Archive for the ‘BIS’ Category

Great Scott Batman, Another Illegal Valve Exporter!

Tuesday, September 7th, 2010 by John Black

You don’t have to have Batman’s “bat senses” to figure out that the pump and valve industry is doing their part to keep US Government export enforcement personnel busy.  This time, the culprit is Tyco Valves & Controls (TVC) with 26 violations for illegal exports of ECCN 2B350 butterfly valves, ball valves, and valve assemblies to China, the UAE, Mexico, India, Israel, Brazil, Singapore, Chile, Jordan and El Salvador. The violations occurred between January 2005 and March 2007.

In this case, the US Government did not have to bring in Batman to find these illegal exports.  TVC voluntarily disclosed its violations to the Department of Commerce and agreed to pay a $218,000 penalty to settle the charges.

Posted in BIS, CCL, China, Commerce Dept, Export License, India, Sanctions, Singapore, UAE, Violations & Fines | Comments Off

Stop Using License Exception TSR Now!: You Need to Get a New TSR Written Assurance

Tuesday, September 7th, 2010 by John Black

BIS Expands Controls on Foreign-Made Products and Changes TSR Written Assurance

In the July 30, 2010, Federal Register the Bureau of Industry and Security (BIS) published a revision to the Export Administration Regulations (EAR) that does two things.  First, it changes the requirements for what has to be in the written assurance for exports and reexports under License Exception TSR.  Second, it changes the destination countries for which the EAR asserts jurisdiction for foreign-made direct products of US technical data or software. (more…)

Posted in BIS, CCL, Commerce Dept, Commerce Dept, Cuba, EAR, Export License, Iran, North Korea, Sudan, Syria | Comments Off

BIS Says: “BIS Has No Authority to Determine Whether an Item is on the CCL”

Tuesday, September 7th, 2010 by John Black

As most of you already know, the Commerce Department Bureau of Industry (BIS) does not have the authority to issue an official ruling as to whether an item is on the Commerce Control List or the US Munitions List.  The Directorate of Defense Trade Controls in the State Department is the only government agency that has the authority to determine whether an item is on the CCL or the USML.  DDTC issues Commodity Jurisdiction Determinations (CJ) (or lesser known GJs) to provide an official determination as to whether something is on the USML or the CCL.

In fact, even if the CCL specifically says it controls an item, the CCL actually might not control that item.  For example, ECCN 1A001 paragraph c says it controls parts that are specially designed for missiles.  In fact, you will find that those 1A001 items specially designed for missiles are usually in Category IV(h) of the USML.

In the August 2, 2010, Federal Register BIS published a notice clarifying these facts stating that commodity classifications and advisory opinions that BIS issues may not be relied upon as determinations as to whether an item is subject to the Export Administration Regulations (EAR) or on the CCL. (more…)

Posted in BIS, CCL, Commerce Dept, Commerce Dept, DDTC, Defense Trade Controls, EAR, Export License, ITAR, State Dept, State Dept | Comments Off

Company President Gets out of Jail and Gets BIS Fine

Tuesday, July 20th, 2010 by John Black

By: John Black

BIS announced that is have imposed an administrative $300,000 fine ($275,000 suspended) on Patrick Gaillard, President of Oyster Bay Pump Works of Hicksville, New York.  In 2007, Mr. Gaillard pleaded guilty to criminal charges for the same actions for which BIS just now penalized him.  As a result of his guilty plea, he got 30 days in prison, a $25,000 fine, 3 years of probation, and a $300 special assessment.  But, all in all, it seems like Gaillard got off fairly easy, if you ask me.  But, then again, I am not the guy who spent 30 days in prison.

BIS charged Gaillard and Oyster Bay, in separate charging letters.  This shows that in cases where BIS thinks one person in a company acted intentionally to violate the regulations, BIS will go after that person as an individual in addition to going after the company.

Even though there was one charging for Gaillard and another for Oyster Bay for essentially the same actions.  I will discuss them as if there were one charging letter.  Here are the charges:

Charge 1: Illegally exported microplate processing equipment via Germany to Cuba

Charges 2 & 3:Sold microplate processing equipment (Charge 2) and 3 power supplies (Charge 3) via Germany to Iran.  At least twice Oyster Bay staff told Gaillard the sale required an export license.  Gaillard told his staff to export the items without an export license.  The items were classified as EAR99.

