The first quarter of 2024 saw numerous developments on the export control front. This report summarizes the key developments and provides links to the relevant Federal Register notices and/or agency announcements.
Export control developments concerning Russia and Belarus can be found on our Russia-Ukraine War Resource Center webpage.
BIS Updates Freight Forwarder Guidance and Best Practices
Agency: Department of Commerce, Bureau of Industry and Security
Publication Date: March 28, 2024 The Bureau of Industry and Security (BIS) has published updated guidance and best practices for freight forwarders and exporters that use freight forwarders to help them better ensure compliance with U.S. export controls and regulatory requirements, including the Export Administration Regulations (EAR). The guidance focuses on freight forwarder roles and responsibilities, including responsibilities with respect to routed and non-routed exports, expectations of the exporter or U.S. principal party in interest (USPPI), factors to consider when selecting a freight forwarder, how the antiboycott regulations apply to freight forwarders, and red flags specific to freight forwarders and USPPIs. Consistent with recent BIS actions, the guidance recommends a heightened level of know-your-customer diligence for freight forwarders and related parties.
BIS Issues New Resource To Facilitate Antiboycott Compliance
Agency: Department of Commerce, Bureau of Industry and Security
Publication Date: March 28, 2024
BIS has also published a new resource for companies, financial institutions, freight forwarders and others to help them identify boycott-related requests they may receive. Part 760 of the EAR prohibits U.S. persons from complying with certain boycott requests and imposes a reporting obligation to BIS’ Office of Antiboycott Compliance (OAC) for the receipt of certain boycott requests. The new resource makes public entities that have been identified as having made a boycott-related request in reports received by BIS. The list, which is not exhaustive, is posted on OAC’s webpage. Again, BIS’ message is that it expects contracting parties to conduct heightened due diligence.
International Traffic in Arms Regulations: Revision to U.S. Munitions List Category XI-High-Energy Storage Capacitors
Agency: Department of State
Publication Date: March 25, 2024
Effective Date: April 24, 2024
In response to comments received regarding the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC) interim final rule that became effective on May 21, 2023, regarding classification of certain high-energy storage capacitors on the U.S. Munitions List (USML), DDTC is further amending USML Category XI. The April 2024 amendments remove certain high-energy storage capacitors from the USML and better identify the high-energy storage capacitors that remain covered by USML Category XI. Category XI now includes a definition of “rated voltage” to more clearly identify capacitors within the scope of USML Category XI(c)(5).
Export Administration Regulations End-User Controls: Imposition of Restrictions on Certain Persons Identified on the List of Specially Designated Nationals and Blocked Persons
Agency: Department of Commerce, Bureau of Industry and Security
Publication Date: March 21, 2024
Effective Date: March 21, 2024
BIS added end-user controls to the EAR, and in certain cases, it expanded existing end-user controls on persons identified on the Specially Designated Nationals and Blocked Persons (SDN) List maintained by the Department of the Treasury's Office of Foreign Assets Control (OFAC). The new controls target transactions not subject to OFAC jurisdiction, including transactions involving only non-U.S. persons, and they apply in addition to other EAR controls – for example, if the SDN is also on the Entity List or the transaction involves items on the Commerce Control List (CCL).
As a result, a license is now required for all items subject to the EAR for transactions involving persons blocked under 14 OFAC sanctions programs. To prevent duplicate licensing requirements, transactions covered by the new rule are not subject to separate EAR authorization if they are authorized under an OFAC-specific or a general license, exempt under OFAC’s regulations, or all terms and conditions of an OFAC general license would be met if the transaction had been subject to OFAC jurisdiction. License exceptions cannot be used to overcome these license requirements.
