extend the 180-day deadline if doing so would serve US Government interests or upon a showing by the party that more time is reasonably necessary to complete the final disclosure report. Any request for an extension of the deadline should be submitted as soon as possible and must be received before the 180-day deadline has passed. Importantly, BIS states in the Federal Register notice that it believes 180 days is ample time to complete the final notification in most instances. It also states that requests for extensions will normally not be justified and that it will not normally grant “boilerplate” extension requests. BIS recommends that the extension request establish that the notifier: (1) began its review promptly after discovering the violations; (2) has been conducting its review and preparation of the narrative account as expeditiously as can be expected, consistent with the need for completeness and accuracy; (3) reasonably needs the requested extension despite having acted consistently with (1) and (2); and (4) has considered whether interim compliance or other corrective measures may be needed and has undertaken such measures as appropriate to prevent recurring or additional violations. Additionally, extension requests should set out a reasonable proposed timeline for submission of the final notification and provide a contact person.
The Federal Register notice also provides the following three illustrative examples of circumstances that could support an extension:
- Records or information from multiple entities and/or jurisdictions are needed to complete the narrative account.
- Material changes occur in the business, such as a bankruptcy, large layoffs, or a corporate acquisition or restructuring, and present difficulties in gaining access to, or analyzing, information needed to complete the narrative account.
- A pending US Government determination (such as a commodity jurisdiction determination or a classification request) is needed to complete the narrative account.
It is important to note that OEE may condition its approval of an extension on an agreement to toll the statute of limitations, if such an agreement was not already in place, or on the implementation of interim remedial measures.