Document ID: BIS-2022-0032-0001
Agency: bis
Document Type: Rule
Title: Guidance: Export Administration Regulations: Penalty Determinations in the Settlement of Administrative Enforcement Cases Involving Antiboycott Matters
Posted Date: 2022-10-07T04:00Z

[Federal Register Volume 87, Number 194 (Friday, October 7, 2022)]
[Rules and Regulations]
[Pages 60890-60892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-21713]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 766

[Docket No. 220930-9998]
RIN 0694-AI91

Export Administration Regulations: Guidance on Penalty 
Determinations in the Settlement of Administrative Enforcement Cases 
Involving Antiboycott Matters

AGENCY: Bureau of Industry and Security, Department of Commerce.

ACTION: Final rule.

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SUMMARY: In this final rule, the Bureau of Industry and Security (BIS) 
amends a supplement to the Export Administration Regulations (EAR) that 
sets forth guidance regarding BIS's penalty determinations in the 
settlement of administrative enforcement cases involving violations of 
the antiboycott provisions of the EAR. This amendment clarifies and 
realigns such guidance with current boycott-related activity and BIS's 
priorities and charging practices. BIS also updates the reference to 
the statutory authority for the EAR's antiboycott provisions.

DATES: This rule is effective October 7, 2022.

[[Page 60891]]

FOR FURTHER INFORMATION CONTACT: Cathleen Ryan, Director, Office of 
Antiboycott Compliance, Bureau of Industry and Security, U.S. 
Department of Commerce, by email at [email protected] or 
[email protected], or by phone at 202-482-2381.

SUPPLEMENTARY INFORMATION:

Background

    Supplement No 2 to Part 766--(Guidance on Charging and Penalty 
Determinations in Settlement of Administrative Enforcement Cases 
Involving Antiboycott Matters) (``Antiboycott Penalty Guidance''), a 
supplement added to the EAR in July 2007, describes how BIS's Office of 
Antiboycott Compliance (OAC) responds to violations of part 760 of the 
EAR (``Restrictive Trade Practices or Boycotts'') and to violations of 
related recordkeeping requirements set forth in part 762 of the EAR 
(``Recordkeeping'') (together, ``the antiboycott provisions of the 
EAR''). Paragraph (d) of the Antiboycott Penalty Guidance specifies how 
BIS determines the appropriate sanctions in the settlement of 
administrative enforcement cases involving violations of the 
antiboycott provisions of the EAR.
    In this final rule, BIS revises paragraph (d)(1)(ii)--Category of 
Violations, which categorizes violations by the seriousness of the 
alleged violations. Based on administrative antiboycott enforcement 
cases pursued in recent years under new statutory authority, the Export 
Control Reform Act of 2018 (50 U.S.C. 4801-4852), specifically, Part II 
(the Anti-Boycott Act of 2018), and current boycott-related trends and 
conditions, it is BIS's view that certain of the violations specified 
under Categories A and B in paragraph (d) do not accurately reflect 
BIS's current antiboycott enforcement priorities and practices or the 
agency's assessment of the seriousness of the alleged violations.
    Accordingly, as detailed below, this rule makes certain revisions 
and clarifications to Categories A and B. By making these revisions, 
this amendment updates the two categories to better comport with 
current boycott-related activity and to better align BIS's penalty 
determinations with the agency's view of the seriousness of the alleged 
violations. BIS has revised Category A to include only those violations 
deemed the most serious; these violations will ordinarily warrant the 
maximum penalty available under the Anti-Boycott Act of 2018. BIS has 
also revised Category B, reflecting shifting trends in boycott 
activity, to include violations that most commonly and currently arise 
in commercial transactions in a boycott context; these violations will 
be the focus of OAC's antiboycott enforcement and subject to enhanced 
penalties to discourage cooperation with boycott-related requirements 
and to promote awareness, accountability and deterrence.
    Specifically, consistent with these policy considerations, this 
rule moves certain violations from Category B to Category A and moves 
other violations from Category A to Category B. It also clarifies the 
references to certain violations. This rule does not make any revisions 
to Category C.

