International Trade Law News

The Bureau of Industry and Security (BIS) of the Department of Commerce issued on February 20, 2004 the final rule, Penalty Guidance in the Settlement of Administrative Enforcement Cases, which amends the Export Administration Regulations (EAR). The rule, which incorporates guidance on how BIS makes penalty determinations when settling enforcement cases under the EAR, states that “BIS carefully considers each settlement offer in light of facts and circumstances of the case, relevant precedent, and BIS’s objective to achieve in each case an appropriate level of penalty and deterrent effect.”

Towards that end, the rule enumerates factors BIS considers in making penalty determinations. The rule provides a number of “General Factors” considered including the degree of willfulness of the party, the destination of the export, and additional related or unrelated violations of the exporter. The rule also includes a number of mitigating factors BIS considers, including whether the party made a voluntary self-disclosure of the violation, whether the party has an effective compliance program, and whether the violation was an isolated occurrence, whether the party cooperated to an “exceptional degree” with the investigation. Finally, the rule states a number of “Aggravating Factors” such as whether the party tried to conceal the violation.

The final rule, found at 15 CFR Parts 764 and 766, is the product of the proposed rule released on September 17, 2003 and BIS’s consideration of public comments on it.

Labels: BIS