Archive for the ‘DDTC’ Category

Congress Throws Political Barbs on Export Control Reform for Guns & Ammo

Tuesday, March 29th, 2016 by Danielle McClellan

(Source: House video recording)

The House Small Business Committee held a hearing yesterday, 11 February, 2016, on the Export Control Reform (ECR) initiative, with testimony from the State Department’s Deputy Assistant Secretary for Defense Trade Controls (DDTC) Brian Nilsson and the Commerce Department’s Assistant Secretary of Commerce for Export Administration Kevin Wolf. The video recording of the full hearing is available here. The following is a transcript of a portion of that hearing containing the remarks of Rep. Tim Huelskamp (R-Kansas), Assistant Secretary Brian Nilsson, and Committee Chair Steven J. Chabot (R-Ohio), which focused on the reasons for the delay in publication of proposed rules to transfer export licensing jurisdiction for our industry’s products (USML Categories I [Firearms, Close Assault Weapons, and Combat Shotguns], II [Guns and Armament], and III [Ammunition/Ordinance]) to BIS from DDTC before the end of the year.

Rep. Huelskamp (to Mr. Nilsson): What is taking so long with Categories I, II, and III? I see from the government website absolutely no efforts reported on that. That would be the firearms, guns, and ammunition categories. I will note that you completed [names other categories], but for some reason, Categories I, II, and III have been sitting out there for two, three, or four years. I don’t know who would answer that and explain the reason for the delay.
Mr. Nilsson: I own those categories, so I’ll answer the question. The prioritization of the categories was based on the remarks of Secretary of Defense Gates when we did the roll-out in April of 2010. Sec Def’s view was that we needed to prioritize, based on interoperability with allies. So the categories that we’ve been doing have been based on providing the best benefits of interoperability with our key allies, and so, and we’ve been systematically working through those. And so we haven’t come to Categories I, II, and III yet. We’ve done some preliminary work on them, but we’re committed to finalizing all the categories this year.

Rep. Huelskamp: Is there an interagency group that recommended that you move forward on that?
Mr. Nilsson: Yes. It’s the same seven departments that have been working on all the categories. And so we’ve already done some, we’ve done work on all twenty-one categories from the out-start, so we’re just not quite there yet for publishing the proposed rules.

Rep. Huelskamp: But exactly why are those categories not making progress, and when will we make progress?
Mr. Nilsson: Well, we’re committed to publishing, to finishing the initial review and having those categories done this year. The primary reason is that —

Rep. Huelskamp: This year?
Mr. Nilsson: Yes, 2016.

Rep. Huelskamp: But this year, you’re going to run out of time. Again, there is absolutely no progress. You’ve got propose rules in 2011, five years ago for, like, Category VIII, and, it’s going – – I just don’t understand why those three have had absolutely no progress, in terms of this sheet [holding up USML category ECR progress status list], even though there have been recommendations from the interagency group that you move forward. When was that recommendation made?
Mr. Nilsson: We were working on rules in 2012, and so, on all twenty-one categories, and it’s been a prioritization of those twenty-one categories, and sort of meeting the Secretary of Defense priorities for those that contribute to the interoperability, and the firearms categories – –

Rep. Huelskamp: Again, it’s been with the Secretary of Defense for a while now, but my question is that I still don’t understand why these three categories don’t have any progress on them.
Mr. Nilsson: Primarily because, by prioritizing those that are key for interoperability of allies, and our firearms categories, that category warrants reform just as all the other categories, but over 90% of what I control in that category are not being exported to governments or militaries, and so there is not an interoperability issue with regard to those. But that begs the question that they certainly warrant going through reform, just as all other sectors warrant going through reform, so for the industries that have not yet benefitted going through reform, that’s firearms, that’s the large manufacturers of things like howitzers, its people who do toxicological agents, do chemicals, and so we, we will finish – –

Rep. Huelskamp: Categories I through III?
Mr. Nilsson: Those are all in categories that have not been deployed in final.

