On April 18, 2024, the Departments of Commerce and the Treasury announced combined export control restrictions and economic sanctions against Iran for its attack on Israel on April 13, 2024. These actions are intended “to degrade and disrupt key aspects of Iran’s malign activity, including its UAV [Unmanned Aerial Vehicles] program and the revenue the regime generates to support its terrorism” and to further restrict Iran’s access to commercial grade microelectronics. This latest round of export controls on Iran also seeks to restrict items manufactured outside the United States that are produced using U.S. technology.

BIS Export Controls

The Department of Commerce’s Bureau of Industry and Security (BIS) imposed new export controls in a Final Rule to restrict Iran’s access to technologies, such as basic commercial grade microelectronics. The new controls expand the scope of two foreign direct product rules (FDPs) — the Russia/Belarus/Temporarily occupied Crimea region of Ukraine FDP rule and the Iran FDP rule under which certain foreign-made items located outside of the United States may be subject to the Export Administration Regulations (EAR). This rule became effective on April 18, 2024.

This final rule builds on BIS’s February 2023 action that targeted Iran’s involvement in supplying UAVs in support of Russia’s war in Ukraine. See Thompson Hine Update of February 27, 2023 for additional details. This new rule also expands the list of items included in Supplement No. 7 to Part 746 of the EAR to include additional items. This list now includes the entirety of the “Common High Priority List” (CHPL), a list prepared in coordination with the European Union, Japan and the United Kingdom, that identifies items used in Russian weapons development by Harmonized Tariff Schedule (HTS)-6 Codes. The CHPL List includes electronic components such as integrated circuits and radio frequency (RF) transceiver modules, items essential for the manufacturing and testing of electronic components, and computer numerically controlled machine tools. See Thompson Hine Updates of March 5, 2024 and September 26, 2023 for further details on these high priority items.

The 39 additional HTS- 6 Code entries are: 845710, 845811, 845891, 845961, 846693, 847180, 848210, 848220, 848230, 848250, 848610, 848620, 848640, 850440, 851769, 852589, 852990, 853400, 853669, 853690, 854110, 854121, 854129, 854130, 854149, 854151, 854159, 854160, 854320, 880730, 901310, 901380, 901420, 901480, 902750, 903020, 903032, 903039, and 903082. All items subject to the EAR that are classified under the newly added 39 HTS-6 entries already require a license for export, reexport, or transfer (in-country) to Russia and Belarus. In addition, Commerce Control List (CCL) and U.S.-origin EAR99 items classified under these HTS-6 entries are already prohibited for export or reexport to Iran. However, by adding these items to Supplement No. 7 to Part 746, BIS jurisdiction over foreign produced items in these categories will now be expanded, which will in turn expands license requirements for Russia, Belarus and Iran. Such foreign produced restrictions are intended to further undermine the ability of Iran and Russia to support the production of missiles, drones, and other military items for use against Israel and Ukraine. Now foreign produced items that are the direct product of U.S.-origin technology and classified under these HTS codes will be subject to the EAR and prohibited for export to Iran or Russia/Belarus/Crimea.

OFAC Sanctions

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Iran in response to its attack on Israel by designating and placing on the Specially Designated Nationals (SDN) List 16 individuals and two entities enabling Iran’s UAV production and who reportedly work on behalf of Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), its UAV production arm, and other Iranian manufacturers of UAVs and UAV engines. OFAC also designated five companies in multiple jurisdictions providing component materials for Iranian steel production, and three subsidiaries of an Iranian automaker that continue to support the IRGC and other entities designated pursuant to OFAC’s counterterrorism authorities. Additional detail and identifying information on these individuals and entities is available here. A Treasury Department press release providing additional background on these entities and persons is available here

As a result of these OFAC actions, all property and interests in property of the persons and entities placed on OFAC’s SDN List that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50% or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

On April 17, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Venezuela-related General License 44A, “Authorizing the Wind Down of Transactions Related to Oil or Gas Sector Operations in Venezuela.” This license replaces General License (GL) 44 that was issued in October 2023 allowing for certain activities in this sector, including those involving Petróleos de Venezuela S.A. (PdVSA) and its 50% or more owned entities (PdVSA Entities), otherwise prohibited under the Venezuela Sanctions Regulations. New GL 44A is significantly different in that it provides authorization for the wind down of such transactions related to oil or gas sector operations in Venezuela. Accordingly, all transactions previously authorized under GL44 must be wound down no later than 12:01 a.m. EDT, May 31, 2024.

