The U.S. Department of Commerce (DOC) recently released a digital tool to help businesses engaged in the export of goods abroad. Federal export laws require a substantial amount of due diligence regarding the intended recipients and end users of export shipments. The DOC may hold an export business liable for violations of these requirements. The White House has enacted a policy of reforming controls on exports. Part of this initiative involves streamlining the screening process with the Consolidated Screening List (CSL), a collection of “watch lists” from various federal agencies. In November 2014, the DOC announced the release of an application program interface (API) that allows export businesses to search the CSL much more efficiently.
Under the Export Administration Act (EAA) of 1979, 50 U.S.C. App. § 2401 et seq., the U.S. President has the authority to regulate U.S. exports for national security and other reasons. Congress has placed restrictions on exports directly through laws like the Arms Export Control Act (AECA) of 1976, 22 U.S.C. § 2751 et seq. Exports may also be restricted by sanctions against specific countries and laws or regulations related to terrorism and other international criminal matters.
In 2013, the DOC’s Bureau of Industry and Security (BIS) charged the University of Massachusetts at Lowell with violations of the Export Administration Regulations (EAR) for shipping atmospheric testing equipment to an entity in Pakistan on the BIS Entity List, 15 C.F.R. Supp. 4. This list identifies entities that the federal government believes may have indirect connections to weapons of mass destruction (WMD) programs. The BIS claimed that the university violated the EAR by shipping the equipment without a required license. 15 C.F.R. §§ 734.3(c), 744.11, 764.2(a); 63 Fed. Reg. 64322 (Nov. 19, 1998). In this case, the equipment itself was not a controlled item, but the recipient was subject to government restrictions. The university agreed to a $100,000 civil penalty, suspended for two years. See also United States v. Roth, 642 F.Supp.2d 796 (E.D. Tenn. 2009), 628 F.3d 827 (6th Cir. 2011).
The White House announced the Export Control Reform Initiative (ECR) in 2010 in order to assist export businesses in complying with the hodgepodge of federal laws and regulations regarding export controls. The CSL, a key part of this effort, currently includes nine screening lists from three cabinet departments. Individuals and entities included in these lists may be barred from receiving certain U.S. exports, or any exports at all, or they might simply raise “red flags” that bear further scrutiny. These screening lists include:
– The aforementioned BIS Entity List, which may require an exporter to obtain an additional license;
– The list of “nonproliferation sanctions” maintained by the Department of State (DOS);
– The DOS list of entities prohibited from receiving “defense articles” for violations of the AECA; and – The “Foreign Sanctions Evaders List” maintained by the Department of the Treasury.
While the CSL gathers many, although possibly not all, of the export screening lists in one place, export businesses must still search each list individually. The API released by the DOC enables businesses to search all nine lists at once. An API is not a stand-alone software application, but rather it is a set of instructions that allow a business to integrate a search of the CSL into its existing software. A familiar example of an API is the Google Maps feature that allows users to share specific map coordinates or images.
Business law attorney Samuel C. Berger represents business owners and entrepreneurs in the New York City and Northern New Jersey areas. We offer fixed-fee legal-service packages that address a variety of legal needs, such as business formation and entity selection, mergers and acquisitions, contracts, and dissolution. To schedule a confidential consultation with an knowledgeable and experienced business advocate, contact us today online or at (212) 380-8117.
More Blog Posts:
Federal Appellate Court Pierces Corporate Veil, Holds Shareholder Liable for Customs Violations, New York & New Jersey Business Lawyer Blog, October 23, 2014
Treasury Department Issues New Guidance for Corporations that Transfer Operations Abroad to Reduce Tax Liability, New York & New Jersey Business Lawyer Blog, October 16, 2014
New Jersey Offers Assistance to Small Businesses Selling Goods and Services Internationally, as India Opens Doors to Their Involvement, New York & New Jersey Business Lawyer Blog, February 14, 2013
Photo credit: By United States Department of Commerce [Public domain], via Wikimedia Commons.