Rep. Huelskamp: But some of those are not in I, II, or III, obviously, but you’ve made a proposed rule on a number of those already. My question is on Categories I, II, and III. When can I expect – –
Mr. Nilsson: This year.

Rep. Huelskamp: This year? This Administration?
Mr. Nilsson: We will finish — we are going to finish the USML this year.

Rep. Huelskamp: Haven’t the rules been approved all the way up the chain and proposed those?
Mr. Nilsson: They haven’t been finalized yet, so – –

Rep. Huelskamp: Who hasn’t signed off on them yet?
Mr. Nilsson: The seven departments haven’t signed off on those for what the rules would propose, but we’re committed to doing the proposed rules on those categories, as all other categories.

Rep. Huelskamp: There are firms that are waiting on this, and have been waiting for years trying to fix – –
Mr. Nilsson: I agree.

Rep. Huelskamp: And you were given, I think you were, $10 million additional to finish some of these things, in the current fiscal year. So are you going to get it done in the current fiscal year, or are you talking about the next fiscal year before you would get it done? You say current year. I just – –
Mr. Nilsson: We need to go through, the way the process works is, we do proposed rules, then we digest the public comments on those to see what adjustments we need to make, then at that point, we would draft final rules, then we publish final rules, and then there is a delay in the effective date, to allow each affected industry to be able to have time to transition to the new rules, and so that’s the process for every category. So that process will run for Categories I, II, and III, just as we’re in the midst of Categories XII, XIV, and XVIII.

Rep. Chabot: The gentleman’s time has expired. [Side remarks omitted.] The Chair would just note that there is considerable, I think, suspicion by many members, at least probably half the members on this committee, that this Administration, because it is not considered to be a friend of guns or ammo, that this is sort of a willful neglect in part at least, and the irony is that it is because of this attitude towards, and concern about the Administration’s attitude toward guns, that there has been a boom in sales of guns and ammo during this Administration, so I think that’s probably the underlying sentiment of my colleague’s questioning there.

[Remainder of hearing omitted.]

House Video Recording: https://www.youtube.com/watch?v=9uRZEXrmoss&feature=youtu.be

BIS & DDTC Release Another Set of Proposed Rules on Military Aircraft

Tuesday, March 29th, 2016 by Danielle McClellan

By: Danielle McClellan

BIS and Department of State simultaneously released proposed rules based on a review of Categories VII and XIX as well as ECCNs 9A610, 9A619, 9C610, 9C619, and 9E619.

BIS Revisions would be as follows:

Changes to ECCN 9A610

  • This proposed rule would remove text currently in the “Control(s)” table that excludes paragraphs .t, .u, .v and .w from national security controls. Although the text of those paragraphs is taken from the Missile Technology Control Regime Annex, the commodities that they control are unmanned aerial vehicle parts, components or associated equipment that also are subject to category ML10 on the Munitions List of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. The addition of the national security controls would not increase the number of destinations to which a license is required for the commodities controlled by these paragraphs as those paragraphs already have missile technology and regional stability controls. …

Changes to ECCN 9A619

  • This rule would make three additions to the “Related Controls” paragraph. The first would state explicitly the historical practice of controlling 501-D22 gas turbine engines in ECCN 9A991.d, which is the classification that has been used for many years. The second would add a reference to USML Category XIX(f) to alert readers that some aircraft parts and components are enumerated in that paragraph. Finally, a note would be added reminding readers that the commodities enumerated in paragraph .y are subject to the controls in that paragraph rather than the broader controls elsewhere in this ECCN. …

Changes to ECCN 9C610

  • ECCN 9C610 would be revised by adding references to USML Category VIII in both the heading and in paragraph .a, to make clear that materials specially designed for commodities enumerated or otherwise described in that category are controlled in ECCN 9C610.

Changes to ECCN 9C619

  • ECCN 9C619 would be revised by adding references to USML Category XIX in both the heading and in paragraph .a, to make clear that materials specially designed for commodities enumerated or otherwise described in that category are controlled in ECCN 9C619.

