Highlights from Bureau of Industry and Security's 2012 Annual Report

The Bureau of Industry and Security (BIS) recently published its annual report to Congress for Fiscal Year 2012.

In addition to providing an overview of BIS's activities during the past year, including regulatory changes, the report contains extensive information on licensing, enforcement and antiboycott-related activities.

Here are some of the highlights of the 2012 Annual Report:

Licensing:

• BIS processed 23,229 export license applications (compared to 25,093 in Fiscal Year 2011) worth approximately $204.1 billion, in an average processing time of 26 days. Of those applications, BIS approved 19,817 (85%), returned 3,197 without action (14%) and denied 143 applications (less than 1%).
• The greatest number of license application approvals under a single commodity classification was for chemical manufacturing facilities and equipment (ECCN 2B350), with 2,777 approved applications for exports and reexports worth $348.5 million.
• The export of crude oil was the category of license applications with the highest transaction value, totaling $113.6 billion.
• With respect to items controlled by multilateral regimes, BIS approved the following licenses:
• 4,467 license applications, valued at $11.9 billion, for the export or reexport of items controlled by the Australia Group.
• 1,064 applications valued at $2.2 billion, for the export or reexport of missile technology-controlled items. 
• 2,277 applications, valued at $2.13 billion, for the export or reexport of items controlled for nuclear nonproliferation reasons.
• 4,939 applications valued at $3.4 billion, for the export or reexport of items controlled by the Wassenaar Arrangement. 

Enforcement:

• BIS investigations resulted in the criminal conviction of 27 individuals and businesses and the imposition of more than $4.7 million in criminal fines for export and antiboycott violations (compared to 39 convictions and $20.2 million in criminal fines in Fiscal Year 2011).
• BIS investigations resulted in the completion of 42 administrative export and antiboycott cases against individuals and businesses and the imposition of $7.4 million in civil penalties (compared to 47 cases and $8.5 million in civil penalties in Fiscal Year 2011).
• BIS issued 231 warning letters, 199 detentions, and 48 seizures. 16 companies and eight individuals were issued Temporary Denial Orders.
• BIS completed 994 end-use checks in over 50 countries, a 10% increase from Fiscal Year 2011. Out of these checks, 136 were Pre-License Checks and 858 were Post Shipment Verifications.

Antiboycott Enforcement and Compliance:

• Of the 42 antiboycott cases closed, ten companies agreed to enter into civil penalty agreement settlement resulting from alleged violations of the antiboycott provisions of the EAR. These civil penalties totaled $142,600 (compared to eight companies involving $129,300 in Fiscal Year 2011).
• The United Arab Emirates (UAE) continued to generate the largest number of prohibited boycott-related requests, followed by Iraq.
• Officials from BIS's Office of Antiboycott Compliance (OAC) held meetings with senior UAE officials to assess progress in removing boycott-related language from documents sent to U.S. companies by UAE entities. The U.S. and UAE agreed to establish a bilateral arrangement whereby OAC would utilize the auspices of the UAE’s Commercial Attaché in Washington to resolve boycott-specific problems. 

Regulatory Changes: 

• As part of the Export Control Reform (ECR) process, BIS published nine proposed rules that would move certain items from the jurisdiction of the ITAR to the EAR.
• BIS published a proposed rule to implement the ECR transition process.
• BIS published nine Entity List-related rules that added 67 persons (in 88 separate entries) and removed 26 parties from the Entity List.
• BIS published a rule establishing the ECCN 0Y521 series of “holding” classifications on the Commerce Control List.

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Our law clerk Joshua Bramble contributed to this report.