Archive for the ‘DDTC’ Category

DDTC Posts Schedule for Uploading Licensing Submissions and Posting Licenses

Wednesday, October 12th, 2016 by Danielle McClellan

(Source: State/DDTC)

Effective September 6, 2016, The Department of State will only be uploading licensing submissions (i.e., DSP -5, -6, -61, -62, -73, -74, and Batch Scheams) and posting licenses (Approved, Approved with Provisos, RWA’ed, and Denied) at 06:30 AM and again at 5:30 PM.

DDTC Posts Revision 4.4a of the Agreement Guidelines

Wednesday, October 12th, 2016 by Danielle McClellan

(Source: State/DDTC)

Revision 4.4a of the Agreement Guidelines has been posted and replaces Revision 4.4.

Revision 4.4a corrects an inadvertent omission on page 152. Both Revision 4.4a and a preamble with a summary of changes can be found here. Revision 4.4a is effective September 1, 2016.

Pakistani National Extradited and Sentenced to 33 Months in Prison for Conspiracy to Export Gyroscopes to Pakistan

Wednesday, October 12th, 2016 by Danielle McClellan

By: Danielle McClellan

Syed Vaqar Ashraf (71) of Lahore, Pakistan (also known as Vaqar A. Jaffrey) was sentenced to 33 months in prison after being extradited from Belgium on July 31, 2015. According to court documents, in June 2012 Ashraf began asking a Tucson-based company, who shall remain nameless, for price quotes for unmanned aerial vehicles (drones). The company specializes in the design, development, and manufacturing of drones for the US military. The company immediately tipped off Homeland Security Investigations (HIS) agents about Ashraf’s requests.  HSI quickly assigned special agents to work undercover as employees of the Tucson-based company and they began dialoging with Ashraf directly.

From June 2012 to August 2014, Ashraf negotiated with special agents. He represented himself as the head of I&E International, based in Lahore, Pakistan.  Most of the correspondence was done via email where he agreed to purchase 18 gyroscopes that were intended to help medium-sized drones fly longer distances as well as 10 optical receiver modules and laser diodes intended to be installed in the aircraft for approximately $440,000.

In September 2013, HSI agents met with Ashraf in Vienna, Austria to work out details regarding the sale. Ashraf explained during the meeting that Pakistan’s nuclear program had been developed using technology exported from the west without a license. This led the agents to believe that Ashraf was working for Pakistan’s Advanced Engineering Research Organization and the intended use for the electronics was for the Pakistani military UAV program.

From January to March 2014 Ashraf asked agents for suggestions to get around the US export controls after agents requested a license from the Commerce Department and were told that the items would require a special license because the optical receive modules could be used in “activities related to nuclear, chemical, or biological weapons or missile delivery systems.” Ashraf asked if there were any alternative descriptions that would appear to cover the items on documents, but would clear arms control hurdles from State and Commerce departments.  Secret agents offered Ashraf with a few different descriptions and asked him if the customer was aware that transaction was “being done without a license.” Ashraf told the agents that they (customer) were “absolutely aware of everything.” Later in an email, Ashraf wrote, “He (customer) is well aware that he cannot get these gyros in a normal way; he’s well aware of that.” The ultimate plan was to transship all of the items; they would be shipped to Pakistan through Belgium.

HIS agents met with Ashraf three more times in face-to-face meetings, including one in the US where they agreed on a series of wire transfers, including one for $67,000. On August 26, 2014 agents set up a final meeting with Ashraf in Belgium to deliver some of the technology. Before the meeting began Belgian police showed up and arrested Ashraf. A little less than a year later Ashraf was extradited to the US to face trial on charges of conspiracy to export defense controlled items without a license which he later pled guilty to.

Read more:

DDTC Agreements Guidelines Updated

Tuesday, September 6th, 2016 by Danielle McClellan

On August 11, 2016, the Directorate of Defense Trade Controls (DDTC) announced its newest revision to the Guidelines for Preparing Agreements, which will become effective September 1, 2016. The changes will bring the Agreement Guidelines in line with certain revisions to the International Traffic in Arms Regulations (ITAR) that will also take effect on September 1, 2016.
Highlights of the changes:

  • Various sections of the Agreement Guidelines have been updated to reflect the new definitions for the terms “export,” “reexport” and “retransfer” that will go into effect on September 1.
  • Revision of Section 3.5: Dual/Third Country National (DN/TCN) to remove § 124.16 from Option 2, add references to § 126.18(d) in Option 1, redact the term “retransfer” from the guidance and required statements, remove country of birth as a consideration when vetting DN/TCNs via Option 2, update the required agreement statements for DN/TCN requests pursuant to § 124.8(5), and remove the optional agreement statement for § 126.1 non-(a) TCN requests.
  • The required statements throughout the Agreement Guidelines are updated, including the statement on sublicensing to U.S. Persons, the required statements for DN/TCN requests pursuant to § 124.8(5), and the § 124.8(5) verbatim clause.
  • Templates in Appendix A are updated to remove the § 124.12(a)(10) statement from the transmittal letter, remove the § 124.16 statement from the agreement, and update the required statements mentioned above.

