White House EO Disfavoring Criminal Enforcement of Regulations Likely Won't Impact Trade, Lawyers Say
The Trump administration on May 9 issued an executive order declaring that it will disfavor criminal enforcement of regulatory offenses in an effort to combat overregulation. Criminal customs enforcement likely won't be affected by the order, since the administration is placing a larger emphasis on trade enforcement and these cases arise out of statutes and not federal regulations, trade lawyers told us.
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The order specifically addresses federal regulations enforceable by a "criminal penalty" and says that prosecution of such offenses "is most appropriate" for parties who "know or can be presumed to know what is prohibited or required by the regulation and willingly choose not to comply."
The order also said strict liability offenses are "generally disfavored," and where enforcement is "appropriate," civil enforcement should be sought over criminal prosecution.
Lawrence Friedman, partner at Barnes Richardson, said in an email the order likely won't impact criminal customs enforcement, since these cases largely arise out of the following three statutes instead of from federal regulations: false entry by misclassification, which falls under 18 U.S.C 541; false entry by other false statements, falling under 18 U.S.C. 542; and smuggling, which generally falls under 18 U.S.C. 545.
Christopher Duncan, partner at Stein Shostak, made similar points, noting that the cases are brought under "longstanding criminal and civil statutes, and not regulations." As a result, "I would not expect a change in practice," he said. Duncan speculated that, contrary to the order's aims, the administration may actually seek more criminal customs cases, given the administration's "emphasis on trade protection."
Friedman said there are "few criminal provisions in title 19," which is the basis for federal trade regulations, "but I have never seen them used."
Chris Kane, partner at Simon Gluck, said criminal enforcement of customs laws is rare, adding that the customs cases that do "go criminal" seem to "revolve around a larger circle of criminal activity, a trifecta, e.g., foreign nationals evading huge amounts of duties and taxes, while violating immigration laws." Kane said he believes the big criminal cases "will still be tried."