NCBFAA Challenges Proposed BIS Enforcement Rule
The Bureau of Industry and Security should modify a proposed rule that would “significantly” alter the factors that BIS considers when setting penalties in various enforcement cases, said the National Customs Brokers & Forwarders Association of America in comments to the agency (here). The group said the rule (see 1512240003) could harm forwarders, NVOCCs, and exporters that might have -- “inadvertently or not” -- violated the Export Administration Regulations. The proposed changes are meant to make administrative penalties more predictable and better aligned with those used by the Office of Foreign Assets Control, BIS said in December (here). NCBFAA said it appreciates BIS’ effort to mesh its penalty enforcement guidelines with OFAC’s, but argues that, if enacted, the rule could birth an “unduly rigid enforcement mechanism.” The organization asserts the proposed process appears to be less flexible than the current one, and it believes the rule will likely prompt more enforcement cases and boost penalty amounts.
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The NCBFAA cited concerns, including the ability for BIS’ Office of Export Control to send warning letters to brokers before it makes a final violation determination, as well as the potential for voluntary self-disclosures to cease to be regarded as a mitigating factor by BIS. It appears a self-disclosure of a violation would only be taken into account to determine the base amount of civil penalty, and the rule would hollow the Office of Export Enforcement's current discretion to respond based on the severity of a violation, NCBFAA said.
The proposed rule could also inappropriately pressure respondents to settle a case even where they have a legitimate defense to the charges or feels the amount of sought penalty is excessive, the association said. Under the proposed rule, if a case does not settle before BIS issues a charging letter, yet proceeds to adjudication, the resulting charging letter could include more violations than alleged in the proposed charging letter, NCBFAA said. “Codifying a process that threatens to broaden the scope of charges or demand a higher penalty in cases where a respondent does not settle after a proposed charging letter is issued seems unduly coercive,” NCBFAA wrote.