Handling items exported in violation

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1. Items tied to a known violation

The Export Administration Regulations (EAR) bar dealings in an item subject to them by a person who knows of a violation connected with that item (15 CFR 764.2(e)). The violation may have occurred already, be about to occur or be intended. The barred dealings include ordering, buying, storing, using, selling, transferring, financing, forwarding or otherwise servicing the item. Any person taking certain actions with knowledge that a violation of the Export Control Reform Act of 2018 (ECRA) or the EAR has occurred has violated that rule (15 CFR 764.5(g)(1)).

A person who has made a voluntary self-disclosure (VSD) knows that a violation may have occurred (15 CFR 764.5(g)(1)(i)). For that reason, the discloser may ask the Bureau of Industry and Security (BIS) for permission to carry out activities that would otherwise be prohibited. The request may be made at the time the VSD is made. The rules for the disclosure itself are covered in voluntary self-disclosure of export violations.

2. Three routes to clear the activity

Any person may also notify the Director of the Office of Export Enforcement (OEE) that a violation has occurred and request permission from BIS (15 CFR 764.5(g)(1)(ii)). A third route covers returns. Actions to return to the United States an item that was unlawfully exported and disclosed need only notification to the OEE Director (15 CFR 764.5(g)(1)(iii)).

Items returned to the United States need no further authorization under paragraph (g) for future activities (15 CFR 764.5(g)(1)(iii)). The condition is that those future activities comply with any applicable EAR requirements.

3. How to make the request

A request should be submitted on letterhead, signed, and sent to the Director of the Office of Exporter Services, with a copy to the BIS VSD intake address (15 CFR 764.5(g)(2)). It should be specific. It should give the nature of the violation, including when and how the violations occurred.

It should describe the items, with their quantity, value in U.S. dollars and Export Control Classification Number (ECCN) or other classification (15 CFR 764.5(g)(2)). It should give license numbers where applicable, and the identities and addresses of all individuals and organizations subject to the request. It should set out the scope of the request, naming the activities sought, including end-use, and a point of contact. A copy of the initial or final VSD, or the notification to the OEE Director, should be attached.

4. What a grant does and does not do

Requests under the first two routes may be granted by the Office of Exporter Services in consultation with OEE (15 CFR 764.5(g)(3)). If a request is granted, future activities with those items that would otherwise violate the knowledge rule will not be violations. Even with permission, a discloser is not absolved of liability for the violations disclosed (15 CFR 764.5, note 1 to paragraph (g)(3)). Nor is the discloser relieved of the duty to obtain any required reexport authorizations.

5. Reexports, in-country transfers and filing errors

Authorization to reexport or transfer within a country items that were exported contrary to ECRA or the EAR may be requested under part 748 (15 CFR 764.5(g)(4)). An applicant who knows the items are the subject of a VSD or notification should say so in the request. A copy of the VSD or notification should be included with the license application.

If the items are otherwise eligible for a license exception or the No License Required (NLR) designation, a request may seek permission to use that exception or designation (15 CFR 764.5, note 2 to paragraph (g)(4)). The transaction must otherwise meet the terms and conditions of the exception or designation.

Automated Export System (AES) filing errors reported to OEE, where there is no other EAR violation, need only notification (15 CFR 764.5(g)(5)). The AES filing must be corrected with the Census Bureau before the activities go ahead. If another violation occurred as well, such as failing to obtain a required license, authorization under paragraph (g) is required.

6. The Libya installed base

A separate section applies the knowledge rule to items that may have been illegally exported or reexported to Libya before the comprehensive embargo ended on 29 April 2004 (15 CFR 764.7(a)). The EAR calls these installed base items. The same prohibition also appears as General Prohibition Ten in section 736.2(b)(10).

Activities within the knowledge rule involving certain installed base items located in Libya, and exported or reexported before 29 April 2004, do not require a BIS license (15 CFR 764.7(b)(1)). Items qualify if they are not on the Commerce Control List (CCL) (15 CFR 764.7(b)(1)(i)(A)). They also qualify if they are on the CCL but authorized to Libya under a license exception (15 CFR 764.7(b)(1)(i)(B)). Items on the CCL controlled only for anti-terrorism (AT) reasons, or for national security (NS) and AT reasons only, also qualify (15 CFR 764.7(b)(1)(i)(C)). The last group must not be on the Wassenaar Arrangement’s Sensitive List or Very Sensitive List.

An item being exported to Libya may still need a license because of its own classification, whether or not it will be used with an installed base item (15 CFR 764.7, note 1 to paragraph (b)(1)(i)).

7. The report and the license route

Anyone carrying out a license-free activity must report to OEE all known material facts on how the installed base item arrived in Libya (15 CFR 764.7(b)(1)(ii)). The report is due within 90 days of the first activity relating to the item in Libya. One report may cover more than one activity or item. A new report is needed if new material information about the export or reexport comes to light.

Activities involving other installed base items in Libya need a BIS license first (15 CFR 764.7(b)(2)(i)). Applications should follow sections 748.1, 748.4 and 748.6, should describe the activity, and should include all known material facts on how the item reached Libya. BIS reviews them case by case (15 CFR 764.7(b)(2)(ii)). Civil end-uses receive favorable consideration, while military, police, intelligence or other sensitive end-uses face a general policy of denial.

The section does not apply to a person who was party to the original illegal export or reexport (15 CFR 764.7(b)(3)). Such persons should use the VSD procedures in section 764.5. Where another EAR provision requires a license for the same transaction, the application should describe the related activity (15 CFR 764.7(b)(4)). If granted, that license also authorizes the related activity.

Key terms

Knowledge rule	The bar in section 764.2(e) on dealing with items tied to a known violation.
Installed base item	An item that may have reached Libya illegally before 29 April 2004.
Office of Exporter Services	The BIS office that decides permission requests, with OEE.
NLR	No License Required, a designation for items needing no license.
AES filing error	A mistake in an electronic export filing that is corrected with the Census Bureau.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

How Sentfore supports this

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