Note:  Applicants are not required to submit an amendment for the sole purpose of updating these statements or removing the § 124.16 statement.  However, the statements must be updated at the next major amendment.  All agreement/amendment applications submitted after September 1, 2016, must include the new required statements, if applicable.  If an old statement is used, a proviso will be added instructing the applicant to change it prior to execution.  Applicants may begin using the new statements prior to September 1.

The templates in Appendix A have been updated to: – Remove the § 124.12(a)(10) statement from the transmittal letter – Remove the § 124.16 statement from the agreement – Update the mandatory statements listed above.

Revised Guidelines:

Summary of Changes:

EAR and ITAR Will Require the Same New Destination Control Statement on November 15, 2016

Tuesday, September 6th, 2016 by Danielle McClellan

By: John Black

In the August 17, 2016 Federal Register the Bureau of Industry and Security (BIS) and the Directorate of Defense Trade Controls (DDTC) announced that effective November 1, 2016, the same Destination Control Statements (DCS) will be required for exports under the Export Administration Regulations (EAR) and exports under the International Traffic in Arms Regulations (ITAR).  The good news is that exporters no longer will have to use one statement for EAR exports and a different statement for ITAR exports.

The bad news is neither the current EAR DCS nor the current ITAR DCS will be required under the new rules.  When it comes to reprogramming our software that prints documents, it might have been easier if the government had chosen one of the existing statements already in use.  On the other hand, several adjustments to the ITAR and EAR will make life easier for exporters in the long run.


Practical Considerations When Implementing the Change

As you prepare to comply with the requirement to comply with the new rules beginning on for the November 15, 2016, here are some important considerations.


The New DCS:

‘‘These items are controlled by the U.S. Government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified. They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations.’’


(Interestingly to me, the EAR Federal Register notice does not put a period after the last word “regulations” in the EAR DCS while the ITAR Federal Register notice does place a period after the last word “regulations” in the ITAR DCS.  I doubt anybody else noticed that.  I also doubt this is a deliberate conspiracy by DDTC and BIS to set up exporters who do not properly include or not include the period in their DCS.)


When the DCS Is Required:

  • ITAR:  For all defense articles exported in tangible form
  • EAR:  For all items exported in tangible form except a DCS is not required for EAR99 items and items eligible for license exceptions BAG or GFT.


ITAR and EAR DCS Required only for Tangible Shipments.  A DCS is not required for items being exported in intangible form such as electronic, oral or visual exports.


Where Do You Have to Put the DCS:   The new DCS must be put on the commercial invoice, and not on the airway bill, bill of lading, or other documents.


Other Information You Must Put on the Commercial Invoice:  The ITAR and EAR will require the following be put on the commercial invoice, in addition to the DCS:


  • ITAR:  1) The country of ultimate destination,

2) The end-user, and

3) The license or other approval number or exemption citation.

  • EAR:    The ECCN for any 9×515 or 600 series items


Information Required When Using ITAR Authorizations to Export EAR-Controlled Items:  The new rule clearly requires that when an ITAR license or authorization (exemption) is used to export EAR controlled items, the exporter must give the ECCN or EAR99 classification for each EAR-controlled item to the end-user and consignees.

Removal of Special Requirements for Certain EAR Exports to India:  The new EAR rule will remove the special DCS requirement for exports to India of items controlled for crime control column 1 or 3 reasons or regional stability column 2 reasons.

Other ITAR Changes

Exports of EAR Items under ITAR Exemptions:  The rule clarifies that EAR Items may be exported under ITAR exemptions only if they are being shipped with ITAR items.

Changes to Required Language in ITAR Agreements and Transmittal Letters:  The rule makes several changes to the required language and clauses in ITAR agreements and transmittal letters.

To see the new EAR and ITAR rules, go to

State/DDTC Relaunches “Company Visit Program”

Tuesday, August 9th, 2016 by Danielle McClellan

(Source: State/DDTC) [Excerpts.]

What is the Company Visit Program?

