LATEST EXPORT CONTROLS AND COMPLIANCE UPDATE
See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and persons denied export privileges by the United States Government.
The EAA is Still Expired… but Extended Under the Authority of the of IEEPA
Aug. 11, 2015 – 80 Fed. Reg. 48233: President Obama continued for one year the national emergency first declared on August 17, 2001 in light of the expiration of the Export Administration Act. The declaration of a national emergency makes possible the continued implementation of the Export Administration Regulations (EAR, 15 CFR Parts 730-774) under the authority of the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1622(d)).
Department of Commerce
BIS Amends the EAR to Add Yuzhno-Kirinskoye Field in Russia to the Entity List and Clarifies that Embargoes and Other Special Export Controls Can Form Basis for Additions to Entity List
Aug. 7, 2015 – 80 Fed. Reg. 47402: The Bureau of Industry and Security (BIS) amended the EAR to add the Yuzhno-Kirinskoye Field, an oil and gas field located in Russia’s Sea of Okhotsk, to the Entity List (Supplement No. 4 to EAR Part 744). License applications for exports to this destination will be reviewed with a presumption of denial, and no license exceptions will be available.
BIS also amended the introductory text of the Entity List and the Russian Industry Sector Sanctions (RISS, 15 CFR Sec. 746.5) to clarify that embargoes and other special controls in the EAR may be used as a basis on which to add entities to the Entity List. Since the Yuzhno-Kirinskoye Field is reported to contain substantial reserves of oil, BIS determined that unauthorized exports, reexports, and transfers to this field present an unacceptable risk of diversion to purposes prohibited by the RISS, i.e., exploration for or production of oil or gas in deepwater locations.
Say Goodbye to EAR SCLs and Say Hello to Extended Utility of Ordinary BIS Licenses
Aug. 26, 2015 – 80 Fed. Reg. 51725: BIS published a final rule removing the Special Comprehensive License (SCL) authorization from the EAR. The SCL authorization permitted multiple shipments of EAR-controlled items and/or shipments to multiple consignees under a single authorization, based on an extensive application process. BIS concluded, however, that recent changes to the EAR now permit exporters to accomplish similar results using individual licenses and a standard application process and/or available license exceptions. Under the new rule, all SCLs currently in effect will expire on September 26, 2016, and no new applications for SCLs or amendments to existing SCLs will be accepted during the transition period.
Department of State
ITAR Name & Address Changes for the Month:
Aug. 5, 10, 13, 14, 25, and 31, 2015: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- HCL Logistics Inc. Address Change;
- Change in Name from Airbus Military Deutschland GmbH to Airbus Defence and Space GmbH and Address Change due to merging of companies;
- Change in Name from EADS PZL Warszawa-Okecie S.A. to PZL Warszawa-Okecie S.A. due to corporate rebranding;
- TRS Prime S.A.S. and Air Command Systems International S.A.S. (ACSI) merger results in change in name for ACSI from Air Command Systems International S.A.S. to Thales-Raytheon Systems Air and Missile Defense Command and Control S.A.S. (TRS AMDC2);
- Change in Name from NATO Support Agency to NATO Support and Procurement Agency due to expanstion of Agency system procurement capabilities;
- Change in Name from Silver Atena Electronic Systems (India) Private Limited to Assystem Technologies India Private Limited and Address Change due to merging of companies;
- Eclipse Electronic Systems, Inc. Name Change to BAE Systems Information and Electronic Systems Integration Inc. due to acquisition by BAE Systems of Esterline Corporation subsidiary Eclipse Electronic Systems, Inc.; and
- Change in Name from Cassidian Belgium N.V to Advionics N.V.