Change to ECCN 9E619

  • The related controls paragraph in ECCN 9E619 would be amended by removing the sentence that reads “Technology described in ECCN 9E003 is controlled by that ECCN.” Although true, the placement of the sentence in a 600 series ECCN could mislead readers into thinking that the order of review does not apply in this instance.

Comments must be received by BIS by March 25, 2016. You may submit comments by any of the following methods:

  • Federal eRulemaking Portal: http://www.regulations.gov. Search for this rule using its regulations.gov docket number: BIS-2016-0009.
  • By email directly to publiccomments@bis.doc.gov. Include RIN 0694-AG76 in the subject line.
  • By mail or delivery to Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW., Washington, DC 20230. Refer to RIN 0694-AG76.
  • FOR FURTHER INFORMATION CONTACT: Thomas DeFee or Jeffrey Leitz in the Office of Strategic Industries and Economic Security, Munitions Control Division by telephone at (202) 482-4506 or by email at Thomas.DeFee@bis.doc.gov or Jeffrey.Leitz@bis.doc.gov.

Department of State Revisions would be as follows:

Revision of Category VIII

This proposed rule revises USML Category VIII, covering aircraft and related articles, to describe more precisely the articles warranting control on the USML.

  • Paragraph (a) is revised to clarify that the controls for all paragraphs are applicable “whether manned, unmanned, remotely piloted, or optionally piloted,” by modifying paragraph (a)(5) to clarify the features meriting USML control, and by deleting paragraph (a)(6) and placing it into reserve, because the relevant control would be subsumed by paragraph (a)(5).
  • Paragraphs (a)(7) and (a)(8) are modified to clarify the features meriting USML control.
  • Paragraphs (a)(11) and (a)(13) are deleted and placed into reserve.
  • Paragraph (a)(14) is modified to exclude L-100 aircraft manufactured prior to 2013 from the scope of control.
  • The Note to paragraph (a) is revised to incorporate technical corrections.
  • Paragraph (d) is modified to delete the “ship-based” control parameter and to clarify the intent and scope of the control.
  • Notes 1 and 3 to paragraph (f) are modified to incorporate clarifying language. …

Revision of Category XIX

This proposed rule revises USML Category XIX, covering gas turbine engines and associated equipment, to describe more precisely the articles warranting control on the USML.

  • Paragraph (a) is modified to clarify the scope of controlled engines and to incorporate technical corrections.
  • Paragraph (b) is revised to provide additional technical parameters to clarify the scope of controlled engines. With respect to paragraph (b)(1), public comment is requested on whether any commercial models exceed the capability described in this paragraph. In any public comment submitted in reply to this request, please provide specific examples of the commercial models at issue.
  • Paragraph (c) is modified to incorporate conforming changes and to make clear that the paragraph applies only to gas turbine engines, while paragraph (d) is modified to update the list of subject engines.
  • The Note to paragraph (e) is modified to incorporate a conforming change.

The Department of State will accept comments on this proposed rule until March 25, 2016. Interested parties may submit comments within 45 days of the date of publication by one of the following methods:

  • Email: DDTCPublicComments@state.gov with the subject line, “ITAR Amendment–Categories VIII and XIX.”
  • Internet: At www.regulations.gov, search for this notice by using this rule’s RIN (1400-AD89).
  • Comments received after that date will be considered if feasible, but consideration cannot be assured. Those submitting comments should not include any personally identifying information they do not wish to be made public or information for which a claim of confidentiality is asserted, because those comments and/or transmittal emails will be made available for public inspection and copying after the close of the comment period via the Directorate of Defense Trade Controls Web site at www.pmddtc.state.gov. Parties who wish to comment anonymously may do so by submitting their comments via www.regulations.gov, leaving the fields that would identify the commenter blank and including no identifying information in the comment itself. Comments submitted via www.regulations.gov are immediately available for public inspection.
  • FOR FURTHER INFORMATION CONTACT: Mr. C. Edward Peartree, Director, Office of Defense Trade Controls Policy, Department of State, telephone (202) 663-2792; email DDTCPublicComments@state.gov. ATTN: ITAR Amendment–USML Categories VIII and XIX.