As noted, this GL originally temporarily authorized transactions that are related to oil and gas sector operations in Venezuela that would otherwise be prohibited under the Venezuela Sanctions Regulations. This authorization was granted in October 2023, in response to a political agreement between Venezuelan President Nicolás Maduro’s representatives and the Unitary Platform as a step forward in restoring democracy in Venezuela. See Thompson Hine Update of October 24, 2023. At that time, OFAC made clear that the easing of these sanctions was conditional and could be rescinded if commitments were not met by Venezuela. On January 30, 2024, the Department of State announced the United States would be reinstating certain sanctions actions on Venezuela in light of activities by President Maduro that undermined these commitments. In this announcement, the State Department noted that “absent progress … [in] allowing all presidential candidates to compete in this year’s election,” GL 44 would not be renewed when it expired on April 18, 2024. See Thompson Hine Update of February 1, 2024

In a press statement on April 17, 2024, the State Department indicated that, “After a careful review of the current situation in Venezuela, the United States determined Nicolás Maduro and his representatives have not fully met the commitments made under the electoral roadmap agreement, which was signed by Maduro representatives and the opposition in Barbados in October 2023.” Thus, replacement Venezuela GL 44A, will allow for an orderly 45-day process to wind down any ongoing activities.

In a separate set of FAQs on this topic, OFAC made clear that entering into new business, including new investment, as of April 17, 2024, that was previously authorized under GL 44 is not considered wind-down activity. Further, U.S. persons unable to complete transactions previously authorized by GL 44 before May 31, 2024, are encouraged to seek guidance from OFAC on a case-by-case basis.

Finally, and for further clarity, OFAC notes that “U.S. persons may continue to rely on other OFAC authorizations related to Venezuela’s oil or gas sector operations in Venezuela, including GL 8M, “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities” and GL 41, “Authorizing Certain Transactions Related to Chevron Corporation’s Joint Ventures in Venezuela,” despite the issuance of GL 44A.” For details on these GLs, see Thompson Hine Updates of November 28, 2022 (for GL 41) and November 20, 2023 (for GL 8M).

To “further enhance defense industrial base cooperation and technology innovation with Australia and the United Kingdom,” the Department of Commerce’s Bureau of Industry and Security (“BIS”) issued an interim final rule (“IFR”) on April 18, 2024 to ease various licensing requirements prescribed by the Export Administration Regulations (“EAR”) for exports, reexports, or transfers (in-country) to or within the two countries.  The IFR, which takes effect April 19, 2024, bifurcates its amendments into “major” and “minor” policy changes, respectively, and essentially extends the same licensing treatment enjoyed by Canada under the EAR to Australia and the United Kingdom.  The changes thus directly support the stated goals of the AUKUS Trilateral Security Partnership “to deepen diplomatic, security, and defense cooperation in the Indo-Pacific region,” while also indirectly facilitating general defense trade, innovation, and information and technology sharing between and among the AUKUS nations.  Built upon longstanding and ongoing bilateral ties, AUKUS was established on September 15, 2021.

The most notable “major” policy change of the IFR is the removal of licensing requirements for national security column 1 (NS1), regional stability column 1 (RS1), and missile technology column 1 (MT1) reasons for control imposed on Australia and the United Kingdom in the Commerce Country Chart (see Supplement No. 1 to Part 738 of the EAR).  Considering Australia and the United Kingdom are already not subject to national security column 2 (NS2) and regional stability column 2 (RS2) reasons for control, the IFR thus eliminates all Commerce Country Chart-based NS and RS controls for both countries.  Correspondingly, certain provisions in Part 742 of the EAR specifying license requirements pursuant to NS, RS, and MT reasons will be removed for Australia and the United Kingdom, too.

Other noteworthy “major” policy changes of the IFR include the abolishment of licenses for “600 series” items destined to Australia or the United Kingdom, the elimination of licenses for many 9×515 satellite-related items destined to either AUKUS member, and the removal of military end-use and end-user-based license requirements for certain cameras, systems, or related components detailed in Part 744.9 of the EAR.

