Export Control Reform Act Archives

The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) recently issued a final rule, effective November 18, 2020, which revises certain provisions of the Export Administration Regulations (“EAR”) to implement enforcement provisions pursuant to the Export Control Reform Act of 2018 (“ECRA”), which expanded the export control authorities available to the Secretary of Commerce. BIS also amended the EAR with respect to the issuance of licenses and denial orders and the payment of civil penalties, not directly related to the implementation of ECRA.

The final rule affirms BIS’ authority to conduct investigations, pre-license checks, and post-shipment verifications outside of the United States, as well as the production of books and other information required to be kept as specified in ECRA Section 1761(a)(2) which may be requested of persons located outside the United States.

The enforcement and protective measures in Part 764 of the EAR include violations and sanctions outlined in sections 764.2 and 764.3. Sanctions for violations of the EAR outlined in Section 764.2 include civil monetary penalties, the denial of export privileges, or the exclusion from practice for persons who act as attorneys, accountants, consultants, freight forwarders, or “in any other representative capacity for any license application or other matter before BIS…” Criminal violations may result in a maximum fine of $1,000,000 and a prison sentence of up to twenty years.

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Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell LLP. She leads the firm’s International Trade & Supply Chain group.

Grant Leach is an Omaha-based partner with the law firm Husch Blackwell LLP focusing on international trade, export controls, trade sanctions and anti-corruption compliance.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

Under the Export Control Reform Act of 2018 (“ECRA”), the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) is authorized to establish controls on the export, re-export or in-country transfer of “emerging and foundational technologies.” On August 27, 2020, BIS issued an advance notice of proposed rulemaking, requesting comments on the definition of, criteria for, and identification of certain foundational technologies.

On November 6, 2020, BIS published a proposed rule in the Federal Register proposing to add certain software to the Commerce Control List (“CCL”) and thereby place export controls on it. BIS seeks comments on its proposed rule by December 21, 2020, so that it can ensure the proposed controls are “effective and appropriate” regarding their potential impact on “commercial or scientific applications.”

Specifically, BIS determined that certain software for the operation of nucleic acid assemblers and synthesizers, which are controlled under Export Control Classification Number (“ECCN”) 2B352, are capable of being used to generate “pathogens and toxins without the need to acquire controlled genetic elements and organisms.” In other words, BIS determined that this type of software can be used to effectively circumvent export controls on genetic elements and organisms.

BIS proposes to amend the CCL by adding ECCN 2D352 to control such software, in order to ensure that a lack of controls cannot be exploited to further the development of biological weapons.

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Julia Banegas is an attorney in Husch Blackwell LLP’s Washington, D.C. office.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

BIS Amends EAR to Implement Export Enforcement Provisions of Export Control Reform Act

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