Military Importers and Exporters Beware: State Department Modifies Sanctions against Rosoboronexport

Tuesday, January 19th, 2016 by Danielle McClellan

By: Danielle McClellan

It is the significance of the target, Rosoboronexport, that makes this a noteworthy development.   According to its own website:

The Joint Stock Company Rosoboronexport, part of the Russian Technologies State Corporation, is the sole Russian state intermediary agency responsible for import/export of the full range of defense and dual-use end products, technologies and services.

Rosoboronexport was set up by RF President’s Decree 1834 of 4 November 2000 as a federal state unitary enterprise tasked to implement the national policy in the area of military-technical cooperation between Russia and foreign countries. Since 1 July 2011 Rosoboronexport has been operating as an open joint stock company.
Rosoboronexport operates under the strict supervision of the Russian President, the Russian Government, and in full conformity with the UN arms control treaties and the relevant international agreements.
Only Rosoboronexport has the right to supply the world market with a full range of arms and military equipment manufactured by Russia’s defense industrial complex and approved to be exported. Rosoboronexport accounts for more than 85% of Russia’s arms exports.
Rosoboronexport is among the major operators in the world market for arms and military equipment. Rosoboronexport cooperates with more than 70 countries.

The official status of the exclusive state intermediary agency gives Rosoboronexport unique opportunities to expand long-term mutually beneficial cooperation with foreign partners, provide guaranteed state support of all export-import operations, and strengthen Russia’s leadership in the world arms market.

On September 2, 2015 the US Government  released the following notice: ‘No department or agency of the United States Government may procure or enter into any contract for the procurement of any goods, technology, or services from [Rosoboronexport (ROE) (Russia) and any successor, sub-unit, or subsidiary thereof], except to the extent that the Secretary of State otherwise may determine .  .  .  .’’

The Department of State has now released (November 19, 2015) the following modification to the September notice: “The United States Government has decided to modify the measure described above against ROE and any successor, sub-unit, or subsidiary thereof as follows. The measure described above shall not apply to subcontracts at any tier with ROE and any successor, sub-unit, or subsidiary thereof made on behalf of the United States Government for goods, technology, and services for the maintenance, repair, overhaul, or sustainment of Mi-17 helicopters for the purpose of providing assistance to the security forces of Afghanistan, as well as for the purpose of combating terrorism and violent extremism globally.”

This modification includes subcontracts for the purchase of spare parts, supplies, and related services for these purposes and can be applied retroactively as of the effective dates of the sanctions (they will remain in place for 2 years unless otherwise determined by the US Government).

This change does not apply to any other measures imposed pursuant to INKSNA.

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2015-11-25/pdf/2015-30058.pdf

Intelligence Analytics Software is on the USML…In Case You Read it Wrong

Tuesday, January 19th, 2016 by Danielle McClellan

By: Danielle McClellan
This notice, while it impacts few exporters, should be clear reminder that as DDTC starts the results of the wide ranging changing changes to the US Munitions List over the past few years, we are bound to see adjustments.   DDTC tends to call these changes to the USML something like clarifications of current policy, instead of changes to the USML.  Regardless of what they are called, exporters should be constantly on the lookout for clarifications or changes to various aspects of the USML and CCL changes made during Export Control Reform.

In this case, the State Department revised paragraph (b) of Category XI after determining that the current language may lead exporters to determine that certain intelligence analytics software is no longer controlled on the USML, when in fact it still is.

On July 1, 2014 DDTC published a final rule amending Category XI of the USML (effective December 30, 2014). This temporary revision clarifies that the scope of control is in existence prior to December 30, 2014 for USML paragraph (b) and directly related software in paragraph (d) remains in effect. This rule inserts the words, “analyze and produce information from” and by adding software description of items controlled.

On July 2, 2015 a final rule was published that temporarily modified Category XI(b) until December 29, 2015. This rule extends the July 2, 2015 modification to August 30, 2017 to allow DDTC more time to consider the controls in Category XI(b).

