According to the story, twenty-nine Holstein bulls have already been exported to Russia and another thirty are to follow. The bulls are set to, er, revitalize (at least that’s what the kids call it now) Russian Holstein dairy herds. The need for bulls with that certain American panache was explained as follows in the story:

Russian farmers want American bulls to improve dairy-herd genetics in a land hampered first by collective farming, then by the collapse of the Soviet Union. …

Instead of raising dairy cattle for milk and beef cattle for meat, Soviet collective farms had “dual-use” cattle, which would be milked for a while, then killed for meat, Osipenko said. Those one-size-fits-all cattle may have embodied an egalitarian ideal, but both milk and meat were mediocre, said Osipenko, a native of Ukraine who recalled his mother boiling beef for hours in a fruitless attempt to tenderize it.

After the Soviet Union collapsed, many dairy herds were all but wiped out as hungry Russians consumed them for food.

“There was a terrible crisis, apparently, and they pretty much ate their seed stock,” said Patrick Comyn, a large-animal veterinarian with the private Virginia Herd Health Management Services who worked on the deal.

And that’s where the exported bulls come in. I am sure that the Virginia bulls will be delighted, to the extent that bulls can be delighted in the first place, that they are fulfilling both a carnal and a patriotic duty.

Of course, these mail-order American husbands may never have seen their wealthy Russian wives if they had been horses because, as all export geeks know, export of horses by sea (ECCN 0A980) requires a license from the Department of Commerce. Personally, I think this is another example of wanton discrimination against American cows in favor of American horses which are spared from both the dinner table and long ocean voyages.

Three entries on the list, two for a high mobility electron transistor (“HMET”) and one for a microwave monolithic integrated circuit (“MMIC”), indicate that the correct classification for these items is ECCN 3A982. The problem is that there is no ECCN 3A982, and there has never been, at least that I could find.

Well today I came across a notice of a final rule by the Bureau of Industry and Security, dated January 9, 2012, and effective on the same date, which creates a new ECCN 3A982 for HMETs and MMICs. Of course, the mystery remains as to how the DDTC could classify something as ECCN 3A982 before the ECCN actually existed, but I suppose that only bothers people concerned about the rule of law and other minor details.

Interestingly, the Settlement Agreement only provides for the payment of the $370,000 fine. There are no provisions, as are now often seen in these agreements, requiring enhanced compliance procedures or export audits.

A spokesman for FedEx, speaking today to a Memphis newspaper, described the violations as “inadvertent and very limited.” This certainly makes sense for the attempted Mayrow exports, which occurred in July 2006, only a month after General Order No. 3 imposed the license requirement on exports to Mayrow. Because Mayrow and the other companies listed in General Order No. 3 were not immediately put on the lists that exporters customarily checked, the FedEx error here is understandable.

The statements from the FedEx spokesman also indicate that the exports were discovered and stopped by the government based on the Automated Export System filings made by FedEx in connection with the shipments. That being the case, it is clear that FedEx had not attempted to disguise what it was doing and that its own compliance procedures had not flagged the problematic shipments.

The settlement documents provide no indication as to what actions, if any, were taken against the FedEx customers that initiated these shipments.

Who says you never have gotten to talk to an Assistant Secretary of Commerce? Tomorrow, Wednesday, December 14, 2011, you can dial up Kevin Wolf at 2:00 p.m. to discuss the White House’s current export reform proposals. The dial-in number for the conference calls will be 1-877-389-6079, Participant Code: 905168. BIS has announced that this will be the beginning of a weekly series of calls on export reform with Assistant Secretary Wolf that will take place each Wednesday at 2:00 pm EST.

There’s only one small catch: Questions for Kevin should be sent in advance of the call to oesdseminar@bis.doc.gov with a subject line of “Teleconference questions.” This is to avoid having someone from the Howard Stern show hijack the teleconference with inappropriate questions. (That, of course, isn’t the real reason, but it would be a good one.)

The stated purpose of these calls is “to foster public understanding of the initiative and to assist interested parties to prepare more informed comments.” I have been told by a reliable source that so far BIS has received almost no comments on these proposals and that BIS is very much interested in input from the export community. There are three public notices relating to the export control reform initiative with comment periods that are still open: the comment period for the notice on aircraft and related parts closes on December 22, 2011 (i.e. almost tomorrow) and the comment period for the notices relating to gas turbine engines and military vehicles closes on January 20, 2012.