Section 760.2(a) (Refusals To Do Business)

    Section 760.2(a) (Refusals to do business) of the EAR is a 
prohibition that may take one of four forms identified in paragraph 
(a)(1). BIS will continue to classify the first of these forms, 
refusing to do business, as a Category A violation. However, this rule 
moves the second form of this prohibition, knowingly agreeing to refuse 
to do business, from Category A to B, and also corrects the inadvertent 
omission of the word ``knowingly'' in the former reference at paragraph 
(d)(1)(ii)(A)(2) of Supp. No. 2 to part 766. Additionally, this rule 
makes clarifying additions to Category B by adding in specific 
references to the two other forms that Section 760.2(a)(1) may take, 
namely, requiring, or knowingly agreeing to require, any other person 
to refuse to do business. These clarifying additions reflect BIS's 
longstanding assessment of these two forms of the prohibition as 
Category B violations.

Furnishing Information About Associations With Charitable or Fraternal 
Organizations Which Support a Boycotted Country--Sec.  760.2(e)

    This rule moves this violation from Category B to A.

Implementing Letters of Credit--Sec.  760.2(f)

    This rule moves this violation from Category A to B.

Furnishing Information About Business Relationships With Boycotted 
Countries or Blacklisted Persons--Sec.  760.2(d)

    This rule moves this violation from Category A to B.
    These revisions and clarifications are intended to increase 
transparency and add clarity to the administrative enforcement process 
with respect to violations of the antiboycott provisions of the EAR 
and, in turn, to incentivize compliance and strengthen deterrence.

Corrections

    Additionally, this rule makes a technical amendment to the 
introductory paragraph of (b) of Supplement No. 2 to Part 766. 
Specifically, it replaces the outdated reference to Section 8 of the 
Export Administration Act of 1979, as amended, with a reference to the 
Export Control Reform Act of 2018, the current statutory authority for 
the antiboycott provisions of the EAR.

Export Control Reform Act of 2018

    On August 13, 2018, the President signed into law the John S. 
McCain National Defense Authorization Act for Fiscal Year 2019, which 
included the Export Control Reform Act of 2018 (ECRA) (50 U.S.C. 4801-
4852). Part II of ECRA contains the Anti-Boycott Act of 2018. ECRA 
provides the legal basis for BIS's principal authorities and serves as 
the authority under which BIS issues this rule.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distribute impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This final rule has been designated as not significant for 
purposes of Executive Order 12866.
    2. This rule does not contain policies with Federalism implications 
as that term is defined under Executive Order 13132.
    3. Pursuant to section 1762 of the Export Control Reform Act of 
2018 (50 U.S.C. 4821), this action is exempt from the Administrative 
Procedure Act (5 U.S.C. 553) requirements for notice of proposed 
rulemaking, opportunity for public participation, and delay in 
effective date.
    4. Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for this rule by 5 U.S.C. 
553, or by any other law, the analytical requirements of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., are not applicable. 
Accordingly, no regulatory flexibility analysis is required, and none 
has been prepared.
    5. Notwithstanding any other provision of law, no person may be 
required to respond to or be subject to

[[Page 60892]]

a penalty for failure to comply with a collection of information, 
subject to the requirements of the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501 et seq.), unless that collection of information displays a 
currently valid Office of Management and Budget (OMB) Control Number. 
This regulation involves a collection currently approved by OMB under 
control number 0694-0012, Report of Requests for Restrictive Trade 
Practice or Boycott--Single or Multiple Transactions. The collection 
carries a burden estimate of 60 to 90 minutes for a manual or 
electronic submission for a total burden estimate of 482 hours. BIS 
expects the burden hours associated with this collection to not to be 
impacted with the publication of this rule.

List of Subjects in 15 CFR Part 766

    Administrative practice and procedure, Confidential business 
information, Exports, Law enforcement, Penalties.

    Accordingly, part 766 of the Export Administration Regulations (15 
CFR parts 730-774) is amended as follows:

PART 766--ADMINISTRATIVE ENFORCEMENT PROCEEDINGS

0
1. The authority citation for part 766 continues to read as follows:

    Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 
U.S.C. 1701 et seq.; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783.