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2015-12-16/pdf/2015-31528.pdf

“Living in a Licensing Wonderland,” DDTC Posts License Process Times for November 2015

Tuesday, January 19th, 2016 by Danielle McClellan

DDTC Source (lyrics by John Black)
Licensing officers sing, are you listening?
In the cue, licenses glistening!
A button to press, it’s licensing success!
Living in a licensing wonderland!

In order to provide greater transparency and predictability for US defense firms in planning munitions license submissions, the Directorate of Defense Trade Controls will provides monthly update of the Directorate’s processing times. The timelines are expressed in averages across all case activity. For electronic cases, the average is based on the date the case was signed by the applicant until the date of final action. For hardcopy cases, the processing times are determined by the date the case entered the Directorate until the time the case is signed out of the Directorate. Processing numbers include all case types except Commodity Jurisdictions (CJs), Government Jurisdictions (GJs), and Electronic Rejections.

Month and Year  Jun ’15 Jul ’15 Aug ’15 Sep ’15 Oct ’15 Nov ’15
Cases Received 4,171 3,972 3,607 3,509 3,670 3,117
Cases Closed 4,102 4,020 3,777 3,570 3,861 3,185
Cases Open at
End of Month
3,336 3,307 3,175 3,134 2,968 2,928
Average Processing
Time
(in Calendar Days)
24 27 26 28 26 28

 

A Little Help from DDTC… DSP5 Copies No Longer Required at Port of Export

Tuesday, January 19th, 2016 by Danielle McClellan

By: Danielle McClellan (lyrics by John Black)

What would Customs do, if I didn’t lodge my DSP?
Would it come out and arrest me?
Thanks to reform, I’m mainly EAR,
And now ITAR exports are lodging-free.
Yea, I’ll get by with a little help from DDTC.
I won’t fry if I submit a VSD.

One less bureaucratic steps for ITAR exports under licenses: No more lodging a copy of the license with Customs and Border Protection.

Although the Federal Register notice has yet to be released, CBP and DDTC issued a notice on December 21, 2015 that exporters are no longer required to lodge copies of DSP5 export licenses with that agency at the port of export.

The ACE/AES transition now allows CBP to see all license information so they no longer need a separate copy of the license at the port.

The actual regulation change will change ITAR 123.22 in the coming months.

DDTC Updates GC’s for Amendments and Adds Time Restrictions

Friday, December 4th, 2015 by Danielle McClellan

By: Danielle McClellan

DDTC has posted an updated guidance that will simplify the authorization matrix and spreadsheets and add a new time restriction for amending the General Correspondence (GC) for Amendments of Existing ITAR Authorizations. They will also clarify who may submit the GC and will take comments from industry after they implement the update. Contact Pete Walker at walkerwp@state.gov, 202-663-2806 with questions and comments.

§122.4 states that a registrant must notify DDTC of all material changes to their registration file. These include:

  • Restructuring,
  • Merger/acquisitions and/or
  • Registration code consolidations and combinations thereof

Per §122.4(c)(3), the licenses affected by these changes must be identified to DDTC via a spreadsheet/matrix attached to a General Correspondence letter. Any license not identified will be considered invalid. Per §122.4(c)(4), affected agreements require an executed amendment for a US entity name change within 60 days of notification. Any agreements not so amended will be considered invalid.

GC requests are applicable regardless of the number of authorizations involved and will cover approval of both DSP licenses and agreements. NEW CHANGE:

  • The GC request must be submitted within 60 days after DDTC approval or acknowledgment of the change.
  • DDTC will entertain name/address changes or registration code change amendments up to 180 days after the date of the approved GC
  • DDTC general policy will be to RWA amendments to GCs that fall outside of the 180 day time frame (they will review these on a case-by-case basis)
    • If the GC amendment is RWA (Return without Action), the applicant will have to individually replace any remaining licenses, and amend any agreements pursuant to 124.1(c)

Name or Registration Change:

When requesting a name or registration code change the following documentation must be included in with the submitted GC for the US entity:

  1. A letter identifying the requested changes;
  2. A §126.13 certification letter;
  3. A copy of the DTCC’s letter acknowledging the requested change(s), if issued, and;
  4. A matrix/spreadsheet containing the authorizations to be transferred.