While the “major” policy changes thus broaden the alignment of controls on Australia and the United Kingdom with those in effect for Canada, most “minor” policy changes of the IFR simply update various clarifying phrases included in the EAR.

Perhaps the most notable “minor” policy change, though, is new text to be included in three license exceptions—Aircraft, Vessels and Spacecraft (AVS); Additional Permissive Reexports (APR); and Encryption Commodities, Software, and Technology (ENC)—explicitly expanding the applicability of all three for exports, reexports, and transfers (in-country) to Australia, Canada, and the United Kingdom.

The IFR is effective on April 19, 2024.  However, to ensure the export control revisions implemented by the IFR advance AUKUS objectives, BIS invites public comments on the impact of these changes, and welcomes comments for revisions, corrections, and clarifications too.  Comments must be received by BIS no later than June 3, 2024, and should be filed using the Federal rulemaking portal (www.regulations.gov).  The Docket ID No. for this IFR is BIS–2024–0019; commenters, however, should also reference RIN 0694–AJ58 in all comments.

On April 17, 2024, the Office of the U.S. Trade Representative (USTR) initiated an investigation targeting the acts, policies, and practices of the maritime, logistics and shipbuilding sectors of the People’s Republic of China (PRC). This action results from a March 12, 202 petition filed by five U.S. labor unions under Section 301 of the Trade Act of 1974 requesting such an investigation. See Thompson Hine Update of March 13, 2014 for more details on the scope of the petition. Section 301 allows the United States to respond to unreasonable or discriminatory foreign government practices that burden or restrict U.S. commerce. 

In determining to initiate an investigation, Ambassador Katherine Tai stated, “The petition presents serious and concerning allegations of the PRC’s longstanding efforts to dominate the maritime, logistics, and shipbuilding sectors, cataloguing the PRC’s use of unfair, non-market policies and practices to achieve those goals. The allegations reflect what we have already seen across other sectors, where the PRC utilizes a wide range of non-market policies and practices to undermine fair competition and dominate the market, both in China and globally.” In accordance with Section 301, USTR will request consultations with the Chinese government, accept public comments, and hold a public hearing on the matter.

Interested parties may submit written comments on any issue covered by the investigation, such as:

  • China’s acts, policies, and practices targeting the maritime, logistics, and shipbuilding sectors for dominance, and whether they are unreasonable and discriminatory;
  • China’s efforts to dominate the global maritime, logistics, and shipbuilding sectors, including the upstream and downstream supply chain, as well as shipping services;
  • Information on other acts, policies, and practices of China relating to the maritime, logistics and shipbuilding sectors, including political guidance, directives, and control within state and private enterprises, activities of state-owned or state-controlled enterprises, market access and investment restrictions, opaque regulatory preferences and discrimination, wage-suppressing labor practices, state support of industry (including government guidance funds), and forced technology transfer (including state-sponsored cyber theft of intellectual property), or other means employed by China to achieve its goals, which might be included in this investigation, or be addressed through other applicable mechanisms; and
  • Whether China’s acts, policies, and practices burden or restrict U.S. commerce, and if so, the nature and level of the burden or restriction.

Any comments must be received no later than May 22, 2024, and submitted on USTR’s electronic portal at https://comments.ustr.gov/s/ under Docket No. USTR-2024-0005, “Request for Comments on the Section 301 Investigation of China’s Acts, Policies, and Practices Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance.” A public hearing will be held on May 29, 2024, beginning at 10 a.m. EDT. Persons wishing to appear at the hearing must notify USTR no later than May 22, 2024. For additional details on the request for public comments and procedures for the public hearing, see USTR’s Notice.

On April 15, 2024, the U.S. Department of the Treasury, as Chair of the Committee on Foreign Investment in the United States (CFIUS), issued a Notice of Proposed Rulemaking (NPR) to enhance certain CFIUS procedures. This proposed rule would modify certain provisions in the CFIUS regulations pertaining to: (i) penalties for violations of statutory or regulatory provisions or agreements, conditions, or orders issued pursuant thereto; (ii) negotiation of mitigation agreements; (iii) requests for information by CFIUS; and (iv) certain other procedures. 

