Top Ten Takeaways from the 2014 BIS Update

by Faegre Baker Daniels

Top Ten Takeaways from the 2014 BIS Update

The U.S. Commerce Department’s Bureau of Industry and Security (BIS) hosted its annual update conference from July 29-31 in Washington, DC.  Attendance was strong as always, and there was plenty to discuss about the export control reform initiative, the new sanctions on Russia, and a host of other topics.  Here are the top ten issues from our notes after attending the conference:

  1. BIS is issuing new sanctions on exports to Russia’s oil and gas exploration industry.  A draft of the new rules was published on the BIS website on Friday, August 1 (and we’ll be commenting on those in our next post).
  2. BIS intends to synthesize some key definitions in the EAR with similar or identical definitions in ITAR, such as “technical data”, “fundamental research”, “public domain” and “defense services”.
  3. Manufacturers and exporters who believe their products are improperly “caught” by the definition of “specially designed” in the 600 series should consider making a §748.3(e) classification request.  This section of the EAR allows BIS to use its discretion to release items that are otherwise caught by the “specially designed” definition but do not provide the U.S. with a military advantage.  According to BIS, only one exporter has submitted a §748.3(e) request to date, and BIS encourages other manufacturers and importers to take advantage of this tool.
  4. Manufacturers and exporters should have both an export compliance plan as well as procedures to handle a visit by the Office of Export Enforcement (OEE).  OEE says exporters get one shot at credibility when they make their initial visit, so being organized and cooperative will set the right tone for any subsequent investigation.
  5. OEE is targeting individuals for export control violations in addition to the companies they work for.  Even if an individual causes an export control violation by virtue of his or her job duties, he or she can be held individually liable.  However, OEE’s focus is on willful violations of export controls, not accidents or unintentional lapses of protocol.
  6. If you had a past export control violation and instituted remedial steps, be sure to test the new remediation plan to confirm it works.  Failure of a remediation plan to effectively prevent violations, coupled with repeated violations by an exporer, will be aggravating factors when the agencies assess penalties.
  7. Don’t forget that 600 series items are still considered military items and did not become “dual use” simply by moving to the CCL.  This means that many of the same export prohibitions are still in place as if those items were on the USML.
  8. DDTC underwent some changes in leadership this year, and with many items moving from the USML to the CCL under the export control reform initiative, there will likely be a reduction in the number of licensing officers on staff at DDTC.  However, the DDTC licensing team will be focusing on more complex transactions, and they see cloud computing and cyber security as the next challenges on the horizon for U.S. exporters.
  9. Current agency turnaround times are as follows:
    • CCATS request – 33 days.
    • BIS license application – 26 days.
    • CJ request – 19 days.
    • DDTC license application – 16 days.
    • 600 series license application – 15 days.
  10. If you couldn’t make the BIS update this year, be sure to tune in to BIS Assistant Secretary Kevin Wolf’s weekly teleconference every Wednesday to hear updates on the export control reform initiative. You can submit written questions in advance which may be answered on the call.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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