Tables comparing the new controls with the previously applicable controls are included in the preamble to the Federal Register notice. The 14 OFAC sanctions program covered by this new rule are:
- Russia’s invasion of Ukraine:
- Belarus Sanctions Regulations, 31 CFR Part 548; Executive Order 13405
- Executive Order 14038 (BELARUS–EO 14038)
- Russian Harmful Foreign Activities Sanctions Regulations 31 CFR Part 587; Executive Order 14024
- Executive Order 13660 (UKRAINE–EO 13660)
- Executive Order 13661 (UKRAINE–EO 13661)
- Executive Order 13662 (UKRAINE–EO 13662)
- Executive Order 13685 (UKRAINE–EO13685)
- Terrorism Related:
- Foreign Terrorist Organizations Sanctions Regulations, 31 CFR Part 597 (FTO)
- Global Terrorism Sanctions Regulations, 31 CFR Part 594 (SDGT)
- Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 CFR Part 544 (NPWMD)
- Criminal Networks and Narcotics Related:
- Executive Order 14059 (ILLICIT DRUGS–EO 140590)
- Narcotics Trafficking Sanctions Regulations, 31 CFR Part 536 (SDNT)
- Foreign Narcotics Kingpin Sanctions Regulations, 31 CFR Part 598 (SDNTK)
- Transnational Criminal Organizations Sanctions Regulations, 31 CFR Part 590; Executive Order 13581 (TCO)
Revisions To Export, Reexport and Transfer In-Country Controls for Nicaragua Under the Export Administration Regulations
Agency: Department of Commerce, Bureau of Industry and Security
Publication Date: March 15, 2024
Effective Date: March 15, 2024
BIS has amended the EAR to apply more restrictive treatment to exports and reexports to and transfers within Nicaragua of items subject to the EAR. The amendments include the addition of Nicaragua to the countries subject to the EAR’s military end-use and end-user restrictions in Part 744 of the EAR and stringent licensing policy for items on the CCL that are controlled for national security reasons. DDTC also added Nicaragua to the list of countries that are subject to a U.S. arms embargo under Part 126 of the International Traffic in Arms Regulations (ITAR). To reflect this changed status under the ITAR, BIS added Nicaragua to Country Group D:5.
International Traffic in Arms Regulations: Addition to List of Proscribed Countries
Agency: Department of State
Publication Date: March 15, 2024
Effective Date: March 15, 2024
As noted above, DDTC amended Section 126.1 of the ITAR to add Nicaragua to its list of countries subject to a policy of denial of applications for licenses or other approvals for exports and imports of defense services and defense articles destined for or originating in Nicaragua. License applications related to nonlethal military equipment intended solely for humanitarian assistance (including natural disaster relief) may be granted on a case-by-case basis.
Clarification of Controls on Radiation-Hardened Integrated Circuits and Expansion of License Exception GOV
Agency: Department of Commerce, Bureau of Industry and Security
Publication Date: March 13, 2024
Effective Date: March 13, 2024
BIS has amended the EAR to clarify controls on radiation-hardened integrated circuits, including when the controls extend to computer and telecommunications equipment incorporating such radiation-hardened integrated circuits. The amendments also expanded the availability of License Exception GOV for microelectronics items being exported, reexported or transferred in country in furtherance of a contract between the exporter, reexporter, or transferor and a department or agency of the U.S. government, including the Department of Energy and the Department of Defense.
Securing the Information and Communications Technology and Services Supply Chain: Connected Vehicles
Agency: Department of Commerce, Bureau of Industry and Security
Publication Date: March 1, 2024
Comments Close: April 30, 2024
BIS, through its Office of Information and Communications Technology Services, issued an Advance Notice of Proposed Rulemaking (ANPRM) seeking comments on the various issues and questions related to transactions involving information and communications technology and services integral to connected vehicles that are designed, developed, manufactured or supplied by persons owned by, controlled by or subject to the jurisdiction or direction of foreign adversaries (broadly defined), which could include countries or foreign nongovernment persons identified as such. This ANPRM builds on previously issued notices going back to 2021 and has helped BIS collect information to better determine the technologies and market participants most likely to be impacted. BIS has stated that any vehicle produced since 2016 may be a connected vehicle. Comments are due by April 30, 2024.