The proposed rule would refine and expand CFIUS’ authorities as follows:

  • Expanding the types of information CFIUS can require transaction parties and other persons to submit when engaging with them on transactions that were not filed with CFIUS. The proposed rule would expressly provide CFIUS authority to request information from transaction parties and other persons related to whether a transaction may raise national security considerations and/or meets the criteria for a mandatory CFIUS declaration, even for non-notified transactions. As for compliance monitoring and review of potential violations, the proposed rule would further amend relevant regulations to require parties to provide information to the Committee upon request in these circumstances. Currently, CFIUS can request information in both circumstances, but the regulations do not expressly obligate parties to respond. Under these proposed amendments, parties would be obligated to respond to such requests, and if failing to do so, CFIUS could seek to compel responses through issuance of a subpoena to the parties to the transaction or other persons.
  • Instituting an extendable timeline for transaction parties to respond to risk mitigation proposals for matters under active review to assist CFIUS in concluding its reviews and investigations within the statutory time frame. CFIUS notes that the regulations require parties to respond to follow-up information requested by the Staff Chairperson in connection with a declaration or notice generally within two or three business days of the request, however, with regards to proposals of terms to mitigate any identified national security risks there are no such deadlines. This proposed rule seeks to establish a similar time frame in which parties are required to respond to follow-up information requests during the investigation phase, and would allow parties to seek extensions in certain circumstances.
  • Expanding the circumstances in which a civil monetary penalty may be imposed due to a party’s material misstatement and omission, including when the material misstatement or omission occurs outside a review or investigation of a transaction and when it occurs in the context of CFIUS’ monitoring and compliance functions. Currently, this penalty amount is set at a maximum of $250,000 per violation as established 15 years ago. CFIUS believes this current penalty maximum may not sufficiently deter or penalize certain violations. The proposed rule seeks to increase this maximum penalty to $5 million per violation or, for certain provisions of the regulations, the greater of $5 million or the value of the transaction.
  • Similarly, CFIUS also seeks to increase the maximum civil monetary penalty available for violations of material provisions of mitigation agreements, material conditions imposed by CFIUS, or orders issued by CFIUS. The proposed rule maximum penalty of the greatest, per violation, of (i) $5 million, (ii) the value of the violating party’s interest in the U.S. business (or covered real estate) at the time of the transaction, (iii) the value of the violating party’s interest in the U.S. business (or covered real estate) at the time of the violation or the most proximate time to the violation for which assessing such value is practicable, or (iv) the value of the transaction. CFIUS notes that this range of measurements for the maximum penalty would provide an additional deterrent or penalty in the case of certain transactions valued at less than $5 million.
  • Extending the time frame for submission of a petition for reconsideration of a penalty to the Committee and the number of days for CFIUS to respond to such a petition. Currently, upon receiving notice of a penalty to be imposed, the subject party may submit a petition within 15 business days of receipt of such notice and CFIUS has 15 business days to assess the petition and issue a final penalty determination. The proposed rule would extend both time frames to 20 business days. Parties would continue to be allowed to seek extension of time for submitting a petition.

Regarding the proposed increases in applicable penalties, CFIUS notes that “[f]or the avoidance of doubt, while the amendments provided for in the proposed rule pertain to the maximum penalty that may be imposed for certain violations, they would not affect the Committee’s discretion to determine the appropriate penalty in individual cases.” In assessing compliance and whether to bring an enforcement action and seek any penalties in a particular case, CFIUS will continue to evaluate the facts and circumstances surrounding the conduct including the aggravating and mitigating factors described in the CFIUS Enforcement and Penalty Guidelines.

CFIUS is accepting public comments on this proposed rulemaking until May 15, 2024. 

On April 12, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) again extended previous Russia-related General License (GL) 13 by issuing a revised GL 13I, “Authorizing Certain Administrative Transactions Prohibited by Directive 4 under Executive Order 14024,” which states that U.S. persons are authorized to pay taxes, fees, or import duties and purchase or receive permits, licenses, registrations, or certifications, to the extent such transactions are prohibited by Directive 4, provided such transactions are ordinarily incident and necessary to such persons’ day-to-day operations in the Russian Federation. Directive 4 prohibits any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities.

Previous GL 13H was set to expire on April 17, 2024; the revised GL 13I is set to expire on July 11, 2024. Please see our prior blog posts on this general license: January 18, 2024, November 7, 2023, and May 21, 2023.