Mergers & Acquisitions Changes:

For these, the GC must come from the acquiring party and if the GC does not come from the acquirer the GC will likely be RWA’d. The GC must contain the following:

  • A subject line clearly indicating that the GC will amend export authorizations as a result of a corporate restructuring, merger/acquisition and/or registration code consolidation or any combination thereof.
  • Concise description of the proposed transaction, in particular the
    • Acquirer and acquiree’s registrant codes (i.e., the “before and after” registration codes.)
  • The request must reference the submitted documentation and, if applicable, provide an attached DTCC approval letter.
  • The following statement MUST be included: “Modifications to the existing agreements submitted as part of this letter are specifically limited to a change to the registration code and/or to the U.S. entity name as a result of an approved merger or acquisition, and are signed by the new U.S. entity, the former U.S. licensor and the foreign licensee(s). Any other modifications will be requested through a proposed amendment in accordance with §124.1(c) or (d).” If no executed amendment is required (such as registration code change only) then this statement is not necessary.
  • The spreadsheet/matrix of authorizations to be transferred must include all existing and pending authorizations. Only those authorizations identified in the list will be amended. Any authorization not included will be considered invalid and a new authorization must be obtained. The spreadsheet/matrix must include the following information for each authorization:
  1. License or agreement number; (Note: §122.4(c)(3) states that registrants shall advise DDTC of all approvals on which unshipped balances will be shipped under the surviving registration code. However, registrants should also consider referencing exhausted licenses in order to retain access to such licenses in DTrade;)
  2. Disposition of authorization (Approved or Pending Approval);
  3. Date of Authorization Expiration;
  4. New registration number and/or company name (if applicable), and;
  5. State Y or N if an executed amendment is required (for agreements only.)

For expeditious review, the applicant should filter the spreadsheet as follows: registration #/new name/existing authorizations/pending authorizations.
Agreements Changes

DDTC will annotate affected agreements in its database.

Changing the Registration Code for Agreements:

  • Submit a GC request

US Entity Name Change for Agreements issued thru DTrade:

  • Upload a cover letter
  • Upload executed “minor amendment” (defined by §124.1(d)) into DTrade case file

 

US Entity Name Change for Paper Agreements:

  • The following documents must be sent via separate cover letters
    • Upload a cover letter citing GC case number in the body
    • Upload executed “minor amendment” (defined by §124.1(d)) into DTrade case file

Third Parties Affected by Change

A third-party is a US entity other than the license holder who has submitted the GC request. Third party licenses affected by a US entity name change does not require a DSP amendment for he affect DSP license. The DDTC issues web notice of name change serves as approval for the change. This notice should be attached to all affected licenses.

Agreements affected by US entity name changes will require the agreement holder to amend the agreement. The executed amendment will serve as a minor amendment (§124.1(d)). The agreement holder must upload the re-executed agreement to the relevant DTrade Case. Any applicants with a pending agreement or amendment must notify the respective DDTC Agreement or Licensing Officer of the upload of a revised executed agreement.
For Company Address Changes Only:

If the US registrant changes address (i.e. address change only, no change in company name or registration code) the following must be submitted:

  1. A letter identifying the requested changes to the company address;
  2. A §126.13 certification letter, and;
  3. A copy of the DTCC’s letter acknowledging the requested change(s), if issued.

DDTC will issue an acknowledgement letter to the US registrant regarding the address change and issue a web notice to alert the US applicants of the address change and provide guidance.

View DDTC’s full notice here: http://pmddtc.state.gov/licensing/documents/gl_GCsMandA.pdf

DDTC Agrees that the Public Domain Prior Approval Requirement is Unreasonable

Thursday, November 5th, 2015 by Danielle McClellan

Source: Author. Reprinted by permission.)

By: Christopher B. Stagg, Esq., chris@staggpc.com, 202-765-2278; Stagg P.C..