In March 2011, BlastGard’s management team officially assumed operational control of HighCom. Since this time we have accomplished a number of key compliance tasks and finalized manufacturing agreements with several key partners. As stated in the paragraph above, BlastGard has received official communication from the U.S. State Department that HighCom’s export authority has been reinstated. In addition to this, BlastGard has completed registration through both the Directorate of Defense Trade Controls as well as the Bureau of Industry and Security (“BSI”). The purpose of these registrations is to allow BlastGard control over the export management and compliance program moving forward.

Completing registration with the Bureau of Industry and Security is quite an accomplishment — considering the BIS (or is it BSI?) doesn’t have a registration process. Perhaps they mean that they’ve gotten a PIN for the SNAP-R system? And we’ll award the coveted “Reader of the Week” prize to anyone who can figure out what the last sentence in that quotation means.

All kidding aside, I still am somewhat surprised that BIS hasn’t gotten on the needless user fee gravy train yet along with DDTC. It’s probably only a matter of time before BIS realizes that there’s gold in them registration hills, and then companies will be able to boast in press releases that they’ve been certified as export-compliant and super cool by BIS in addition to having been certified by DDTC.

An Indian website today quoted an executive of one of these removed groups who was, it seems, unenthused about the impact of the removal:

“I do not think removal of some DRDO labs from the Entity List by the U.S. has changed anything for us. The American export regulations for dual-use technologies and items need stringent clearances from their commerce and defence departments,” Saraswat [Chief of the Defence Research and Development Organisation ("DRDO")] said when asked if the American policy announced during US President Barack Obama’s visit last November and implemented in January this year had helped India in anyway.

“Whether or now we are with Missile Technology Control Regime (MTCR), the export rules and regulations apply for us. We have to go through the process. It is not an easy process and it becomes difficult to acquire them,” he said.

“Our experience has been these regulations make it more difficult,” he added.

If that’s the case, perhaps Saraswat won’t mind if the U.S. puts DRDO back on the Entity List.

At the same time, Wang settled civil penalty charges brought against her by BIS for the same exports. Under that agreement, Wang has agreed to a civil penalty of $200,000 and a five-year denial order. Under the denial order, Wang will be forbidden from engaging in any transactions involving the export of items from the United States. Of course, a five year jail sentence will also accomplish the same goal, since I doubt that federal prisoners can engage in export transactions from jail.

Whatever one thinks of the seriousness of the charges against Wang, wacking her, or anyone else, with both criminal and civil penalties seems to be overkill. There used to be this quaint notion that jail time was the ultimate penalty and was designed to assure that the defendant paid his or her debt to society. But now that is just the starting point, with every other penalty piled on top for good measure. Frankly, I won’t be surprised when I read of an export defendant subjected to jail time, criminal fines, civil fines, denial of export privileges, permanent suspension of his or her driver’s license, three thousand push-ups, five weeks in the stocks in Times Square, eight weeks in a re-education camp, and a pound of flesh.

On October 19 this blog reported on a hearing held by the Senate Energy and Natural Resources Committee with respect to efforts that the U.S. government and U.S. companies are taking to respond to and mitigate potential ecological disasters that might stem from planned exploratory drilling by non-U.S. companies in Cuban territorial waters. The chairs in the hearing room had barely cooled off before Ileana Ros-Lehtinen, Chair of the House Foreign Relations Committee, fired off a letter to the Obama administration criticizing any efforts by the federal government to minimize the impact of the Cuban drilling on the ecology of nearby U.S. coastal waters. Because the drilling is going to occur in all events, complaining about damage containment on U.S. shores seems to be a classic case of cutting off our own nose to spite Cuba’s face.

Chairwoman Ros-Lehtinen’s tenure on the Foreign Relations Committee has, sadly, not caused her to learn much about U.S. export laws, as we’ve noted before, and this letter on Cuban drilling continues to demonstrate her confusion about applicable export and sanctions laws. For starters, the Chairwoman seems to believe that the lapsed Export Administration Act is still in force when she demands an investigation by the Bureau of Industry and Security (“BIS”) as to whether use of a Chinese-built rig in the drilling violates the “Export Administration Act.”