On April 12, 2024, the Office of Foreign Assets Control (OFAC) signed a new determination under section 1(a)(i)(A) of Executive Order 14068 of March 11, 2022 as amended by Executive Order 14114 of December 22, 2023. According to this determination, the importation and entry into the United States, including importation for admission into a foreign trade zone located in the United States, of aluminum, copper, and nickel of Russian Federation origin is prohibited, except to the extent provided by law, or unless licensed or otherwise authorized by OFAC. However, this prohibition does not apply to aluminum, copper, and nickel that was produced in the Russian Federation before April 13, 2024.

On that same day, OFAC signed another determination under section 1(a)(ii) of Executive Order 14071, dated April 6, 2022, which imposes prohibitions on certain services related to the acquisition of aluminum, copper, or nickel of Russian Federation origin. Specifically, the determination targets warranting services for aluminum, copper, or nickel of Russian Federation origin on a global metal exchange and services to acquire aluminum, copper, or nickel of Russian Federation origin as part of physical settlement of a derivative contract (collectively, “Covered Metals Acquisition Services”). According to this determination, the following activities are prohibited, except to the extent provided by law, or unless licensed or otherwise authorized by the OFAC: the exportation, reexportation, sale or supply, directly or indirectly, from the United States or by a United States person, wherever located, of any of the Covered Metals Acquisition Services to any person located in the Russian Federation. This determination excludes Covered Metals Acquisition Services related to aluminum, copper, or nickel that was produced prior to April 13, 2024.

In addition, OFAC released new FAQs (1168-1172) clarifying prohibitions and definitions relating to Russian Federation origin metals, particularly aluminum, copper, and nickel, in response to ongoing Russian aggression. Importantly, OFAC clarified that the term “Russian Federation origin” excludes “any Russian Federation origin good that has been incorporated or substantially transformed into a foreign-made product.”

These actions were taken in coordination with action taken by the United Kingdom. As stated in OFAC’s press release, “[a]s a result of today’s collective actions, metal exchanges, like the London Metal Exchange (LME) and Chicago Mercantile Exchange (CME), will be prohibited from accepting new aluminum, copper, and nickel produced by Russia. Metal exchanges provide a central role in facilitating the trading of industrial metals around the globe. By taking joint action, the United States and UK are depriving Russia and its metals producers of an important source of revenue.”

On April 15, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License (GL) 5O, “Authorizing Certain Transactions Related to the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or After August 13, 2024,” which continues to delay U.S. persons’ ability to enforce bondholder rights to the CITGO shares serving as collateral for the Petróleos de Venezuela, S.A. (PdVSA) 2020 8.5% bond until on or after August 13, 2024.  The previous deadline had been April 16, 2024.  Effective April 15, 2024, this General License replaces GL 5N.

With this revised General License, U.S. persons remain prohibited from engaging in any transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5% Bond unless specifically authorized by OFAC. In FAQ 595, OFAC continues to note a favorable licensing policy toward those seeking to apply for a specific license in an effort to reach an agreement on proposals to “restructure or refinance payments due to the holders of the PdVSA 2020 8.5% bond.” 

On April 4, 2024, the Department of Commerce’s Bureau of Industry and Security (BIS) released another Interim Final Rule (IFR) offering clarification and correcting inadvertent errors made in earlier rulemakings regarding the implementation of significant export controls on certain advanced computing items and supercomputer and semiconductor end use. This latest rule is effective April 4, 2024.

Background

On October 7, 2022, IFR titled “Implementation of Additional Export Controls: Certain Advanced Computing and Semiconductor Manufacturing Items; Supercomputer and Semiconductor End Use; Entity List Modification,” made critical changes to the Export Administration Regulations (15 CFR parts 730–774) (EAR) in two areas to address U.S. national security concerns. Among its numerous provisions, the Rule restricted exports to China of high-end chips and semiconductor manufacturing equipment, including foreign made items that are the product of U.S. technology. It also restricted the export of a wide range of items that would support certain supercomputing or integrated circuit production end-uses in China. For additional details, see Thompson Hine Update of October 31, 2022.

On October 25, 2023, BIS published two IFRs updating the October 7, 2022 rulemaking that notably: (1) revised export controls on semiconductor manufacturing items by removing certain Export Control Classification Numbers (ECCNs) and revising license requirements; and (2) placing additional export controls on certain advanced computing items.