The Company Visit Program (CVP) entails visits by Directorate of Defense Trade Controls (DDTC) officials to U.S. entities registered with DDTC as manufacturers, exporters, or brokers of defense articles and defense services, as well as others involved in ITAR-regulated activities, to include foreign companies and foreign governments. The CVP is administered by the Office of Defense Trade Controls Compliance (DTCC); however, representatives from DDTC’s Licensing and Policy offices, or other entities in the Department or elsewhere in the U.S. government, may also participate in the visits.

What is the purpose of the Company Visit Program?

The CVP has several purposes. First, the CVP ensures DTCC understands how compliance programs are implemented in accordance with the International Traffic in Arms Regulations (ITAR). Second, the program enables DDTC to gather information to support the Directorate’s development of regulatory policy and practice. Finally, DTCC uses site visits to glean, assess, and disseminate industry best practices, provide feedback to individual companies on their compliance programs, and share information on compliance programs industry-wide. Note that the CVP includes two (2) types of visits:

  1. CVP-Outreach (“CVP-O”) is an extension of DDTC’s outreach activities, e.g., speaking at conferences. These visits are intended to be a learning exercise for both parties, and provide an opportunity to discuss challenges (such as adapting to changes associated with Export Control Reform) and offer suggestions or best practices. CVP-O site visits are unrelated to specific compliance matters. The purpose of the visit is to understand how companies implement ITAR compliance requirements, not to evaluate compliance failures or violations.
  2. CVP-Compliance (“CVP-C”) visits are designed for DTCC oversight activities, for example as part of consent agreement monitoring. These visits may include a more in-depth look at a company’s compliance program.

Is a CVP visit considered an audit or inspection? What is DDTC looking for during a CVP visit?

Both CVP-O and CVP-C type visits are neither an audit nor an inspection. Visits do not produce a grade or pass/fail assessment for internal or external use, and generally do not include review of transactional records. DDTC will request information from the company to gain a better understanding of their compliance program. CVP-C visits may require a more in-depth look at a company’s compliance program because the visits are focused on overseeing compliance matters already known to DTCC.

How is the visit not an audit if DDTC provides recommendations for improvements to our program?

DDTC may provide recommendations for improvements to a company’s compliance program during both CVP-O and CVP-C type visits. If we make recommendations, it is an effort to offer assistance, help prevent violations and share best practices. The CVP is intended to serve as a learning tool for both parties.

What happens if the DDTC team discovers or learns of a violation during the visit?

DTCC will recommend that the company review the issue and submit a disclosure, if appropriate.

How many companies does DDTC plan to visit each year?

DDTC plans visits for each quarter based on other engagements requiring travel and available resources. Generally, DDTC aims to conduct between two and four CVP visits per quarter. In 2015, DTCC conducted eight company visits under CVP auspices; three of those visits were pursuant to consent agreement monitoring.

How are companies selected for a CVP visit?

DTCC selects companies based on its CVP goals. DTCC considers a variety of factors when selecting companies to visit, including proximity to other activities DDTC is participating in, registration status, volume of licensed activity, experience conducting ITAR activities, nature of business, type and sensitivity of technology, geographic location, monitoring of an existing consent agreement, and value to ongoing work within the Directorate.

How is the DDTC team staffed for each CVP visit?

A CVP team typically consists of two or more staff from DTCC, depending on the size of the individual company/site being visited and number of companies/facilities visited per trip. On some CVP visits, staff members from the Offices of Defense Trade Controls Licensing and Policy, or other relevant agencies, may participate. One DTCC team member serves as team lead and primary point of contact with the company. This primary contact is responsible for coordinating the site visit with the company.

How is a CVP visit conducted and what should a company expect?

  • Once a company is selected for a potential CVP visit, DTCC contacts the company. The company can elect not to participate in the visit. If the company would like to participate, DTCC will propose visit dates and begin planning with the company.
  • Once visit dates are finalized, DTCC sends the company a formal visit notification letter outlining the visit. DTCC may request pre-visit materials from the company for review and preparation purposes. Before the visit, DTCC will work with the company to finalize the agenda.
  • At the visit’s opening, DTCC meets with senior management to explain the visit’s purpose and the agenda. The company should provide an overview of its operations and export activity during opening discussions. Visits generally last one to two days, depending on the purpose, and occur on the company’s premises in offices and conference rooms, and through tours of business operations within the facility (e.g., business development, contracts, procurement, design, manufacture, security, IT, personnel, and shipping).
  • At the visit’s conclusion, the DDTC team briefs company senior management and export control staff to share information the team gathered. DDTC invites the company to provide feedback, ask questions, or raise concerns for follow-up.
  • The DDTC team returns to the Department and generates an internal report. The team also follows up on company feedback. DTCC will send a formal close-out letter to the company. Close-out letters summarize the visit, indicate best practices, recommend areas for improvement or suggest best practices, and address feedback, questions, or concerns raised by the company. DTCC also requests feedback on the visit’s quality and usefulness and suggestions for improving the program.

