On June 22, 2016, the Bureau of Industry and Security (BIS) published in the Federal Register a final rule [Docket No. 151204999–6179–02] revising the BIS guidance regarding administrative enforcement cases based on violations of the Export Administration Regulations (EAR). The rule rewrites its Guidance on Charging and Penalty Determinations in Settlement of Administrative Enforcement Cases found in Supplement No. 1 to part 766 of the EAR, setting forth the factors that the Office of Export Enforcement (OEE) considers when setting penalties in settlements of administrative enforcement cases and when deciding whether to pursue administrative charges or settle allegations of EAR violations.
BIS is amending the EAR to update its Guidance in order to make civil penalty determinations more predictable and transparent to the public and aligned with those promulgated by the Treasury Department’s Office of Foreign Assets Control (OFAC). OFAC administers most of its sanctions programs under the International Emergency Economic Powers Act (IEEPA), the same statutory authority by which BIS implements the EAR. OFAC uses the transaction value as the starting point for determining civil penalties pursuant to its Economic Sanctions Enforcement Guidelines. Under IEEPA, criminal penalties can reach 20 years imprisonment and $1 million per violation, and administrative monetary penalties can reach $250,000 (subject to adjustment in accordance with U.S. law, e.g., the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Pub. L. 114–74, sec. 701)) or twice the value of the transaction, whichever is greater. Both agencies coordinate and cooperate on investigations involving violations of export controls that each agency enforces, including programs relating to weapons of mass destruction, terrorism, Iran, Sudan, Specially Designated Nationals and Specially Designated Global Terrorists.
This final rule does not apply to alleged violations of regulations concerning restrictive trade practices and boycotts, which would continue to be subject to the guidance. The guidance also will not apply to pending matters where, as of July 22, 2016, there are ongoing settlement negotiations and a charging letter has not been filed. The new rule is effective July 22, 2016.