Source: http://learnexportcompliance.bluekeyblogs.com/category/topics/defense/page/2/
Timestamp: 2018-01-17 08:38:59
Document Index: 796116342

Matched Legal Cases: ['§ 124', '§ 126', '§ 124', '§ 126', '§ 124', '§ 124', '§ 124', '§ 120', '§ 120', 'arts 120', 'arts 120', 'ART 120', 'art 120', 'ART 122', 'art 122', 'art 129', 'ART 124', 'art 124', 'art 122', 'ART 125', 'art 125', 'ART 126', 'art 126', 'art 122', 'arts 120']

In new ECCN 1B607, paragraph .a controls “equipment,” not including incinerators, that is “specially designed” for the destruction of chemical agents controlled by USML Category XIV(a). Paragraph .b of ECCN 1B607 controls test facilities and “equipment” that are “specially designed” for military certification, qualification, or testing of commodities controlled by new ECCN 1A607.e, .f, .g, .h, or .j or by USML Category XIV(f), except for XIV(f)(1). Paragraph .c of ECCN 1B607 controls tooling and “equipment” “specially designed” for the “development,” “production,” repair, overhaul, or refurbishing of commodities controlled under new ECCN 1A607.e, .f, .g, .h, or .j or USML Category XIV(f). Paragraphs .d through .w are reserved. Paragraph .x controls “parts,” “components,” “accessories,” and “attachments,” not enumerated or otherwise described elsewhere in the USML, that are “specially designed” for a commodity controlled by ECCN 1B607.b or .c or for a defense article controlled by USML Category XIV(f). As indicated above, ECCN 1B607.b does not control test facilities and “equipment” that are “specially designed” for military certification, qualification, or testing of commodities and are enumerated or otherwise described in USML Category XIV(f)(1), as set forth in State’s companion rule to this final rule (e.g., see the equipment in USML Category XIV(f)(1)(ii) that is “specially designed” for testing the articles controlled in paragraph (a), (b), (c), (e), or (f)(4) of USML Category XIV). In addition to the test facilities and “equipment” controlled by ECCN 1B607.b, see the tooling and “equipment” classified under ECCN 2B350 or 2B352 for producing the chemical/biological agents, precursors, or defoliants described in USML Category XIV(a), (b), (c), or (e). The EAR also control tooling and “equipment” to produce the antibodies/polynucleotides and vaccines described in USML Category XIV(g) and (h), respectively, as follows: lab “equipment” designated as EAR99 under the EAR; biological dual-use “equipment” (including protective “equipment”) classified under ECCN 2B352; and EAR-controlled biological systems for making vaccines (involving the use of mice, rabbits, etc.).
New ECCN 1C607?Tear gases, riot control agents and materials for the detection and decontamination of chemical warfare agents. New ECCN 1C607.a controls specified tear gases and riot control agents. Paragraph .b of ECCN 1C607 controls “biopolymers” not controlled by USML Category XIV(g) that are “specially designed” or processed for the detection or identification of chemical warfare (CW) agents specified by USML Category XIV(a) and the cultures of specific cells used to produce them. Paragraph .c controls specified “biocatalysts” and biological systems that are not controlled by USML Category XIV(g) and are “specially designed” for the decontamination or degradation of CW agents specified by USML Category XIV(a). Paragraph .d controls chemical mixtures not controlled by USML Category XIV(f) that are “specially designed” for military use for the decontamination of objects contaminated with materials specified by USML Category XIV(a) or (b).
New ECCN 1D607?“Software” “specially designed” for the “development,” “production,” operation, or maintenance of items controlled by 1A607, 1B607 or 1C607. New ECCN 1D607.a controls “software” “specially designed” for the “development,” “production,” operation, or maintenance of items controlled by ECCN 1A607, 1B607 or 1C607. Paragraph .b of ECCN 1D607 is reserved.
New ECCN 1E607?“Technology” “required” for the “development,” “production,” operation, installation, maintenance, repair, overhaul, or refurbishing of items controlled by ECCN 1A607, 1B607, 1C607, or 1D607. New ECCN 1E607.a controls “technology” “required” for the “development,” “production,” operation, installation, maintenance, repair, overhaul, or refurbishing of items controlled by ECCN 1A607, 1B607, 1C607, or 1D607. Paragraph .b of ECCN 1E607 is reserved.
Posted in 2016, BIS, CCL, Commerce Dept, Defense Trade Controls, Defense Trade Controls, EAR, ITAR, Reform, State Dept, State Dept, USML | Comments Off on The Last Hoorah for Reform?
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.
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.
Posted in 2016, DDTC, Defense Trade Controls, Defense Trade Controls, Export License, MLA, TAA | Comments Off on DDTC Agreements Guidelines Updated
Successful Violations for Dummies: Don’t Fly to the US when Attempting to Arrange Illegal Exports
Friday, May 27th, 2016 by Danielle McClellan
New Zealand Man Arrested in Seattle After Contacting Undercover Agent
William Ali, a New Zealand man has been indicted in Seattle on federal charges that he attempted to purchase aircraft parts in the US that he planned to sell to a client in China. Last year Ali contacted a US company looking for “aircraft parts called accelerometers.” These parts are developed for low or zero gravity navigation systems used in spacecraft and aircraft and any one selling the items must have an export license (Ali did not).