State also published a slideshow overview of the program, which can be found here.

The Expired DSP-83 is Back

Tuesday, July 12th, 2016 by Danielle McClellan

By: Danielle McClellan

Effective immediately an expired DSP-83 forms that the DDTC receives will be processed.

The notice published on the State Department website on May 6, 2016 is rescinded.  If you received a proviso directly an upload of the new DS-83 form in accordance with the rescinded Notice can hereby disregard the proviso by citing this revised notice.

The State Department has updated its policy regarding the DSP-83, although it cannot mandate the use of the expired form, an individual or entity may voluntarily submit the form and it can be processed as long as it contains all of the information and certifications required by the current, unexpired form. At this point, the DSP-83 has not been substantially amended so DDTC will continue to accept the expired form.

DDTC is strongly urging that entities and individuals that do not use the current DSP-83 form provided by the them to implement the new form no later than October 1, 2016 to avoid confusion during the future revisions.

Link to Notice:

DDTC Company Visit Program Frequently Asked Questions

Tuesday, July 12th, 2016 by Danielle McClellan

(Source: State/DDTC)

Question:  What is the Company Visit Program?

Answer:  The Company Visit Program (CVP) is administered by the Compliance and Registration Division (CRD) Office of Defense Trade Controls Compliance. The program involves visits by Department of State officials to U.S. companies that are registered with DDTC as manufacturers, exporters or brokers of defense articles and defense services.
Question:  What is the purpose of the Company Visit Program?

Answer:  The purpose of the program is several-fold. First is to learn how companies establish an overall defense trade control program. Second, is to understand how those programs are implemented and comply with the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). Third, is to gather information for the Department to determine whether we are properly exercising our regulatory responsibility in licensing and compliance. Fourth, is to use the information gathered from visits to adjust or revise our regulations and practices accordingly. Fifth, is to provide direct feedback to companies that we visit, and to learn and disseminate industry best practices.


Question:  Is a visit considered an audit or inspection?

Answer:   A visit is neither an audit nor an inspection. DDTC uses the program as a learning tool to provide information on how companies comply with the law and regulations and how DDTC can better do its job as regulator thereof. In visiting companies, DDTC is also exercising its responsibility under recordkeeping requirements detailed in Section 122.5(b) of the ITAR.


Question:  How are companies selected for a visit?

Answer:  Companies are selected for a variety of reasons, including: registration status, volume of licensed activity, experience conducting ITAR activities, nature of business, type and sensitivity of technology, geographic location, follow-up to a disclosure of an ITAR violation, or monitoring of a consent agreement.


Question:  How is a visit conducted and what should a company expect?


  • The company is sent a visit notification letter approximately 6-8 weeks in advance of the visit.
  • The visit letter outlines material that the company is to provide in advance of the team’s visit (e.g., export compliance manual, export compliance policies and procedures, organizational chart, and an overview of ITAR controlled programs at the facility).
  • In consultation with the company, the CVP team establishes an agenda for the one or two day visit.
  • The visit occurs on the company’s premises in offices, conference rooms and tours of business operations within the facility (e.g., business development, contracts, procurement, design, manufacture, security, IT, personnel, shipping, etc.).
  • At the conclusion of the visit, the team conducts a post-visit briefing with senior management and export control staff sharing information the team has gathered.
  • The team returns to the Department and will generate a report for DTCC management. The team will send a formal letter to the company, which records the matters raised in the post-visit briefing.
  • The letter should address any recommendations for improvement and provide feedback on any company best practices.


Question:  How is the team staffed?

Answer:  The visit team normally consists of two to four staff from the DTCC, depending upon the size of the company being visited, and number of companies/facilities visited per trip. The team includes civil servants and contract personnel. On some visits, staff members from the Office of Defense Trade Controls Licensing and Policy may participate.


Question:  How many companies have been visited?

Answer:  More than 60 companies have been visited since the program’s inception in October 2005. The results overall have been positive for companies and for DDTC. Companies have benefited from meeting DDTC officials, explaining their defense trade control program, discussing best practices and identifying areas for improvement. DDTC has benefited from learning first-hand how companies control and comply and using the results to better inform our regulatory practices.

