The Department of Commerce’s Bureau of Industry and Security (BIS) recently issued a notice stating that, effective immediately, an export license is no longer required to export crude oil from the United States. Formerly, crude oil was subject to stringent “Short Supply” controls in BIS’s Export Administration Regulations (EAR), and as a result, a BIS license was required to export crude oil to all destinations.
This change to BIS’s long-standing (40-year) export policy stems from a provision included in the Consolidated Appropriations Act, 2016, which was signed by President Obama on December 18, 2015. While Congress has repealed the general export ban, note that the President retains authority to re-impose license requirements under certain limited circumstances, such as a national emergency, material supply shortages, or price increases that are causing material adverse employment effects in the United States.
Prior to this development, there had been considerable uncertainty and wrangling as to what exactly constituted “crude oil” subject to export restrictions, as opposed to “petroleum products” that typically could be freely exported, such that BIS felt compelled to issue a Frequently Asked Question (FAQ) guide to address this issue. This distinction is no longer nearly as critical, as crude oil is now classified as EAR99 and can be exported to most destinations without a license.