On June 3, 2015, the Directorate of Defense Trade Controls issued a proposed rule to amend the public domain exclusion within ITAR § 120.11 to include a prior government approval requirement. In proposing this revision, DDTC made a curious statement in the preamble that prior government approval is not a new requirement and that the proposed revision is merely “a more explicit statement of the ITAR’s requirement that one must seek and receive a license or other authorization [to put information into the public domain].”  The federal court case where DDTC made these statements is Bernstein v. Department of State in DDTC’s opposition to the plaintiff’s motion for summary judgment at 25, 945 F. Supp. 1279 (N.D. Cal. 1996).  A copy of DDTC’s statements to the federal court is provided here.

This is a curious statement because DDTC has previously stated to the federal courts that reading ITAR § 120.11 to impose a prior approval requirement is “by far the most un-reasonable interpretation of the provision” and also “one that people of ordinary intelligence are least likely to assume is the case.” Accordingly, DDTC confirmed to the federal courts in 1996 that there is no prior approval requirement to put information into the public domain.

The federal court case where DDTC made these statements is Bernstein v. Department of State. A copy of DDTC’s statements to the federal court is provided here (click on image for a high-resolution version):

These are highly damaging statements by DDTC. Not only does DDTC’s statement unequivocally maintain that there is no prior approval requirement, but it also establishes that the position DDTC now takes is admittedly “by far the most un-reasonable interpretation of the provision” and “that people of ordinary intelligence are least likely to assume is the case.”

Since DDTC concedes that “people of ordinary intelligence” would not read the public domain exclusion to impose a prior approval requirement, this raises a due process claim under the Fifth Amendment that DDTC’s new interpretation is unconstitutionally vague. The legal standard for a due process vagueness claim is whether the law would give fair notice to persons of ordinary intelligence of the legal requirements. Also, in laws that concern speech covered by the First Amendment, the federal courts impose an even higher standard by requiring that the law has even greater clarity. Here, DDTC concedes that such persons would not have notice.

DDTC’s statements in the court case also confirms that it has a long-standing practice of not requiring prior government approval to put information into the public domain. In changing its practice, it is well-established law that a regulatory agency must (1) acknowledge it is departing from prior practice and (2) explain the reason for the departure. The failure by a regulatory agency to follow these requirements raises due process issues. For instance, without an agency following these procedural requirements in changing its position, courts could not know whether a regulatory agency acted erroneously.

Here, DDTC fails both requirements. Instead of recognizing it is departing from prior practice, DDTC simply asserts that this is not a new requirement. Yet, the regulatory history of the public domain exclusion and DDTC’s own admissions to the federal courts clearly evidences this is incorrect. Since DDTC failed to acknowledge it is departing from prior practice, it also failed to fulfill the second well-established requirement of explaining the reason for its departure.

To read the rest of this article (including exhibits), please click here.

Another Contract Bites the Dust

Thursday, November 5th, 2015 by Danielle McClellan

By: Danielle McClellan

The United States Naval Air Warfare Center (NAVAIR) Aircraft Division awarded Tactical Lighting Systems Inc. (Tactical) with a contract to develop landing lights. Tactical announced on May 19, 2015 that they planned to add Carmanah Technologies Corporation (Carmanah) of Victoria, BC as a subcontractor to the contract.

Fast forward about 6 months, after struggles with the International Traffic in Arms Regulations (ITAR), Tactical and Carmanah have mutually agreed to stop working together on the project. The decision was based on significant operational challenges related to the ITAR under the contract with NAVAIR. The two companies agreed that the ITAR placed such significant barriers for the two to work together on the project that they could not jointly work together and comply with the export controls required.

More information: http://www.marketwatch.com/story/carmanah-ceases-work-on-joint-development-contract-2015-09-22-18173634

DTrade Upgraded DSP Forms—Never Mind

Friday, September 11th, 2015 by Danielle McClellan

On July 6, 2015 DDTC announced that the new DTrade forms posted on July 1 have problems and may not be used.  DDTC assures exporters it will fix the problems and make the new forms available in the “future.”