Archive for the ‘DDTC’ Category

Aug

1

Federal Court Incorrectly Says DDTC Jumped the Gun on Gun Printing Plans

Posted by at 1:29 pm on August 1, 2018
Category: Arms Export • BIS • DDTC • USML

Printed Guns via http://defdist.tumblr.com/post/85127166199/i-have-often-been-asked-who-the-first-person-to-be [Fair Use]Just hours before Defense Distributed, pursuant to a Settlement Agreement with the Department of State’s Directorate of Defense Trade Controls, planned to upload plans to allow anyone who can afford a 3-D printer to make their own plastic guns, a federal district court in Seattle entered a temporary restraining order prohibiting the uploading of those plans.   The temporary restraining order was entered at the request of attorneys general from eight states and the District of Columbia.   In entering the order, the court stated that the plaintiffs were likely to prevail on the merits for two reasons — both, frankly, fairly questionable.

The first reason the court thought that plaintiffs would likely prevail is that, in the court’s view, the Settlement Agreement effectively removed items from the United States Munitions List (“USML”) without the prior thirty-day notice to Congress as required by section 38(f) of the Arms Export Control Act, 22 U.S.C. § 2278(f).  As you probably recall, DDTC and BIS so far have only issued proposed rules.   As noted early on in the export control process, State and Commerce indicated that they would provide the section 38(f) notices to Congress 30 days prior to publishing the final rule.  At this point, only the proposed rules have been issued and the comment period ended on July 9, so it is likely that no section 38(f) notices have been sent to Congress as the court states. Certainly they would not have been sent thirty days prior to the execution of the Settlement Agreement on June 29 as the Court said should have been done.

The problem with this argument is that the Settlement Agreement did not remove Category I (or any other) items from the USML.  The Settlement Agreement is quite clear that DDTC was not removing anything from the list but, rather, was granting an exemption under ITAR  section 125.4(b)(13).  Under that section, an export of technical data does not require a license if that data has been “approved for public release” by DDTC.  All that DDTC did in the Settlement Agreement was approve public release of specified Defense Distributed plans making their export eligible for the exemption in section 125.4(b)(13).  Nothing has been removed from the USML by the Settlement Agreement, and, thus, no section 38(f) notice was required as a result of the Settlement Agreement.

The other reason relied on by the district court in temporarily blocking the Settlement Agreement was the requirement in Executive Order 11958 that any removal of any item from the USML by DDTC would need the concurrence of the Department of Defense.  The court stated:

When the President delegated his authority under the AECA to the Secretary of State, he also imposed a requirement that any changes in designations of defense articles and defense services subject to export control had to have the concurrence of the Secretary of Defense. There is no indication that the federal government followed the prescribed procedures

Apparently, the district court had not bothered to read the initial notice from the Department of Commerce on the proposed removal of Category I firearms from the United States Munitions List to the Commerce Control List.   That notice clearly states:

The changes described in this proposed rule and in the State Department’s companion proposed rule on Categories I, II, and III of the USML are based on a review of those categories by the Department of Defense, which worked with the Departments of State and Commerce in preparing the amendments.

Oops.  So even if the Settlement Agreement effectively removed certain Article I items from the USML, which it did not, the DOD had already agreed to that prior to the publication of the initial notices proposing removal of those items.

The problem here is that if states or the federal government want to regulate 3-D gun plans, the export laws are not the way to do it because the policy driving these decisions has nothing to do with exports at all but rather with purely domestic considerations such as detectability and traceability.  The states attorneys general presumably don’t really care whether these gun plans and the plastic guns made from them wreak havoc in Croatia; they are worried about the consequences right at home in their own states.  Moreover, there is already a law on the books –  the Undetectable Firearms Act of 1988, 18 U.S.C. § 922(p) — which makes it illegal to manufacture undetectable weapons.  So, rather than try to shoehorn these issues into the Arms Export Control Act, lawmakers and officials should confront any issues with these plans directly.

 

 

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Copyright © 2018 Clif Burns. All Rights Reserved.
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Jul

16

Chronicle of a Death Foretold

Posted by at 4:40 pm on July 16, 2018
Category: BIS • DDTC • Export Reform

Printed Guns via http://defdist.tumblr.com/post/85127166199/i-have-often-been-asked-who-the-first-person-to-be [Fair Use] Of course, the Interwebs are all abuzz with the news that the Directorate of Defense Trade Controls (“DDTC”) settled the Defense Distributed case as if that were somehow remarkable.  Of course, it was about as remarkable as 100 degree days in DC in August or the All Star Game being a pointless, mind-numbing bore.  DDTC’s position in this case was on life support, if not already dead, since last May when DDTC and BIS finally announced export control reform which would result in the transfer of most firearms and related technical data, including the types of firearms described in the 3-D printing plans at issue in the  case, from the jurisdiction of DDTC to that of the Bureau of Industry and Security (“BIS”).