Revision of License Requirements of Certain Cameras, Systems or Related Components
Agency: Department of Commerce, Bureau of Industry and Security
Publication Date: February 23, 2024
Effective Date: March 8, 2024
BIS amended the EAR to eliminate license requirements for certain cameras, systems and related components when they are destined for military end users in Country Group A-1, which includes the closest allies of the United States, while clarifying that focal plane arrays remain subject to license requirements when subject to regional stability controls or certain other EAR controls. In addition to these changes, BIS added a new export control classification number (ECCN), ECCN 6A293, to control certain cameras that were not previously controlled by ECCNs 6A003 or 6A203. The new ECCN 6A293 is intended to capture cameras with certain minimum exposure time and throughput speed not controlled under ECCNs 6A003 or 6A203. Cameras now controlled under ECCN 6A293 are subject to nuclear proliferation and anti-terrorism reasons for control and will not be eligible for License Exception STA.
Commerce Proposes Rule To Advance U.S. National Security Interests and Implement Biden-Harris Administration’s AI Executive Order and National Cybersecurity Strategy
Agency: Department of Commerce
Publication Date: January 29, 2024
Comments Close: April 29, 2024
This notice of proposed rulemaking (NPRM) seeks comments on the proposed requirements for infrastructure-as-a-service providers or cloud infrastructure providers. The NPRM outlines proposed requirements to address the risk of foreign malicious actors using U.S. cloud services that could be deployed in malicious cyber-enabled activity to harm U.S. critical infrastructure or national security, including to train large artificial intelligence (AI) models. The proposed rule would require U.S. cloud infrastructure providers and their foreign resellers to implement and maintain customer identification programs, which would include collection of know-your-customer information. Comments are due by April 29, 2024.
BIS Deploys Assessment on the Use of Mature-Node Chip
Agency: Department of Commerce, Bureau of Industry and Security
Publication Date: January 18, 2024
Submission Deadline: April 30, 2024
Survey Available
BIS is conducting a comprehensive assessment of the use of mature-node semiconductor devices in supply chains that directly or indirectly support U.S. national security and critical infrastructure. The survey is intended to identify how U.S. companies are sourcing mature-node semiconductors, which are also known as legacy chips. Completion of the survey is mandatory for organizations contacted by BIS, but other organizations can elect to make a voluntary submission by April 30, 2024.
Department of State 2024 Civil Monetary Penalties Inflationary Adjustment and New Maximum Penalty for Violation of Section 38 of the Arms Export Control Act
Agency: Department of State,Directorate of Defense Trade Controls
Publication Date: January 5, 2024
Effective Date: January 5, 2024
On January 5, 2024, DDTC published a final rule to adjust the civil monetary penalties provided for in Section 127.10 of the ITAR as part of a larger rule amending penalties for all regulatory provisions maintained and enforced by the agency. The revised penalty amounts apply to those penalties assessed on or after January 5, 2024, regardless of the date on which the underlying facts or violations occurred. The ITAR civil penalties are now $1.2 million or twice the value of the transaction, whichever is greater, per violation for both companies and individuals.
Department of Commerce 2024 Civil Monetary Penalty Adjustments for Inflation
Agency: Department of Commerce
Publication Date: December 27, 2023
Effective Date: January 15, 2024
On December 27, 2023, the Department of Commerce published a final rule to adjust civil monetary penalties within its jurisdiction (including those provided for in the EAR) for inflation. The 2024 adjustments took effect on January 15 and apply only to those penalties, including those for which the associated violation predated the adjustment, which are assessed by the Department of Commerce (including BIS) after the effective date of this rule. The EAR civil penalties are now $368,136 or twice the value of transaction, whichever is greater, per violation for both companies and individuals.
The authors acknowledge with thanks the assistance of Dr. Bálint Bordács in preparing this report.
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