The de minimis rule also appears to have confused Ros-Lehtinen:

We are concerned by reports that the Scarabeo 9 may have been designed specifically to avoid U.S. economic sanctions against Cuba. While the EAA and the Export Administration Regulations (EAR) generally prohibit virtually all exports and reexports of U.S.-origin goods, software and technology to Cuba, we need clarity on how the Administration is applying the sanctions and EAR to foreign produced items incorporating 10 percent or less controlled U.S. content

That is not a difficult question to answer: the sanctions and the EAR do not apply to restrict export to Cuba of foreign-produced items incorporating 10 percent or less controlled U.S. content. There’s no need to write a letter to President Obama to get that answer; it’s clearly stated in the EAR.

But the Chairwoman saves the best for last:

The Export Administration Regulations clearly state that the only items allowed to be exported to Cuba are donations of medical equipment, agricultural exports, and telecommunications equipment. Thus, even if the de minimis rule does not [sic] apply, the broader prohibitions against exports to Cuba must still be enforced.

Where exactly to start with this? Section 746.2(a)(1) of the EAR permits many more exports other than the three mentioned by Ros-Lehtinen, including medicine, computers, disk drives, digital cameras, televisions, radio receivers, recording devices, baggage, gifts, humanitarian donations, aircraft on temporary sojourn, spare parts for foreign-made equipment and much more. More importantly, any listing of permissible exports in section 746.2(a)(1) does not overrule the explicit provisions of the de minimis rule found in section 734.4 of the EAR which specifically permits re-exports to Cuba of items with 10 percent or less U.S.-origin controlled content.

Although these statements are fairly unambiguous violations of the anti-boycott regulations, it is significant that BIS is going after the freight forwarder here and not the shipper. According to the company’s website, the company moves annually over 100 million kilos by air and 260,000 containers by ocean. The BIS settlement suggests that freight forwarders need to scour through all shipping documents to see whether any of them contain information prohibited by the anti-boycott regulations, a burdensome, time-consuming, and, frankly, pointless task given that BIS can fine the shipper who presumably does read all of the relevant shipping documents.

Of course, BIS fines for anti-boycott violations remain well below an amount that would give an incentive to those hit with the fines to mount an administrative and judicial challenge. This is understandable given that there is considerable question as to whether the anti-boycott regulations, enacted under the now-lapsed Export Administration Act, can be validly extended by an executive order under the International Economic Emergency Powers Act (“IEEPA”), which is the only argument for their continued validity.

The third charge against JAS is, frankly, puzzling. The offending statement, as quoted in the charging documents, is this statement in the Certificate of Insurance:

The undersigned does hereby certify on behalf of the above insurance company, that the said company has a duly qualified and appointed agent or representative in Kuwait, whose name and address appear below.

Yep. That’s the offending statement. Apparently now it is illegal to tell other companies that you have an agent in Kuwait. Or maybe to reveal the agent’s address. Go figure.

One can only assume that the Certificate of Insurance said something naughty other than the quoted statement; you’ll just have to guess what it was. I suppose when you’re only able to get about $20,000 in each enforcement action, BIS doesn’t really feel it’s worth it to fuss around with the documents too much to guarantee their accuracy.

He said that the US Departments of Commerce and the Treasury have a long-standing practice of providing licenses to address environmental challenges in Cuban waters, and that DOC’s Bureau of Industry and Security has issued a number of them for booms, skimmers, dispersants, pumps, and other equipment and supplies to minimize environmental damage from a spill. “I believe the Commerce and Treasury departments would move quickly to approve more licenses if needed,” he said.

Not all witnesses before the Committee shared Bromwich’s rosy view of our ability to respond to a Cuban spill:

Paul A. Schuler, president of Clean Caribbean & Americas, an international spill response cooperative operating in the region, said only three US companies have such licenses that must be renewed every 1-2 years. “It needs to be handled in advance, and not as an ad hoc action as part of a response to an oil spill,” Schuler said. “Others would have to go through the entire licensing process, and my experience has been that it has not been quick.”

I suspect that exporters with experience obtaining licenses from BIS and OFAC might also share Schuler’s scepticism about whether the agencies could move quickly on licenses by U.S. companies to provide clean-up services in Cuban waters (which would require an OFAC license) and export equipment to be used in that clean-up effort (which would require a BIS license).