On June 30, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced four significant policy changes intended to strengthen its administrative enforcement of the Export Administration Regulations (EAR):
- Significantly higher penalties. BIS will use its existing authority to impose higher penalties in egregious cases to ensure resolutions are commensurate with the national security harm caused, discourage violations, and provide parity for companies that proactively adopt robust compliance programs. Under this new approach, BIS will more aggressively and uniformly apply the settlement guidelines in Supplement 1 to Part 766 of the EAR, including how it considers aggravating and mitigating factors to determine penalty amounts. Voluntary self-disclosures (VSDs) will continue to be considered a mitigating factor that can reduce penalty amounts.
- Non-monetary resolutions for less serious violations. In pending cases that are not egregious but rise to the level of a warning letter or no-action letter, BIS will offer non-monetary settlement agreements. These agreements will impose a suspended denial order with conditions, such as training and compliance requirements. Alleged violators will also be required to accept responsibility, admit to their conduct, and commit to enhanced compliance measures moving forward.
- Elimination of “no admit, no deny” settlements. As previewed in our May 26, 2022 client alert, BIS will no longer use “no admit, no deny” settlements. While a party will still receive a reduced penalty for entering into a settlement, the party will be required to admit that the underlying conduct occurred.
- Dual-track processing for VSDs. BIS will now fast-track minor and technical violations to resolve them with a warning or no-action letter within 60 days of the final VSD submission. Alternatively, BIS will assign a special agent and an attorney from the Office of Chief Counsel to serious violations. For the most serious cases, the Department of Justice may also assign an attorney from the Counterintelligence and Export Control Section. This dual-track process should create a quicker turnaround for minor or technical violations.