April 2024 Interim Final Rule

The latest April 4, 2024 IFR corrects inadvertent errors contained in the earlier rules and continues to make additional updates and clarifications. While numerous technical corrections and clarifications are addressed in this rulemaking, the most notable updates are:

  • Revisions to § 740.8 Notified Advanced Computing (NAC) and Advanced Computing Authorized (ACA) that make these separate licenses exceptions. Among other things, the NAC license exception will authorize exports and reexports of specified items to Macau and destinations in Country Group D:5 and entities headquartered in, or with an ultimate parent headquartered in, Macau or a destination specified in Country Group D:5, wherever located, that require a notification to BIS. The ACA license exception will authorize exports, reexports, and transfers (in-country) of specified items to destinations in Country Group D:1 or D:4 (except Macau and destinations specified in Country Group D:5) that do not require a notification to BIS. License Exception ACA will also authorize transfers (in-country) to Macau and destinations in Country Group D:5, and entities headquartered in, or with an ultimate parent headquartered in, Macau or a destination specified in Country Group D:5, that do not require a notification to BIS.
  • Revisions to § 744.6.  Restrictions on specific activities of “U.S. persons” in which BIS’ license review standards have been clarified and modified.
  • Restoring controls for ECCNs that contain .z paragraphs. The IFR restores controls in the license requirement table of ECCNs 3A001, 3D001, 3E001, 4A003, 4A004, 4A005, 4D001, 4E001, 5A002, 5A004, 5D002, and 5E002, by removing the exceptions for .z paragraphs from the national security (NS), missile technology, nuclear proliferation, and/or crime control license requirement paragraphs. BIS notes that it is making these changes “to ensure the .z paragraphs will not be used to circumvent regime controls under the respective .z ECCNs (for instance, by inserting a chip to make the item a .z item and thereby eligible for License Exceptions NAC or ACA, provided the export, reexport, or transfer (in-country) also otherwise meet the applicable terms and conditions of License Exceptions NAC or ACA).”
  • Revisions to 3A001. This rule adds four new .z paragraphs to ECCN 3A001 to make a distinction of those paragraphs controlled for NS:1, RS:1, MT:1, and NP:1 reasons.
  • Numerous revisions to various ECCNs, including ECCN 3B001, 3B991, 3D001, 3E001, 4E001, 5D002, 5D992, 5E002 and 5E992.
  • Revision of § 744.23(a)(4). Adding a new paragraph (4)(ii) to distinguish between direct exports, reexports, and transfers (in-country) in (a)(4)(i) and indirect exports, reexports, transfers (in-country) in (a)(4)(ii) for the “development” or “production,” by an entity headquartered in, or with an ultimate parent headquartered in, Macau or a destination specified in Country Group D:5. BIS notes that this revision is being done “to address concerns about continued support for indigenous ‘development’ and ‘production’ of front-end integrated circuit ‘production’ equipment in Macau and destinations in Country Group D:5 countries – and by companies headquartered in those countries.”

Finally, the April 2024 IFR provides clarification to BIS responses to certain public comment topics it addressed in the October 2023 semiconductor manufacturing items IFR.

BIS continues to invite public comments for revisions, corrections, and clarifications in this most recent rule. Comments must be received by BIS no later than April 29, 2024 and should be filed using the Federal rulemaking portal (www.regulations.gov). The Docket ID No. for this interim final rule is BIS-2023-0016; commenters should also reference RIN 0694-AJ23 in all comments.

These interim final rules are technical, lengthy, and complex, and Thompson Hine’s Updates provide only an overview of the major provisions of the revised export controls targeting semiconductor manufacturing equipment, software, and technology and access to advanced computing. Companies impacted by these rules must continue to review their scope and potential impact not only on U.S. production but also how the increased scope impacts foreign-produced items that are direct products of U.S.-origin software or technology.

On March 7, the Department of Justice (DOJ) announced a new department-wide whistleblower pilot program, which aims to incentivize whistleblowers to come forward with information related to corporate misconduct. By offering monetary rewards to whistleblowers, the program seeks to enhance enforcement efforts and promote transparency in the business world.

DOJ’s new pilot program is designed to complement existing programs. While other agencies already have whistleblower programs for specific types of misconduct under the jurisdictions of those agencies, the DOJ’s focus will be on significant corporate fraud and financial misconduct of which the government is not already aware and which is not covered by those programs.

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