0
2. Supplement no. 2 to part 766 is amended by revising paragraph (b) 
introductory text and paragraph (d)(1)(ii) to read as follows:

Supplement No. 2 to Part 766--Guidance on Charging and Penalty 
Determinations in Settlement of Administrative Enforcement Cases 
Involving Antiboycott Matters

* * * * *
    (b) Responding to Violations.
    OAC within BIS investigates possible violations of the Anti-
Boycott Act of 2018, the antiboycott provisions of the EAR, or any 
order or authorization related thereto. When BIS has reason to 
believe that such a violation has occurred, BIS may issue a warning 
letter or initiate an administrative enforcement proceeding. A 
violation may also be referred to the Department of Justice for 
criminal prosecution.
* * * * *
    (d) How BIS determines what sanctions are appropriate in a 
settlement.
    (1) General Factors. BIS looks to the following general factors 
in determining what administrative sanctions are appropriate in each 
settlement.
    (i) Degree of seriousness. In order to violate the antiboycott 
provisions of the EAR, a U.S. person does not need to have actual 
``knowledge'' or a reason to know, as that term is defined in Sec.  
772.1 of the EAR, of relevant U.S. laws and regulations. Typically, 
in cases that do not involve knowing violations, BIS will seek a 
settlement for payment of a civil penalty (unless the matter is 
resolved with a warning letter). However, in cases involving knowing 
violations, conscious disregard of the antiboycott provisions, or 
other such serious violations (e.g., furnishing prohibited 
information in response to a boycott questionnaire with knowledge 
that such furnishing is in violation of the EAR), BIS is more likely 
to seek a denial of export privileges or an exclusion from practice, 
and/or a greater monetary penalty as BIS considers such violations 
particularly egregious.
    (ii) Category of violations. In connection with its activities 
described in paragraph (a)(1) of this supplement, BIS recognizes 
three categories of violations under the antiboycott provisions of 
the EAR. (See Sec.  760.2, Sec.  760.4 and Sec.  760.5 of the EAR 
for examples of each type of violation other than recordkeeping). 
These categories reflect the relative seriousness of a violation, 
with Category A violations typically warranting the most stringent 
penalties, including up to the maximum monetary penalty, a denial 
order and/or an exclusion order. Through providing these categories 
in this penalty guidelines notice, BIS hopes to give parties a 
general sense of how it views the seriousness of various violations. 
This guidance, however, does not confer any right or impose any 
obligation as to what penalties BIS may impose based on its review 
of the specific facts of a case.
    (A) The Category A violations and the sections of the EAR that 
set forth their elements are:
    (1) Discriminating against U.S. persons on the basis of race, 
religion, sex, or national origin--Sec.  760.2(b);
    (2) Refusing to do business--Sec.  760.2(a);
    (3) Furnishing information about race, religion, sex or national 
origin of U.S. persons including, but not limited to, providing 
information in connection with a boycott questionnaire about the 
religion of employees--760.2(c).
    (4) Evading the provisions of part 760--Sec.  760.4; and
    (5) Furnishing information about associations with charitable or 
fraternal organizations which support a boycotted country--Sec.  
760.2(e).
    (B) The Category B violations and the sections of the EAR that 
set forth their elements are:
    (1) Knowingly agreeing to refuse to do business--Sec.  760.2(a);
    (2) Requiring, or knowingly agreeing to require, any other 
person to refuse to do business--Sec.  760.2(a);
    (3) Implementing letters of credit--Sec.  760.2(f);
    (4) Furnishing information about business relationships with 
boycotted countries or blacklisted persons--Sec.  760.2(d); and
    (5) Making recordkeeping violations--part 762.
    (C) The Category C violation and the section of the EAR that 
sets forth its elements is: Failing to report timely receipt of 
boycott requests--Sec.  760.5.
* * * * *

Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2022-21713 Filed 10-6-22; 8:45 am]
BILLING CODE 3510-33-P