As noted in my post yesterday on the proposed rules to transition certain Category I, II and III items from the United States Munitions List to the Commerce Control List, DDTC attempted to preserve its brokering authority over the transferred firearms and related items by amending the brokering rules to contain items both on the United States Munitions List (“USML”) and the United States Munitions Import List (“USMIL”).  An alert reader pointed out, quite correctly, that this clever regulatory sleight-of-hand was, ahem, not authorized by the Brokering Amendment to the Arms Control Export Act. 22 U.S.C. § 2278(b)(1)(A)(ii).

The Brokering Amendment provides authority to DDTC to register brokers and license brokering transactions.   The problem is that it authorizes this only with respect to items on the USML.   It makes no reference to the USMIL and provides no authority to regulate brokers of, and brokering transactions related to, items on the USMIL.

Section 2278(b)(1)(A)(ii)(I) provides the statutory mandate and authority to require registration of brokers:

As prescribed in regulations issued under this section, every person (other than an officer or employee of the United States Government acting in official capacity) who engages in the business of brokering activities with respect to the manufacture, export, import, or transfer of any defense article or defense service designated by the President under subsection (a)(1), or in the business of brokering activities with respect to the manufacture, export, import, or transfer of any foreign defense article or defense service (as defined in subclause (IV)), shall register with the United States Government agency charged with the administration of this section.

Subclause III requires licensing for “brokering activities described in [the above-cited] subclause (I)”.

The relevant language here then is “any defense article … designated by the President under subsection (a)(1)” and “any foreign defense article … as defined in subclause (IV)”.  Both of these are, it turns out, references only to items on the USML

Subsection (a)(1), which gives the President the authority to designate defense articles subject to export controls, says this in the last sentence of the subsection:

The items so designated shall constitute the United States Munitions List.

Subclause IV only references the USML in its definition of “foreign defense article”:

For purposes of this clause, the term “foreign defense article or defense service” includes any non-United States defense article or defense service of a nature described on the United States Munitions List regardless of whether such article or service is of United States origin.

Not surprisingly, DDTC’s discussion of these proposed rules fails to mention this little problem in relying on the Brokering Amendment or where it believes it can otherwise find statutory authority to extend its brokering rules to items on the USMIL.

UPDATE: I just got off the phone with a spokesperson from DDTC who explained the agency’s theory as to how they could exert brokering authority over USMIL items. According to the spokesperson, section 2278(a)(1) gives the President the authority to “control the import and export of defense articles” and to “to designate those items which shall be considered as defense articles.” The USMIL and the USML are, thus, separate subsets of the broader “statutory” USML referenced in subsection (a)(1).  The USMIL administered by ATF lists those items subject to controls on permanent imports.  The USML  administered by DDTC lists items subject to controls on exports and temporary imports. While this argument is at least plausible, it does require taking the facially counter-intuitive position that the USMIL is really the USML and that the USML in the ITAR isn’t really the entire USML.

Photo Credit: Pistol Heckler & Koch P9S by Hecklerfan [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via https://en.wikipedia.org/wiki/Heckler_%26_Koch_P9#/media/File:Heckler_%26_Koch_p9s.jpg [cropped]. Copyright 2004 Hecklerfan

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