United States: AES Now Requires Consistency With EAR Destination-Based Controls; Census Will Not Remove Domestic EEI Requirement For Puerto Rico & U.S. Virgin Islands Shipments

Effective January 13, 2022, the U.S. Census Bureau's ("Census") Automated Export System ("AES") began issuing a response code 66Q notifying Electronic Export Information ("EEI") filers whenever they enter an export control classification number ("ECCN") and destination combination that is prohibited under the Export Administration Regulations' ("EAR") destination-based controls. For now, such mismatches in filings will merely result in Compliance Alerts, but beginning on or around July 13, 2022, Census plans for the ECCN/destination mismatch to result in a "Fatal Error" that, if left uncorrected, will subject the principal party or authorized agent to penalties under the Foreign Trade Regulations ("FTR"). EEI filings are required by both the EAR administered by the Bureau of Industry and Security ("BIS") and by the FTR administered by Census and enforced by U.S. Customs and Border Protection ("CBP"). Notably, the Census bulletin announcing the change directed questions to a BIS email address, suggesting BIS may be increasing its surveillance of the treasure trove of data provided in EEI filings. Time will tell.

Also, on February 4, 2022, Census withdrew its September 17, 2020 advance notice of proposed rulemaking ("ANPRM") concerning the proposed removal of domestic EEI filing requirements for shipments between U.S. states and Puerto Rico and the U.S. Virgin Islands. Those domestic filing requirements remain in force. Census uses the data to publish estimated statistics such as Puerto Rico's and the U.S. Virgin Islands' gross domestic product. Census received nearly 100 comments regarding the ANPRM-43 in favor of removing the EEI requirements and 50 in favor of keeping them in place. The ANPRM reports Census and fellow Commerce Department agency, the Bureau of Economic Analysis, are open to alternative data gathering measures, but for now EEI filings to and from the U.S. territories remain legal requirements.

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