Court of Appeals Judges Question Justice Department on ITAR Prior Restraint Against Speech at Libraries, the Internet, and other Public Forums

Tuesday, July 12th, 2016 by Danielle McClellan

By: Matthew A. Goldstein, Esq.,, 202-550-0040

Originally filed in the U.S. Federal District Court for the Western District of Texas in Austin under Case No. 1:15-cv-00372, the case of Defense Distributed and the Second Amendment Foundation against the U.S. Department of State and other government defendants seeks to prevent application of the International Traffic in Arms Regulations [FN/1] (“ITAR”) as a prior restraint against public speech.

Following the District Court’s denial of the plaintiffs’ request for a preliminary injunction against the State Department, the plaintiff’s appealed to the United States Court of Appeals for the Fifth Circuit.

At last week’s oral argument before the Court of Appeals, a panel of judges questioned the Justice Department on the scope of the State Department’s prior restraint.  The Justice Department’s responses were inconsistent with prior State Department positions in the case and contrary to the State Department’s June 13, 2015 notice of proposed rulemaking that announced the government’s sudden application of the ITAR as a prior restraint on public speech. [FN/2]


Has the State Department Previously Enforced the Prior Restraint?

Considering how the regulations have been in effect for 60 years, the Court asked the Justice Department to provide examples of when the State Department previously regulated prepublication of information about guns.  The Justice Department responded that it did not know of any examples, “but there certainly aren’t a lot…” [FN/3]


The Justice Department’s representation that “there certainly aren’t a lot” of examples is unclear, but seems to assume there is at least one.  Yet, the State Department has not cited a single case of enforcement in its briefs filed with the court.

The Justice Department claim there “aren’t not a lot” of examples also conflicts with a Justice Department representation to the court that followed its original response, where it concedes the State Department has not previously regulated information about handguns. [FN/4]


Is Exposing Technical Data to a Foreign Person Controlled?

The Justice Department told the Court that exposing technical data to a foreign is not the relevant standard. [FN/5]  However, the State Department’s June 3, 2016 proposed rule discussing the prior restraint states: “‘technical data’ may not be made available to the public without authorization.” [FN/6]


Does the Prior Restraint Apply to Scientific Information?

The Justice Department told the court that it did not think that anybody could read the prior restraint to apply to scientific exchanges. [FN/7]  However, the ITAR U.S. Munitions List (“USML”) designates a vast amount of scientific information as technical data and the State Department’s rule does not provide any across-the-board exclusion from the prior restraint for exchanges of scientific information.

There is a limited exclusion for information that arises or results from “fundamental research,” but the State Department takes a very narrow interpretation of the scope of this exclusion-to the point that it does not exist in reality. This is because the fundamental research exclusion, codified at 120.11(a)(8), is nested within the ITAR definition of public domain at 120.11(a) [FN/8]-and is therefore under the shadow of the State Department’s prepublication approval requirement.  Here, the State Department warns universities: “The only part of fundamental research that is not controlled by the ITAR is the published information that meets the definition of public domain.” [FN/9]


Does the Prior Restraint Apply to Information on Guns?

The Justice Department told the court the ITAR does not prohibit the dissemination of information about guns for a number of reasons and claimed that a lot of that information is already in the public domain. [FN/10]

Of course, the ITAR definition of “technical data” includes information on any article listed on the ITAR USML, not just guns.  But it most definitely controls “information required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification” of guns listed on the USML. [FN/11]

Moreover, the State Department’s June 3, 2015 proposed rule prevents reliance on the public domain exclusion for the vast majority of information on the Internet, public libraries, and other public forums where it states:

“‘Technical data’ and software that is made publicly available without proper authorization remains ‘technical data’ or software and therefore remains subject to the ITAR.” [FN/12]

Considering how the State Department has not publicly enforced its prepublication approval requirement against anyone other than Defense Distributed, most, if not all, persons who previously posted technical data to the Internet, at libraries, and other public forums had no reason to know that the State Department required prior U.S. government authorization for public speech.  As a result, the vast majority of publicly available technical data on guns is not “already in the public domain” because the publishers did not obtain U.S. government authorization before publication.


Does the Prior Restraint Criminalize Placing Books at Libraries?

