International Law Advisory - BIS Issues Revisions to Export/Anti-Boycott Penalties

On Friday, August 4, 2006, the Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule (attached) revising and clarifying civil monetary penalty amounts for violations of the Export Administration Regulations (EAR).  In response to new provisions enacted as part of the USA PATRIOT ACT Improvement and Reauthorization Act of 2005, the rule revises the maximum civil penalty from $11,000 to $50,000 for each export violation incurred under the EAR while the regulations are continued in force under the International Emergency Economic Powers Act (IEEPA).

Since the lapse of the Export Administration Act (EAA) on August 21, 2001, IEEPA has provided the statutory authority for the continuation in force of the EAR.  Penalties for violations of the EAR, including both export control and anti-boycott violations, have been limited to those authorized under the IEEPA.  Original IEEPA penalties included a statutory maximum civil penalty of $10,000 for each violation, which, adjusted for inflation, had reached $11,000 per violation prior to the recent amendment.

Today’s final rule amends the text of the EAR to clarify that penalties under IEEPA are controlling while the EAA is in lapse.  It also reflects the recent increase in the maximum civil penalty amount under Section 206 of IEEPA to $50,000 for each violation of the EAR.  Finally, the rule clarifies that the increased penalty amount became effective on March 9, 2006, which is the date the President signed into law the USA PATRIOT ACT Improvement and Reauthorization Act. 

Should you have any questions regarding how these changes may affect your company, please contact Ed Krauland at 202-429-8083 or Meredith Rathbone at 202-429-6437.