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
DDTC Publishes Blue Lantern Report for FY 2014
Aug. 5, 2015: DDTC posted the FY 2014 End-Use Monitoring Report (the “Blue Lantern” report) on its website at http://www.pmddtc.state.gov/reports/documents/End_Use_FY2014.pdf. DDTC closed 641 Blue Lantern cases in FY 2014, with the largest numbers in the Americas and East Asia. Eighteen percent of the investigations resulted in negative reports in which findings of fact were not consistent with information in the license application request. Causes of the negative reports included derogatory information / foreign party deemed unreliable, violation of license terms, indications of diversion or unauthorized retransfer or re-export, involvement of unauthorized foreign parties, end-user’s inability to confirm order or receipt of goods, refusal to cooperate, and inability to confirm the existence of a foreign party.
DDTC Posts Public Comments on Proposed Rules Pertaining to US Persons Performing Defense Services in Their Individual Capacity as Employees of Foreign Companies
Aug. 5, 2015: DDTC posted public comments received on its proposal to amend provisions of the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) affecting the registration and licensing of U.S. persons performing defense services as employees of foreign employers in the U.S. or abroad or in a foreign branch or (under some circumstances) subsidiary of a U.S. company and to U.S. persons engaged as independent contractors outside the U.S. (May 26, 2015 – 80 Fed. Reg. 30001). The comments are on the DDTC website at
Addendum to DSP-83 for UAVs Modified to Not Require Compliance by Foreign Parties with U.S. Laws Other than Applicable U.S. Export Control Law
Aug. 6, 2015: DDTC posted a modification to the Requirements for the Permanent Export of Unmanned Aerial Systems (UAS) that it posted in February 2015, which required a special addendum to the required DSP-83 Non Transfer and Use Certificate for permanent exports of military drones. The modification deletes a reference in the addendum to “other relevant provisions of U.S. law.” The notice, including the required format of the revised addendum, is on the DDTC website at http://www.pmddtc.state.gov/licensing/documents/gl_UAS_NoticeUpdated080615.pdf. As before, the addendum is not required for the temporary export of a UAS, but must be submitted at the time of initial application for a license for the permanent export of the UAS.
DDTC Posts Public Comments on Proposed ECR Revisions Pertaining to USML Categories XIV and XVIII
Aug. 27, 2015: DDTC posted the public comments it received on its proposed revisions of U.S. Munitions List Category XIV (Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment) and Category XVIII (Directed Energy Weapons). The comments are on the DDTC website at http://www.pmddtc.state.gov/regulations_laws/documents/proposed_rules/CategoryXIVandXVIII_Comments.pdf. The proposal, along with a complementary proposal by BIS for amendments of the Commerce Control List (CCL, 15 CFR Part 774, Supplement No. 1) was first published on June 17, 2015 (80 Fed. Reg. 34572 and 34562 – see June 2015 Regulatory Update for additional information).
Aug. 31, 2015: DDTC updated its table of Commodity Jurisdiction Final Determinations, which includes final determinations of commodity jurisdictions and classifications. Items on the table can be sorted by manufacturer, model name, and description, and can also be searched by key word. The table is on the DDTC website at http://www.pmddtc.state.gov/commodity_jurisdiction/determination.html.
Department of the Treasury
OFAC Publishes Guidelines Pertaining to New Iran Nuclear Proliferation Deal
Aug. 7, 2015: The Office of Foreign Assets Control (OFAC) published new information and guidance about the sanctions relief that remains in effect pending implementation of the Joint Comprehensive Plan of Action (JCPOA) that was reached by the P5 + 1 and Iran on July 14, 2015. Information and guidance on new sanctions relief resulting from the JCPOA will be published prior to implementation, which will commence upon verification by the International Atomic Energy Agency (IAEA) that Iran has implemented key nuclear commitments. Until then, the sanctions relief that has been in effect during negotiations toward the JCPOA since November 24, 2013, will remain the only Iran-related sanctions relief in effect. OFAC’s newly issued information and guidance about the current status of sanctions includes revisedGuidance (http://www.treasury.gov/resource-center/sanctions/Programs/Documents/guidance_ext_20150807.pdf); Frequently Asked Questions Relating to the Continuation of Certain Temporary Sanctions Relief Implementing the Joint Plan of Action, as Extended (http://www.treasury.gov/resource-center/sanctions/Programs/Documents/jpoa_ext_faq_20150807.pdf); and a Third Amended Statement of Licensing Policy on Activities Related to the Safety of Iran’s Civil Aviation Industry (http://www.treasury.gov/resource-center/sanctions/Programs/Documents/3rd_amended_jpoa_lic.pdf).