The Court asked the Justice Department whether the State Department restricts placing books at public libraries. [FN/13]  The Justice Department did not clearly answer “yes” or “no.”  Instead, it argued that the State Department has not faced the issue and that upholding the State Department’s prior restraint in the present case would not impact the issue. [FN/14]

However, the State Department’s June 3, 2015 proposed rule claims that prior government authorization is required for any transmission of technical data into the public domain, regardless of the means of transmission.  As announced by the Stated Department in its proposed rule:

Prior to making available ”technical data” or software subject to the ITAR, the U.S. government must approve the release through one of the following: (1) The Department; (2) the Department of Defense’s Office of Security Review; (3) a relevant U.S. government contracting authority with authority to allow the ”technical data” or software to be made available to the public, if one exists; or (4) another U.S. government official with authority to allow the ”technical data” or software to be made available to the public. [FN/15]

There is no carve-out for technical data in books placed at public libraries.  To the contrary, the proposed rule states the ITAR prior restraint applies to a release of technical data by publishing in a book as much as publishing on the Internet:

The requirements of paragraph (b) are not new. Rather, they are a more explicit statement of the ITAR’s requirement that one must seek and receive a license or other authorization from the Department or other cognizant U.S. government authority to release ITAR controlled ”technical data,” as defined in § 120.10. A release of ”technical data” may occur by disseminating ”technical data” at a public conference or trade show, publishing ”technical data” in a book or journal article, or posting ”technical data” to the Internet. [FN/16]

Accordingly, if the Court of Appeals rules in favor of the State Department, the Court will indeed be upholding a broad prior restraint on the placing of books at public libraries, as well as releases of technical data at public conferences, and any other public forum.

Moreover, same as the exclusion for fundamental research discussed above, because the exclusion for information that is available at “libraries open to the public”, as codified at 120.11(a)(4), is nested within the ITAR definition of public domain at 120.11(a) [FN/17]-it is subsumed within the State Department’s prepublication approval requirement-as are the other public forums nested below 120.11(a) (i.e., through sales at newsstands and bookstores, subscriptions, second class mailing privileges, etc.)-which are all subject to the State Department’s prior restraint.


Does the ITAR Restrict Republications of Information?

The Justice Department told the court that republication of technical data that was made available without government authorization is a violation under the State Department’s proposed rule if made with “knowledge that it was put out originally in violation of the regulations…” [FN/18]  But the Justice Department did not explain what it means by “knowledge”-a legal term of art that can include actual knowledge of a fact or constructive knowledge of a fact.

Are suspicious circumstances enough for prosecution?

Is it sufficient that a speaker knows or should know the facts indicate technical data or software was made publicly available without an authorization?

What, if any, actions constitute sufficient due diligence to guard against imputation of such knowledge?

These questions are particularly relevant considering how the government has not publicly enforced the prior restraint, which means the public is on constructive notice that the vast majority of all technical data in the public domain was placed there without U.S. government authorization.

For instance, under the proposed rule, it is unclear whether a person can be held liable for reposting technical data if they do not actually know whether the original poster of technical data had permission from the government, but circumstances exist indicating a lack of such approval (i.e., no indication that government approval was obtained, technology of a nature that the government is unlikely to approve, etc.).

The republication requirement will also violate the First Amendment under the Supreme Court’s holding in Bartnicki v. Vopper Williams, 532 U.S. 514 (2001). In Bartnicki the Supreme Court addressed the question: “Where the publisher has lawfully obtained information from a source who obtained it unlawfully, may the government punish the ensuing publication based on the defect in a chain?” [FN/19]


The Supreme Court concluded that, under the statutory language at issue in the case, a person speaking on matters of public concern could not be prohibited from publishing the contents of an electronic communication, even where he or she knows or has reason to know that the information was obtained through an illegal interception. The Supreme Court noted:

“It would be quite remarkable to hold that speech by a law-abiding possessor of information can be suppressed in order to deter conduct by a non-law-abiding third party.” [FN/20]

Equally important to note, the Supreme Court has held that government bans on the republication of information does not meaningfully advance any legitimate government interest. [FN/21]


What Happens Next?

As explained in the plaintiffs’ briefings to the Court, the State Department’s prior restraint is unconstitutional under the First Amendment and for a variety of other reasons.  However, much more than protection of the First Amendment and other fundamental rights are at stake in the upcoming Court of Appeals decision.


A Dangerous Precedent

A decision in favor of the State Department will establish a dangerous precedent wherein the government is allowed to maintain a list of topics that citizens cannot discuss publicly without a license from some unnamed government official (or contractors working for the State Department).

Although the case concerns information about guns and other topics listed on the USML, future lists can include virtually any topic that some unnamed government official or contractor decides to “designate” or otherwise place on a list-unless the prospective speaker has the time and money to hire a team of attorneys, file a lawsuit, and eventually wins in court.


