May

28

DoJ Miffs Description of Iran Sanctions


Posted by at 6:09 pm on May 28, 2014
Category: Criminal PenaltiesDoJIran Sanctions

By Another Believer (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ADepartment_of_Justice%2C_Washington%2C_D.C._2012.JPGIn a recent DoJ press release correcting a previous press release that incorrectly stated that the DoJ had indicted someone on export charges that they hadn’t actually indicted him on (oops!), the DoJ took the opportunity to try to explain the scope of the U.S. sanctions on Iran. Unfortunately the DoJ got it wrong. Of course, when an exporter makes a mistake about the scope of the Iran sanctions, it’s a big deal; but when the DoJ makes a mistake, oh well, we all make mistakes.

At issue are charges against Pennsylvania-based Hetran, Inc. which allegedly shipped a horizontal lathe to Iran via a company in Dubai. This gives the DoJ the opportunity to say this:

American companies are forbidden to ship dual use items – such as the peeler – to Iran without first obtaining a license from the U.S. Department of Commerce

Oh dear, where to start with this? Really, it’s just wrong in so many ways. Let’s start with section 746.7 of the Export Administration Regulations which sets forth the controls by the Department of Commerce’s Bureau of Industry and Security on exports to Iran. That would have been a good place for the DoJ to start as well before attempting to explain U.S. sanctions on Iran.

Subsection (e) says this

No person may export or reexport any item that is subject to the EAR if such transaction is prohibited by the Iranian Transactions Regulations (31 CFR part 560) and not authorized by OFAC.

Subsection (a) says this:

[I]f OFAC authorizes an export or reexport, such authorization is considered authorization for purposes of the EAR as well.

So, where does that leave us?

Error 1: Licenses aren’t just required for exporting dual use items to Iran. OFAC rules forbid all exports to Iran except for certain limited items such as food, medicine, medical devices, informational products and personal telecommunications devices. Plenty of things that aren’t dual use (i.e. listed on the Commerce Control List) require licenses.

Error 2: the requirement for exports to Iran is a license from OFAC, not from BIS. A license from BIS is required only if no license from OFAC has been obtained and the matter is “not subject to OFAC regulatory authority.”  EAR 746.7(a)(2).

Here’s an idea: maybe people in the DoJ should be required to attend BIS’s annual Update Conference before they are allowed to say things about export law.

 

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4 Comments:


It would interesting to see if the error carries over to the criminal information and which statute they cited as the source of authority.

It also is worth noting that this is another case where OEE is serving as the enforcement muscle for OFAC. Perhaps that is what confused DoJ.

Comment by Hillbilly on May 29th, 2014 @ 1:17 pm

W/r/t the first potential error, aren’t all items subject to the EAR technically “dual-use”? See the last sentence of 730.3. I think the DOJ may have been using the referred-to shorthand.

Comment by Aaron on June 2nd, 2014 @ 3:07 pm

    EAR99 items that are exported from the U.S. are “subject to the EAR” but are not “dual use.” The provision you cite talks about items “covered by the EAR,” which is not a defined term in the EAR but by context seems to refer to items with an ECCN other than EAR99.

    Comment by Clif Burns on June 4th, 2014 @ 11:57 pm

Hey Clif, speaking of errors did you mean “muffs.” :)

miff
1.annoy or offend somebody: to annoy or offend somebody
2.ill humor: an angry mood or sulk
3.petty quarrel: a tiff or trivial quarrel

Comment by Jim Slear on June 6th, 2014 @ 6:52 pm