BIS Final Rule Adds Notification Requirement for Export Under Authorization VEU

December 18, 2012 by Brian Feito|Top News

The Bureau of Industry and Security finalized its rule amending provisions on Validated End-User notifications, as well as situations where license requirements change for items previously exported under Authorization VEU. The final rule, which is effective Jan 18, makes minor changes to the proposed rule published on April 17.

The final rule amends the Export Administration Regulations by (i) adding a requirement for persons shipping under Authorization VEU to send written notice of such shipments to the recipient VEU; (ii) saying that item-specific conditions under Authorization VEU no longer apply when such items no longer require licenses or become eligible under a license exception; and (iii) requiring that, for such items, VEUs are still subject to the recordkeeping requirements for items shipped before removal of the license requirement or addition of the license exception.

Exporters Must Notify VEUs of Shipments

BIS is amending the EAR at 15 CFR 748.15 (Authorization Validated End-User) by adding paragraph (g), which would require persons exporting, reexporting, or transferring (in-country) under Authorization VEU to send written notification to the recipient VEU with details about their shipment.

Details of the shipment required in the notification include:

a list of VEU-authorized contents of the shipment or transfer
the quantity of items that have been or will be shipped to the respective VEUs under Authorization VEU
a list of the applicable Export Control Classification Numbers (ECCNs) for the VEU-authorized items

(In this final rule, BIS clarified that the notification requirement only applies to VEU-authorized items in cases where shipments include both items shipped under VEU authorization and items shipped under other types of authorization. The proposed language did not make such a distinction.)

Made in ‘previously agreed timeframe.’ The notification must be made within a timeframe previously agreed to in writing by the exporter and the VEU, BIS said. Agreement to the timeframe for notification must occur in advance of the shipment under Authorization VEU. The VEU and the shipper may determine if notifications need to be made for each Authorization VEU shipment or whether multiple shipments may be the subject of a consolidated notification.

(The proposed rule required notification within seven days of the export, reexport, or transfer to the VEU. The final rule removes that language, instead providing for the exporter and VEU to come to an agreement on the notification timeline.)

Notification would be in writing. The new paragraph does not mandate the form of communication (e.g., fax, email, letter) for the notification, but does require that the notification be in a written format.

Must be maintained in records. Exporters, reexporters, and VEUs will be required to maintain the notifications they receive pursuant to their recordkeeping requirements.

(BIS clarified that it is making these changes to improve the ability of VEUs to determine which shipments are made to them under Authorization VEU. “The use of Authorization VEU requires VEUs to track items received under Authorization VEU, but does not require VEUs to distinguish between identical items sent under Authorization VEU and other types of shipping authorizations,” BIS said.)

Regulations Specify Effects of Termination of Conditions on VEU Authorizations

The proposal would add another paragraph to 15 CFR 175.15 that would say that VEUs who are subject to item-specific conditions and have received items subject to such conditions under Authorization VEU are no longer be bound by the conditions associated with the items if the items no longer require a license for export or reexport to China or India (depending on the VEU’s location) or become eligible for shipment under a license exception to the destination.

In a change from the proposal, the final rule specifies that items that become eligible for a License Exception are subject to the terms and conditions of the applicable License Exception and the restrictions in Section 740.2 of the EAR. Items that become eligible for export without a license and that remain subject to the EAR may only be exported, reexported, transferred (in-country) or disposed of in accordance with the requirements of the EAR, BIS said.

In addition, BIS added a new paragraph to the same section to remind exporters that records requirements for shipments that were made under Authorization VEU prior to the removal of a license requirement or the availability of a license exception remain subject to the review / recordkeeping requirements of 15 CFR 748.15(f)(2) on and after the date that the license requirement was removed or the license exception became applicable.

(FR Pub 12/19/12)