Adversely Impact Innovation

The ITAR controls many developmental electronics, aeronautics, and other technologies. [FN/22]  It even controls emerging technologies not yet enumerated on the USML. [FN/23]  Although it is important to protect these technologies, the development of advanced and innovative technologies through open research and development is the key to U.S. National Security.  The State Department’s proposed prepublication approval requirement will defeat this important government interest by creating increased caution and restraint in the scientific community that will inhibit the free exchange of information necessary to innovation.


Chilling Effect on Speech

The prior restraint’s impact will be far-reaching because a prepublication review requirement will necessarily subject a wide range of technical information to review. Most persons publishing information in books, newspapers, magazines, journals, and on the Internet are not generally knowledgeable about export controls. Because of this, they are unlikely to recognize the proper scope of ITAR controls and will likely refrain from participating on exchanges for fear of inadvertently violating the regulations.


Changes Contrary to Stated ECR Goals

The prior restraint is contrary to the stated goal of the President’s Export Control Reform (“ECR”).  The primary ECR goal is a system where “higher walls are placed around fewer, more critical items” that focuses agency resources on license reviews of critical technologies that matter. The proposed prepublication approval requirement is contrary to this stated goal because it will require the devotion of significant agency resources to reviews of unclassified, non-proprietary information, which does not generally describe the state of art technology or implicate military critical technologies.


Ineffective and Waste of Taxpayer Dollars

Considering the annual volume of academic and professional publications and the sheer volume of daily publications on the Internet that may contain technical data, the costs of adding more staff with the technical expertise required to administer the proposed prepublication review requirement will no doubt exceed existing DDTC capacities.  In the meantime, further lawsuits by newspapers, magazines, academic journals, and other would-be publishers will further burden agency resources and waste taxpayer dollars.


[FN/1] 22 C.F.R. Part 120 et seq.

[FN/2] See 80 Fed. Reg. 31,525 (June 13, 2015).

[FN/3] June 6, 2016 Hearing Record (hereinafter “06/06/16 H.R.”) at 23:32-25:40.

[FN/4] 06/06/16 H.R. at 24:21-25:17.

[FN/5] 06/16/16 H.R. at 30:48-31:26 (Justice Department stating, inter alia, that “exposed to a foreigner is not the standard”).

[FN/6] 80 Fed. Reg. at 31,528.

[FN/7] 06/06/16 H.R. at 28:09-28:47; See also 24:11-25:40.

[FN/8]  22 C.F.R. § 120.11   Public domain.

(a) Public domain means information which is published and which is generally accessible or available to the public:

(1) Through sales at newsstands and bookstores;

(2) Through subscriptions which are available without restriction to any individual who desires to obtain or purchase the published information;

(3) Through second class mailing privileges granted by the U.S. Government;

(4) At libraries open to the public or from which the public can obtain documents;

(5) Through patents available at any patent office;

(6) Through unlimited distribution at a conference, meeting, seminar, trade show or exhibition, generally accessible to the public, in the United States;

(7) Through public release (i.e., unlimited distribution) in any form (e.g., not necessarily in published form) after approval by the cognizant U.S. government department or agency (see also §125.4(b)(13) of this subchapter);

(8) Through fundamental research in science and engineering at accredited institutions of higher learning in the U.S. where the resulting information is ordinarily published and shared broadly in the scientific community. Fundamental research is defined to mean basic and applied research in science and engineering where the resulting information is ordinarily published and shared broadly within the scientific community, as distinguished from research the results of which are restricted for proprietary reasons or specific U.S. Government access and dissemination controls…

[FN/9] (emphasis in original) See here.

The State Department also advised that the fundamental research exclusion does not apply to the provision of information to foreign parties during the performance of research involving technical data or a defense article because the provision of such information constitutes a defense service that requires DDTC authorization under ITAR sections 120.9(1) and 124.1(a). Under this DDTC interpretation of the exclusion, the provision of information to foreign parties in the course of research, regardless of if in the public domain or otherwise falling under any other ITAR exclusion, requires DDTC authorization if the research involves ITAR-controlled technical data or a defense article.

[FN/10] 06/06/16 H.R. at 18:51-19:47; 21:45-22:39.

[FN/11] 22 C.F.R. § 120.10.

[FN/12] 80 Fed. Reg. 31,528 (June 3, 3015) (“‘Technical data’ and software that is made publicly available without proper authorization remains ‘technical data’ or software and therefore remains subject to the ITAR.”).