Charge 4:  Sold microplate processing equipment for export to Iran via the UAE.  Initially, a representative of the Iranian buyer approach Oyster Bay to buy the equipment and Oyster Bay said it could not export the items to Iran due to the US embargo.  Then the Iranian rep arranged with Gaillard to export the items to the Iranian company’s trading arm in the UAE for ultimate delivery to Iran.  The US Government seized the items before the export took place.  The items were classified as EAR99.

Charge 5: Destroying and altering records related to Charges 1-3 involving Cuba.  Around the time he learned that the US Government seized the items destined for Iran, Gaillard told his staff to remove references to Cuba from certain document and to destroy other documents related to the Cuba activities.

Charge 6: Destroying and altering records related to Charge 4 involving Iran.  When he learned that the US Government seized the items destined for Iran, Gaillard told his staff to remove references to Iran from certain document and to destroy other documents related to the Iran activities.

According to BIS Gaillard intentionally violated the regulations and tried to destroy and alter documents to cover his tracks.  BIS typically goes after an individual in addition to the company when it thinks an individual has done such things.  In the end, Gaillard got these combined criminal and administrative penalties:  Combined fines of $50,300 (plus another $275,000 suspended penalty if he stays clean), 30 days in prison, and a 3 year period on the Denied Persons List (all of the 3 years on the List is suspended if he stays clean).  Plus Oyster Bay got a $300,000 fine ($275,000 suspended) and 3 years on the Denied Persons List (all of which is suspended).

As I said above, having not spent the 30 days in prison myself, it seems to me that Gaillard got off relatively easy.  The fines certainly could have been higher on him and his company.  Let’s run through some aggravating and mitigating factors to see if we can find any reason for the easy treatment.  This was not a voluntary disclosure, so that mitigating factor does not enter into the equation.  Cuba and Iran normally are aggravating factors.  Intentionally violating the regulations normally is an aggravating factor.  The fact that this was EAR99 stuff and not sensitive is mitigating—but these products are not medical equipment eligible for a relatively favorable license approval policy.  I just can’t figure it out.

Maybe I am just selfish and wish that BIS would have fined the guy a million dollars so export compliance people could tell other people in their company about the harsh penalties imposed on an individual.

Or maybe it’s just my unquenched desire to see an intentional violator tazed in a youtube.com video.

BIS did not say how it learned about these activities.  Wait, a second, what is that I hear?  Is that a whistle blowing?

Posted in BIS, EAR, Export License, Iran, Violations & Fines | Comments Off

“Buying Export Violations” or “When Will the Valve Companies Catch On?”

Tuesday, July 20th, 2010 by John Black

By: John Black

I don’t know if my first observation should focus on successor liability or the fact that this is another 2B350 violation.  So I will start with a few facts.

Wesco Industrial Products, Inc. of Lansdale, PA agreed to pay a $50,000 in a settlement agreement with the Bureau of Industry and Security resulting from its voluntary disclosure of some relatively harmless exports of ECCN 2B350 valves.  Wesco is the surviving entity of several mergers that occurred in 2008 and is the successor to Neptune Chemical Pump Co., Inc.  The violations all occurred before the merger. (more…)

Posted in BIS, Commerce Dept, EAR, Export License, Singapore, Violations & Fines | Comments Off

What the New Encryption Rules Mean For U.S. Exporters

Tuesday, July 20th, 2010 by admin

This article originally appeared in a slightly different form in International Trade Law360, July 1, 2010.  Reprinted with permission of Pillsbury Winthrop Shaw Pittman LLP.

by Sanjay Jose Mullick

The Obama administration has taken the first step in export control reform by easing the pathway for U.S. companies to export certain encryption items.

The First Export Control Reform

On June 25, the U.S. Department of Commerce’s Bureau of Industry and Security issued new regulations governing export controls on encryption. This rulemaking represents the first formal example of the president’s initiative to reform U.S. export controls by concentrating regulation on the most sensitive items.

