BIS Settles With Semiconductor Equipment Manufacturer That Exported EAR99 Technology To Parties on BIS Entity List

On April 13, 2026, the U.S. Department of Commerce’s Bureau of Industry & Security (BIS) entered into a settlement agreement with Coastal PVA Technology, Inc. (Coastal) for selling EAR99 items to Chinese parties on BIS’ Entity List. The BIS Entity List — distinct from other federal agencies’ entity lists — is BIS’ central repository of foreign entities that are subject to additional license requirements and restrictions when exporting, reexporting, or transferring (in-country) items covered by the Export Administration Regulations (EAR). The settlement resolves allegations that Coastal violated the EAR by exporting, reexporting, or transferring controlled semiconductor manufacturing equipment to restricted Chinese entities on the BIS Entity List without authorization.

The administrative enforcement action is the latest example of the U.S. government’s focus on semiconductor and semiconductor manufacturing equipment and BIS’ longstanding policy to enforce licensing requirements for Entity List transactions even for EAR99 items (the least restrictive U.S. export classification). It underscores the need for manufacturers to implement robust compliance programs and provides an informative example of how BIS may pursue enforcement actions in this sector moving forward.

Background

Coastal is a California-based company that manufactures and exports polyvinyl alcohol (PVA) brushes, which are used in the semiconductor manufacturing process to clean post-etched semiconductor wafers.

According to BIS’ charging order, between May 2021 and May 2024, Coastal sold PVA brushes to Chinese entities listed on BIS’ Entity List without authorization. BIS alleged that Coastal used third-party distributors to sell brushes and related products valued at $400,088 to Semiconductor Manufacturing International (Beijing) Corporation (SMIC Beijing) and Semiconductor Manufacturing North China (Beijing) Corporation (SMIC North). BIS’ order further noted that, on occasion, Coastal shipped the EAR99 items directly to SMIC Beijing and SMIC North.

BIS also alleged that, at the time of these transactions, Coastal did not have formal export compliance policies or procedures or was not aware of the license requirements for sales to SMIC Beijing and SMIC North.

Settlement Terms

Under the settlement agreement, BIS imposed a $1,700,000 civil penalty, which BIS suspended for one year given Coastal’s demonstrated limited ability to pay. In addition to the monetary penalty, the settlement imposes several compliance focused obligations. Coastal’s export compliance personnel must complete export compliance training within the next six months and provide advance notice to the Commerce Department’s Office of Export Enforcement of the selected training program. Coastal must conduct an internal audit of its export compliance program and share the results with BIS within nine months of the order. Any additional export control violations identified during the audit must be disclosed to BIS. Finally, the settlement agreement makes compliance with these requirements a condition precedent for any future export licenses, license exceptions, permissions, or privileges granted to Coastal.

Key Takeaways

• Entity List transactions continue to pose heightened risk to exporters. Because SMIC Beijing, SMIC North, and their affiliates have been on the Entity List since late 2020, any shipment, direct or indirect, may trigger increased scrutiny and licensing requirements.
• BIS continues to enforce aggressively Entity List restrictions even for low-level technology products, particularly when there is a nexus to U.S. critical technologies.
• Firms in the semiconductor and other critical industries should prioritize formal export compliance policies and procedures. Coastal and its civil penalty are relatively small compared to peer equivalents that have been subject to recent BIS enforcement actions. Yet, Coastal is part of a broader enforcement trend against smaller, specialized firms. The BIS order’s requirements in this case demonstrate its keen enforcement interest in compliance programs and outcomes — no matter the size of the firm — and such programs can ensure firms catch any compliance gaps or violations promptly.

Arnold & Porter has a deep bench of expertise to help industry members establish export compliance programs and conduct internal audits of such programs and transactions. For questions about this enforcement action or other export control matters, contact the authors or any of their colleagues in Arnold & Porter’s Export Control & Sanctions or White Collar Defense & Investigations practice groups.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.