LATEST SANCTIONS FINES & PENALTIES
This section of our newsletter provides information on the latest sanctions, fines and penalties for export
violations or matters of non-compliance with the ITAR or EAR issued by the US government enforcement
Department of Commerce
Aug. 10, 2015 – 80 Fed. Reg. 47898: BIS denied the export privileges of Peter Gromacki and related companies JEN Fibers, LLC and Performance Engineered Nonwovens, LLC, all from Middletown, NY, for 10 years based on Gromacki’s conviction in U.S. District Court in New York, NY, on November 26, 2013 of the unlawful, willful, and knowing export of T700 carbon fiber to China without the required authorization. In the criminal case, Gromacki was sentenced to 3 months of imprisonment, 3 years of supervised release, a $300 assessment, and a $5,000 criminal fine.
Fines and Penalties
Aug. 5, 2015: Production Products, Inc. agreed to pay $78,750 to settle charges by OFAC that it had violated the Weapons of Mass Destruction Proliferators Sanctions Regulations (WMDPSR, 31 CFR Part 544) by shipping 3 duct fabrication machines with a total value of $500,000 to China National Precision Machinery Import and Export Corp. (CNPMI&E) and receiving payment in connection with that export without obtaining the necessary authorization from OFAC. The authorization from OFAC was necessary because CNPMI&E, is listed as a Specially Designated National under the WMDPSR.
Aug. 7, 2015: OFAC issued a Finding of Violation in lieu of a civil monetary penalty to resolve civil charges against Schlumberger Oilfield Holdings, Ltd. (SOHL), a subsidiary of Schlumberger Ltd., of violations of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560) and the Sudanese Sanctions Regulations (SSR, 31 CFR Part 538) involving various business activities in Iran and Sudan. OFAC concluded that the Finding of Violation, without a civil fine, was an appropriate penalty based on the totality of the facts and circumstances, particularly SOHL’s entering into a plea agreement settling parallel criminal charges with a criminal fine of $155,138,904 and a forfeiture money judgment of $77,569,452. (See the March 2015 and May 2015 Regulatory Updates for information about the criminal cases.)
Aug. 14, 2015: The U.S. Attorney in Tampa, FL announced the unsealing of an indictment charging Eyad Farah of Barrington, Texas with conspiring to export firearms without a license, exporting firearms without a license, and smuggling firearms from the United States in violation of federal export control and firearms laws. Farah is allegedly a member of a network smuggling firearms from the U.S. to the Middle East. The firearms were allegedly concealed in vehicles that had been purchased at used car auctions in Florida and were then scheduled for export to Jordan. Farah’s alleged co-conspirator, Mahmoud Abdel-Ghani Mohammad Assaf, previously pleaded guilty to his role in the conspiracy and is currently awaiting sentencing. Yasser Ahmad Obeid, a defendant in a related case, pleaded guilty in December 2014 and was sentenced to 4 years and 3 months in federal prison. (See December 2014 Regulatory Update.)
Aug. 25, 2015: Yue Wu, a citizen of China, was sentenced in U.S. District Court in Seattle, WA to 18 months in federal prison for conspiracy to violate the Arms Export Control Act by obtaining ITAR-controlled accelerometers used in satellites and spacecraft and exporting them to China without the required authorization. On multiple occasions during a 2-year period Wu attempted to convince a contact who was actually an undercover law enforcement agent to send the accelerometers to China either disguised as a different product or to transship them through another country. Wu was arrested October 23, 2014 at San Francisco International Airport.