BIS Proposes Penalty Guidance for Settlement
of Administrative Enforcement Cases

The Commerce Department’s Bureau of Industry and Security (BIS) this week published in the Federal Register proposed penalty guidance for the settlement of administrative enforcement cases under the Export Administration Regulations (EAR).

In announcing the publication of the proposed guidance, Under Secretary of Commerce for Industry and Security Kenneth I. Juster stated: “Providing the public with greater transparency and predictability in how BIS approaches these issues will promote both effective enforcement and fair resolution of cases.”

The proposed guidance provides the public with a comprehensive description of how BIS determines what penalties are appropriate in the settlement of administrative enforcement cases. Because many such cases are resolved through settlements, the settlement process is integral to BIS’s export enforcement program.

The proposed guidance, which BIS developed with input from its Regulations and Procedures Technical Advisory Committee, 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. It also describes factors usually considered in deciding whether to issue a warning letter, rather than bring an administrative enforcement case. The proposed guidance encourages parties to provide information to BIS that would be helpful in the application of the guidance to their cases. BIS will give serious consideration to such information.

Under the proposed rule, voluntary self-disclosure of violations would be given “great weight” as a mitigating factor, and also would typically be considered in deciding whether violations should be addressed by a warning letter, rather than a penalty. Aggravating factors that would receive “great weight” include a deliberate effort to hide or conceal violations and a serious disregard for export compliance responsibilities.

In view of the importance of this subject matter, BIS published this guidance as a proposed rule, so that BIS can receive and consider public comments on these issues. BIS encourages all interested persons to submit such comments. The deadline for public comments is November 17, 2003. The proposed rule may be accessed on the BIS Web site.