It is no secret that BIS and DDTC have radically different ideas about the consequences of putting something of the Internet.   As far as DDTC is concerned, putting anything of the Internet is an export of that item to every foreign country with access to the Internet, i.e.,  everywhere but the outer reaches of Mongolia.  BIS, on the other hand, takes the position that publication on the Internet means that an item is no longer subject to export controls.  As BIS said in its proposed notice of rulemaking:

[I]f a gun manufacturer posts a firearm’s operation and maintenance manual on the Internet, making it publicly available to anyone interested in accessing it and without restrictions on further dissemination (i.e., unlimited distribution), the operation and maintenance information included in that published operation and maintenance manual would no longer be “subject to the EAR.”

So once the Category I transition is complete, the fat tenor has sung and the game is over.

DDTC, of course, could have waited until the last notes of Nessun Dorma, but instead agreed to move ahead. To do that before the transition of the firearms in question to BIS was complete, there are several housekeeping matters that the settlement agreement needed to address. First, DDTC agreed to continue with the announced proposed rules and to adopt a final rule that would remove the plans at issue from Category I of the USML. Second, DDTC would announce a temporary modification of the rules to exempt the plans prior to the transition from the USML to the Commerce Control List becoming effective. Third, DDTC agreed to issue a letter saying that the plans had been approved for public release — something not really necessary in light of the temporary modification of the rules to exempt the plans. Fourth, an acknowledgment that the letter permitted people to do whatever they wanted with those plans — again something not really necessary in light of the temporary modification and the letter itself.

What comes as a surprise to me was not that DDTC dropped the case, or that it did so before the guns at issue were removed from the USML, but that it agreed to fork over $39,581 to the plaintiffs. Granted that’s not a huge sum. Still, DDTC has not conceded that its position that putting USML technical data on the Internet is an export is wrong. Indeed, that will continue to be the case for items remaining on the USML. Well, I guess lawyers have to eat too.

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
May

15

Export Control Reform Finally Announced for Guns and Ammo

Posted by at 7:04 pm on May 15, 2018
Category: BIS • CCL • DDTC • Export Reform • USMIL • USML

Guns by Al [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/6gPGbx [cropped]The Directorate of Defense Trade Controls and the Bureau of Industry and Security today announced the proposed rules for the long awaited export control reform of Categories I, II and III of the United States Munitions List.  The proposed rules for DDTC are here; the proposed rules for BIS are here.

Under the proposed rules, the only items remaining in Category I will be firearms that fire caseless ammunition, are fully automatic, or are specially designed to integrate fire control, automatic tracking, or automatic firing.  Other small arms that were once in Category I will be moved to 0A501 and 0A502.  Small arms that are on Category I of the USMIL will still be subject to the brokering rules of the ITAR even if they have been moved to 0A501 or 0A502.

These new proposed ECCNs will be controlled by, among others, RS1 and FC meaning that licenses will be required for all destinations.  (RS1 captures every country but Canada and FC captures Canada).  The BIS proposed rules also exclude the use of most license exceptions so that the new regime will closely parallel the available exemptions that were available under the ITAR.   So the result of the transition of these items from the USML to the CCL will mostly be a change in the agency with licensing authority.

There are a few significant changes, however, worth noting.  First, the proposed rules would eliminate a particular bugbear of mine relating to the classification of rifle scopes.  Currently, rifle scopes are ITAR if they are “manufactured to military specifications,” whatever that means.   Foreign manufacturers of rifle scopes routinely decline to state whether their scopes are Category I(f) or 0A987 and do not provide enough information to decide whether a particular scope is manufactured to military specifications.  Under the proposed rules, a scope is on the USML only if it has night vision or infrared capabilities that would cause it to be captured under Category XII.  Everything else is now 0A987.

Second, these new rules will reverse the questionable position that DDTC has taken in the Defense Distributed case.   In that case, DDTC argued that posting 3D gun plans on the Internet is an export of controlled technical date on Category I firearms to every foreign person with access to the Internet.  BIS has a somewhat different take on posting things to the Internet.   Here’s what the proposed BIS rules say:

The EAR also includes well-established and well understood criteria for excluding certain information from the scope of what is “subject to the EAR.” (See part 734 of the EAR.) Items that would move to the CCL would be subject to existing EAR concepts of jurisdiction and controls related to “development” and “production,” as well operation, installation, and maintenance “technology.” While controlling such “technology,” as well as other “technology” is important, the EAR includes criteria in part 734 that would exclude certain information and software from control. For example, if a gun manufacturer posts a firearm’s operation and maintenance manual on the Internet, making it publicly available to anyone interested in accessing it and without restrictions on further dissemination (i.e., unlimited distribution), the operation and maintenance information included in that published operation and maintenance manual would no longer be “subject to the EAR.”

Part 734 makes clear that publication of technology on the Internet is not an export of that technology to the rest of the world; rather it is a release of that technology from export controls.