The new regulations reflect a recognition that encryption is ubiquitous in today’s high-tech world and cannot be completely regulated. These rules also attempt to address the need for U.S. companies to be able to get to market quickly, to foster the competitiveness of U.S. industry. However, they do not accomplish a complete de-control of encryption, and the prior system will remain in place for many products.

Although the regulations have been published as an interim final rule with a request for comments, they likely reflect the prevailing framework for regulating encryption exports going forward. Let’s take a look at some of the key elements of the new rules and how they will impact exporters. (more…)

Posted in BIS, CCL, Commerce Dept, EAR, Encryption, Export License, Uncategorized | Comments Off

The Check’s in the Mail (Export Control Reform [Again])

Wednesday, June 9th, 2010 by John Black

Editorial Analysis by John Black

I am old.  I can’t even count the number of times I have heard well intentioned high level government officials tell us that they plan to make significant reforms in the US export control system.  Some government officials have told me that they are going to make the system so transparent and user friendly that they will put consultants like me out of business.

It’s been 26 years for me in this business and numerous government pledges to make things better.  As far as I can tell, I am still here and there is still a huge demand for assistance in dealing with the infinite number of problems that US export controls create for companies who try to comply with the rules.  Yes, this reform could be different.

So, I apologize (for a change) in advance for being the cynic as a good number of my peers spout enthusiastically about Defense Secretary Gates’ call for comprehensive reform to the US export control system.  Reform certainly makes sense.  Comprehensive reform could both promote national security and make compliance a bit easier for companies.

Comprehensive reform is highly unlikely.  Adjustments to certain aspects of US export controls might be the better-than-nothing result we should hope for.  And, changes to the current system that will create a lot of extra work for us without actually improving anything is what we should fear.   (Well, this last scenario will probably be a gold mine for my seminar and consulting businesses.) (more…)

Posted in BIS, CCL, Commerce Dept, DDTC, DOD, DOJ, Defense Trade Controls, Defense Trade Controls, EAR, Export License, State Dept, State Dept, USA Regulations | Comments Off

Eric Hirschhorn Finally Gets BIUS Under Secretary

Wednesday, June 9th, 2010 by John Black

Long time export compliance expert Eric Hirschhorn is now the Under Secretary of Commerce Department’s Bureau of Industry and Security.  Exporters should welcome this; Eric brings with him an extremely impressive resume and a recognized reputation as an experienced export compliance expert.  His appointment was delayed by Congress for reasons relatively unrelated to his competence.

Besides extensive experience as a trade control lawyer, he also served as the Executive Secretary of the Industry Coalition on Technology Transfer (ICOTT), an association that sought to influence US trade control rules and policies.  He also served as the Deputy Assistant Secretary for Export Administration from 1980 to 1981.

It’s nice to see that President Obama has staffed the upper level of the Commerce Department with a solid team of leaders who have extensive export compliance experience.

Posted in BIS, Commerce Dept, Jobs/Careers | Comments Off

BIS Replaces the STELA Telephone Voice Based Application Status System with e-STELA

Wednesday, June 9th, 2010 by John Black

All good things must come to an end, and it’s the same for the BIS STELA voice status system.  In its early days, the STELA system which gives a  voice status on pending license applications was ahead of its time.  Gone are the days when you can hear a computer generated voice tell you that your application has been pending in the Department of Energy since April 3.

The new STELA is a web-based status system.  Just go to http://www.bis.doc.gov/licensing/stela4u.htm and enter your application case number.

STELA is dead!  Long live STELA.

It all rolls into one and nothing comes for free,
There’s nothing you can hold for very long
And when you hear that song come crying like the wind
it seems like all this life was just a dream
STELA Blue

Posted in BIS, Commerce Dept, Export License | Comments Off

BIS Announces Elimination of Issuance of Certain Paper Document

Wednesday, June 9th, 2010 by John Black

The Bureau of Industry and Security announced that it will no longer issue paper versions of most export/reexport licenses, application denial notices, return without action notices, product classification notices, encryption review requests, and License Exception AGR notification results.  In certain special circumstance BIS will continue to issue paper documents.  For more information go to:  http://www.access.gpo.gov/bis/fedreg/ear_fedreg.html

Posted in BIS, Commerce Dept, Export License | Comments Off

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