Where Industry and Security Intersect
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Violations of the Export Administration Act of 1979, as amended (EAA), 50 U.S.C. app. §§ 2401-2420 (2000), and the Export Administration Regulations, 15 C.F.R. Parts 730-774 (2007) (EAR) may be subject to both criminal and administrative penalties. When the EAA is in effect, criminal penalties can reach 20 years imprisonment and $1 million per violation. Administrative monetary penalties can reach $11,000 per violation, and $120,000 per violation in cases involving items controlled for national security reasons. When the EAA is in lapse, the criminal and administrative penalties are set forth in the International Emergency Economic Powers Act (IEEPA).
On October 16, 2007, President Bush signed into law the International Emergency Economic Powers (IEEPA) Enhancement Act, Public Law No. 110-96, amending IEEPA section 206. The Act enhances criminal and administrative penalties that can be imposed under IEEPA and also amends IEEPA to clarify that civil penalties may be assessed for certain unlawful acts. Criminal penalties can reach $1,000,000 and 20 years imprisonment per violation and the administrative penalties can reach the greater of $250,000 per violation or twice the amount of the transaction that is the basis of the violation. Endnote
Violators may also be subject to denial of their export privileges. A denial of export privileges prohibits a person from participating in any way in any transaction subject to the EAR. Furthermore, it is unlawful for other businesses and individuals to participate in any way in an export transaction subject to the EAR with a denied person.
Endnote: On November 13, 2000, the EAA was reauthorized by Pub. L. No. 106-508 and it remained in effect through August 20, 2001. Since August 21, 2001, the EAA has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 C.F.R. 2001 Comp. p. 783 (2002)), which has been extended by successive Presidential Notices, has continued the EAR under the International Emergency Economic Powers Act (50 U.S.C. §§1701 - 1706 (2000)) (IEEPA).
On February 20, 2004, BIS published in the Federal Register penalty guidance for the settlement of administrative enforcement cases under the EAR. See Supplement No. 1 to Part 766. And on July 17, 2007, BIS published in the Federal Register penalty guidance for the settlement of antiboycott administrative enforcement cases under the EAR. See Supplement No. 2 to Part 766.
The guidance provides the public with a comprehensive description of how BIS determines appropriate penalties in the settlement of administrative enforcement cases. It explains that BIS carefully considers each settlement offer in light of the facts and circumstances of each case, relevant precedent, and the appropriate level of penalty and deterrent effect.
The guidance identifies both general factors, such as the destination of the export and degree of willfulness involved in violations, and specific mitigating and aggravating factors that BIS typically takes into account in determining an appropriate penalty. The guidance also encourages parties to provide information to BIS that would be helpful in the application of the guidance to their cases.
Under the guidance, voluntary self-disclosure of violations are given “great weight” as a mitigating factor and are typically considered in deciding whether violations should be addressed by a warning letter rather than a penalty. Aggravating factors that receive “great weight” include a deliberate effort to hide or conceal violations and a serious disregard for export compliance responsibilities.
BIS finalized this guidance after receiving and carefully considering public comments on the proposed guidance. In response to these comments, BIS made several revisions, including a clarification of the mitigating effect of post-violation compliance efforts and of the factors BIS usually considers in deciding whether to issue a warning letter instead of bringing an administrative enforcement case.
The ACRB is an internal BIS committee that advises the Assistant Secretary for Export Enforcement at important stages of administrative cases and assists the Assistant Secretary and other Export Enforcement (EE) officials and attorneys in the Office of Chief Counsel for Industry and Security (OCC) to determine EE's positions related to the prosecution of administrative cases. A primary goal of the ACRB is to help promote administrative and legal best practices in EE enforcement policy and to ensure that all positions taken by EE in administrative enforcement cases are consistent, fair, and in line with overall BIS program and enforcement goals. See more information on the ACRB here.
Small entities may comment about BIS's enforcement and compliance process to the Office of the National Ombudsman, Small Business Administration, via the internet (www.sba.gov/ombudsman), e-mail (ombudsman@sba.gov), mail (Small Business Administration, Office of the National Ombudsman, 409 Third St., SW, Washington, D.C. 20416), or by calling 1-888-REG-FAIR.
The Office of the National Ombudsman of the Small Business Administration (SBA) has asked all Federal agencies to make clear that, if a small business requests Ombudsman assistance on a matter or otherwise questions or complains about a Federal agency action, the agency will not retaliate in response.
The Department of Commerce is committed to fair regulatory practices, supports the right of the regulated community to raise concerns about regulatory enforcement actions without the fear of retaliation, and will investigate any allegations of retaliation and take appropriate action. We take such concerns and allegations very seriously and strive to avoid even the appearance of impropriety.
However, while the Department will investigate any allegation of retaliation, a complaint to the Ombudsman will not stop or delay investigations and legal or administrative proceedings as part of the Department=s ongoing responsibility to enforce relevant Federal laws.