[FN/13] 06/06/16 H.R. at 25:39-27:13.

[FN/14] 06/06/16 H.R. at 26:27-27:13.

[FN/15] 80 Fed. Reg. at 31,528.

[FN/16] Id.

[FN/17] 22 C.F.R. § 120.11 (“(a) Public domain means information which is published and which is generally accessible or available to the public… (4) At libraries open to the public or from which the public can obtain documents…”)

[FN/18] 06/06/16 H.R. at 31:26-33:00.

[FN/19] Id. at 528.

[FN/20] Bartnicki at 529-530.

[FN/21] Florida Star v. B.J.F., 491 U.S. 524, 535 (1989) (“punishing the press for its dissemination of information which is already publicly available is relatively unlikely to advance the interests in the service of which the State seeks to act.”).

[FN/22] See e.g., USML at 22 C.F.R. § 121.1 paragraphs VI(c), VIII(f), X(f), XI(a)(7), and XX(a)(8).

[FN/23] See e.g., USML Category XXI-Articles, Technical Data, and Defense Services Not Otherwise Enumerated

*(a) Any article not enumerated on the U.S. Munitions List may be included in this category until such time as the appropriate U.S. Munitions List category is amended. The decision on whether any article may be included in this category, and the designation of the defense article as not Significant Military Equipment (see §120.7 of this subchapter), shall be made by the Director, Office of Defense Trade Controls Policy.

(b) Technical data (see §120.10 of this subchapter) and defense services (see §120.9 of this subchapter) directly related to the defense articles covered in paragraph (a) of this category.

Export Control Reform Is Not Dead

Friday, May 27th, 2016 by Danielle McClellan

By: John Black

Maybe you were beginning to feel comfortable with the sweeping changes to US export controls resulting from the Obama Administration’s Export Control Reform Initiative.   Well, the regulatory change party isn’t over.  Get out your reading glasses and free up some time in your calendar because it won’t be long before the EAR-ITAR definitions clean-up regulations hit the street.  In 2015, DDTC and BIS published proposed, so-called harmonization rules to harmonize EAR and ITAR definitions of terms such as export, publicly available/public domain and others.  At first glance I thought the proposed EAR and ITAR rules were not harmonization because they proposed to have different definitions of many key terms.  Then the musicians in my family reminded me that when two people sing harmony they do not sing the same note at the same time but they sing different notes at the same time.  So I guess the proposal to have definitions in harmony was musically correct because the definitions were not the same.

It’s easier for me to talk about the rules as definitions clean up, updates or clarifications, or perhaps just changes.  In any event, putting aside the name I prefer to use, this is a high level overview of what I/we should expect:

  • Clarifications of the EAR definitions of export (something leaves the US), reexport (something goes from one foreign country to another) and retransfer (change in end-use or end-user).
  • Stating in the EAR that a person’s country status under the EAR deemed export rule is the most recent country of citizenship or permanent resident status.
  • If technical data, technology or software is electronically transmitted or moved using end-to-end encryption, and is not intended for storage in the most sensitive export control countries such as China, Russia, and arms-embargoed countries, it is not an unauthorized export if electronic transmissions transit countries for which the a license would be required for the content of the transmission.
  • The EAR will include provisions to apply the ITAR 126.18 and 124.16 concepts to EAR deemed reexports of technology or source code.  Deemed reexports from Country Group A:5 STA eligible countries to nationals of any of those A:5 countries will be authorized.  Deemed EAR reexports involving other countries and nationals will be authorized along the lines of ITAR 126.18 which means the deemed reexporter has an NDA from the recipient, a compliance procedure to vet/control the deemed reexport and there is no substantive contact with problem countries.
  • The EAR will include provisions to apply ITAR special arrangements involving countries such as Canada, the UK and Australia to EAR issues.
  • The EAR will require that the license applicant inform all other parties in the license of the license scope and conditions.
  • The EAR will clarify that technology that is an input into a fundamental research is not fundamental research.

To a large extent, the definition changes will merely clarify that the definitions mean what you thought they meant, which will increase your confidence in your understanding of the regulations and, hopefully, make it easier for you to explain and apply the rules in your organization, and perhaps help you to sleep better at night.  Clarification, even without hope for changes to the restrictions and requirements, is something I always appreciate because for me it is always better to understand the rules than to agree with them.

In any event, once the new changes are out, it will be time to join me as I print out the Federal Register notices, get some small sticky notes and a couple highlighter pens, pour yourself a big cup of coffee, and start to read the notices, including the preamble text, and study the new rules.  I am looking forward to it, and I hope you are too.