On September 12, 2024, the U.S. Department of Commerce Bureau of Industry and Security (BIS) issued a final rule to amend the Export Administration Regulations (EAR) revising provisions related to the voluntary self-disclosure (VSD) process for persons who believe that they may have violated the EAR, or any order, license or authorization issued thereunder. The final rule specifically provides clarified guidance on charging and penalty determinations in settlement of administrative enforcement cases.

BIS is incorporating into the EAR three Policy Memoranda issued on June 30, 2022; April 18, 2023; and January 16, 2024, each discussing the benefits of submitting a VSD, and the risks of deciding against submitting a VSD. BIS is also revising the BIS Penalty Guidelines (Supplement No. 1 to Part 766) to change how the Office of Export Enforcement (OEE) calculates the base penalty in administrative cases, and how it applies various factors to the base penalty to determine the final penalty.

The significant revisions to § 764.5 of the EAR are:

• Adding a party’s failure to submit a voluntary disclosure of a significant violation to the list of aggravating factors.
• Adding BIS’ new process for handling disclosures of minor or technical violations. OEE now processes VSDs in a dual-track manner, one for VSDs involving minor or technical violations (to be processed in 60 days), and another for potentially significant violations.
• Streamlining the submission process for VSDs involving minor or technical violations using an abbreviated narrative only describing the general nature and extent of the violations (without requiring a five-year lookback) and providing the contact information of the party submitting the abbreviated narrative.
• Adding  clauses explaining that (i) any person (not just the party submitting a VSD) may notify the Director of OEE that a violation has occurred and then request permission from the Office of Exporter Services to engage in activities described in § 764.2(e) that would otherwise be prohibited; (ii) actions to return to the United States unlawfully exported items that were disclosed in a VSD only require notification to the Director of OEE; and (iii) once the items are returned to the United States, no further authorization is required.

Significant revisions to Supplement No. 1 to Part 766 (regarding the BIS Penalty Guidelines) include:

• Providing OEE increased discretion in determining penalties that appropriately reflect the individual circumstances of violations by removing the “applicable schedule amount” cap on penalties.
• Formalizing non-monetary resolutions as an enforcement response for cases involving non-egregious conduct but that are above the level of cases warranting a warning letter or no-action letter.
• Addition of human rights abuses as a specific consideration when BIS assesses the potential impact of a violation on U.S. foreign policy objectives.
• Making clear that disclosures of conduct by others that lead to an enforcement remedy count as exceptional cooperation.

In the same publication, BIS announced it appointed Raj Parekh to be its first-ever Chief of Corporate Enforcement. BIS reports that he will be the primary interface between BIS, the Department of Commerce’s Office of Chief Counsel for Industry and Security, and the Department of Justice on corporate investigations.