As of December 18, 2015, U.S. companies will no longer be required to obtain a license to export crude oil. President Obama signed into law the Consolidated Appropriations Act, 2016 (H.R. 2029) that included Section 101 of Division O. The new law ends the 40-year ban on crude oil exports from the U.S.
Effective immediately, a Department of Commerce license is no longer required to export crude oil. Crude oil is now classified as EAR99. The classification as EAR99 indicates that crude oil is subject to the Export Administration Regulations (EAR), but is not listed with a specific Export Control Classification Number on the Commerce Control List. Most exports of crude oil may now be made as NLR (no license required).
Why Is This Important
The law makes it easier for U.S. companies to export crude oil, and it also makes it difficult for the U.S. government to reimpose such restrictions. The President can only reimpose export licensing requirements or other restrictions on the export of crude oil from the U.S. for a period of one year or less. Additionally, the President and his administration would need to take affirmative actions to reinstate the export ban, including declaring a national emergency and issuing a notice of the declaration of such emergency in the Federal Register.
Things to Remember
- The new law excludes shipments of crude oil to embargoed or sanctioned countries or persons, including those end-users and end-uses covered in parts 744 and 746 of the EAR. U.S. companies will still need authorization to export to these countries or persons.
- Companies holding current licenses for crude oil exports should be aware of section 750.7(i) of the EAR regarding terminating license conditions. Even though crude oil has become eligible for export without a license, the export still remains subject to the EAR and any export, reexport, or disposition of the crude oil must be made in accordance with the requirements of the EAR.
- This change does not relieve an exporter or reexporter of its responsibility for any export violations that might have occurred prior to December 18, 2015.