Third, the new rules will eliminate the issue as to whether firearms training is a defense service that cannot be provided by a U.S. person to a foreign individual without a license.  Both the existing and latest proposed DDTC rule defining defense services would require a license to provide basic firearms training to a foreign individual.  (The latest proposed rule permits basic training but only if there is an approved license to export the firearm to that individual.)  The BIS analysis of this is somewhat different.  The BIS notice of proposed rulemaking somewhat wryly states:

The EAR does not include a concept of “defense services,” and the “technology” related controls are more narrowly focused and apply in limited contexts as compared to the ITAR.

In fact, of course, under the proposed rules training a foreign individual in firearms use would require a license only if it involved a control of technology covered by proposed ECCNs 0E501 or 0E502.  However, neither ECCN covers information related to the use of 0A501 or 0A502 firearms.   As a result, firearms training that would have required a license under the old rules will not require a license if the new rules are adopted.

Photo Credit: Guns by Al [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/6gPGbx [cropped]. Copyright 2009 Al

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Apr

25

Well, That Didn’t Last Long: DDTC Finds Backdoor To Reimpose Access Rule

Posted by at 10:31 pm on April 25, 2018
Category: DDTC • Deemed Exports

HD Thermal Camera via https://www.flir.com/news-center/professional-tools/the-new-t1010---flirs-latest-hd-thermal-camera/ [Fair Use]Yesterday the Directorate of Defense Trade Controls (“DDTC”) and FLIR entered into a consent agreement under which FLIR consented to a civil penalty of $30 million, half of which was suspended on the condition that this amount was and would be applied to previous and future compliance costs. The fine was based on a number of export violations in various categories that FLIR voluntarily disclosed.  These violations included instances where disclosed violations continued after their disclosure and where promised remedial actions to cure disclosed violations were not taken.

One part of the Charging Letter is interesting because it appears to be effectively a reversion to the old DDTC standard, clearly articulated in the 2004 General Motors Charging Letter, that access to ITAR-controlled information by a foreign national is a deemed export violation even if the controlled information was never in fact seen by the foreign national. As you may recall, back in 2016 DDTC retreated from that position, saying this in the Federal Register Notice in which “export” was redefined by DDTC:

Several commenters requested that the Department remove the portion of (a)(6) that addressed the provision of physical access to technical data. The Department has removed paragraph (a)(6). However, as described above for paragraph (a)(7), while the act of providing physical access does not constitute an “export,” any release of technical data to a foreign person is an “export,” “reexport,” or “retransfer” and will require authorization from the Department. If a foreign person views or accesses technical data as a result of
being provided physical access, then an “export” requiring authorization will have occurred and the person who provided the foreign person with physical access to the technical data is an exporter responsible for ITAR compliance.

Now look at this part of the Charging Letter:

Approximately 1,350 foreign-person employees had access to all ITAR-controlled technical data (over 1,400 files) located on Respondent’s servers in 22 non-U.S. facilities … While access does not mean that the employees viewed the information, Respondent lacked the IT records which could confirm which employees actually accessed ITAR-controlled files. … It is the Department’s position that Respondent transferred technical data to foreign-person employees that was necessary for their job performance on its servers without authorization.

What DDTC is saying here, in effect, is that if you don’t have logs showing every access to the controlled technical data — and who will have that? — then DDTC is just going to assume that the controlled technical data was transferred to everyone who had access to it. So we’re back where we started and access, not disclosure, is the violation. Sigh.

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Feb

21

Oxycodone, Testosterone, Night Vision and eBay Do Not Mix

Posted by at 5:17 pm on February 21, 2018
Category: Criminal Penalties • DDTC • Night Vision

SkeetIR Micro Mono Sight via https://www.baesystems.com/en-us/product/oasys-thermal-imaging-and-aiming#ske[Fair Use]Last week a criminal indictment against Arkansas resident Scott Douglas Browning was unsealed after he was arrested on a number of charges including receiving property stolen from Fort Bragg, possessing testosterone and oxycodone, and exporting image intensification tubes and a thermal imaging monocular (pictured at left) to the Netherlands without a license.  According to the indictment, Browning listed the items on eBay and sold them to a buyer or buyers in the Netherlands. The items were all allegedly listed on the USML and would have required a license from DDTC.

I’ve said so many times that it almost goes without saying, but the Government, in order to convict Browning on the export charges, must prove that he knew that the export of these items required prior authorization and were illegal without such an authorization. We’ll leave aside what someone tweaked out on testosterone and whacked out on oxycodone would know about the legality of his exports. Still, it seems likely, at least to me, that this is going to an uphill battle for the prosecution. It’s not like the guys who stole the stuff from Fort Bragg gave it to him with a warning that the items were export controlled. And it’s not like the guy was trying to sell this stuff in secret. He listed the items on eBay after all. Last time I checked, that wasn’t exactly a dark web site. And although the indictment is sparse on details, there is nothing to suggest that any of the normal indicia of a guilty conscience — false description of the item on shipping documents, confessions of guilt to undercover agents, etc. — are present here.  Of course, the export charges may be the least of his worries here.

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

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