A Homeland Security agent began to investigate Ali shortly after he contacted the company looking to purchase the accelerometers. The agent and Ali exchanged emails and Ali admitted that he knew there were controls on the sale of the items that he was looking to buy and that trying to buy them was turning out to be difficult. He also explained that he didn’t think he could get an export license for the parts so he was trying to purchase them through different sources. His client was looking for a “huge quantity” of the product because they were “manufacturing a variant of the MA60 aircraft and needed high-quality US parts” according to the criminal complaint.
After considering all of his options, Ali flew to Seattle to pick up the pars where he was arrested when he arrived on April 11, 2016.
More Details: http://www.seattletimes.com/seattle-news/crime/new-zealand-man-faces-illegal-export-charges-in-seattle/
Posted in 2016, Defense Trade Controls, EAR, Export License, Violations & Fines | Comments Off on Successful Violations for Dummies: Don’t Fly to the US when Attempting to Arrange Illegal Exports
Posted in 2015, DDTC, Defense Trade Controls, Russia, State Dept, USML | Comments Off on Military Importers and Exporters Beware: State Department Modifies Sanctions against Rosoboronexport
DDTC Agrees that the Public Domain Prior Approval Requirement is Unreasonable
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.
Posted in 2015, DDTC, Defense Trade Controls, Defense Trade Controls, State Dept, State Dept, Telecommunication | Comments Off on DDTC Agrees that the Public Domain Prior Approval Requirement is Unreasonable
Another Contract Bites the Dust
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
Posted in 2015, Canada, DDTC, Defense Trade Controls, Defense Trade Controls, State Dept | Comments Off on Another Contract Bites the Dust
DDTC Provides Average Licensing Processing Times
The Directorate of Defense Trade Controls (DDTC) is now providing a monthly update on the current license processing times. For electronic cases, the average is based on the date the case was signed by the applicant until the date of final action. In the case of hardcopy cases, the time is determined by the date the case enters the Directorate until the time it is signed out of the Directorate. The processing time below include all cases except for Commodity Jurisdictions (CJs), Government Jurisdictions (GJs), and Electronic Rejections.
The monthly licensing update can be accessed at: http://pmddtc.state.gov/metrics/index.html
Posted in 2015, Defense Trade Controls, Defense Trade Controls, Export License, State Dept | Comments Off on DDTC Provides Average Licensing Processing Times
DDTC Looking for Comments Regarding Amendments to Parts 120, 122, 124, 125 & 126
The Department of State wants to clarify requirements for the licensing and registration of US person providing defense services while in the employ of foreign persons. They also want to clarify when these same persons may be covered under existing DDT C authorizations previously issued to their employers and affiliates, and when they are instead obligated to apply for their own license or agreement prior to engaging in the provisions of the defense service.
Comments regarding the following proposed rules will be accepted until July 27, 2015
FOR FURTHER INFORMATION CONTACT: Mr. C. Edward Peartree, Director, Office of Defense Trade Controls Policy, Department of State, telephone (202) 663-1282; email DDTCResponseTeam@state.gov. ATTN: Regulatory Change, U.S. Persons Employed by Foreign Persons.
The Department of State’s full plan can be accessed here.
For the reasons set forth above, Title 22, Chapter I, Subchapter M, parts 120, 122, 124, 125 and 126 are proposed to be amended as follows:
PART 120–PURPOSE AND DEFINITIONS
1. The authority citation for part 120 continues to read as follows: . . . .
2. Section 120.39 is amended by revising paragraph (a)(2) to read as follows:
Sec. 120.39 Regular employee.
(2) An individual in a long term (i.e., 1 year or longer) contractual relationship with the company where the individual:
(i) Works at the company’s facilities;
(ii) Works under the company’s direction and control;
(iii) Works full time and exclusively for the company;
(iv) Executes nondisclosure certifications for the company; and
(v) Where the staffing agency that has seconded the individual (if applicable) has no role in the work the individual performs (other than providing that individual for that work) and does not have access to any controlled technology (other than where specifically authorized by a license).
3. Section 120.40 is amended by removing the Note and adding Note 1 and Note 2 to read as follows:
Sec. 120.40 Affiliate.
Note 1 to Sec. 120.40: For purposes of this section, “control” means having the authority or ability to establish or direct the policies or operations of the firm with respect to compliance with this subchapter. Control is rebuttably presumed to exist where there is ownership of 25 percent or more of the outstanding voting securities if no other person controls an equal or larger percentage.
Note 2 to Sec. 120.40: A registrant may establish a control relationship with another entity via written agreement such that the entity then becomes an affiliate in accordance with section. The registrant may include such an affiliate on its registration, in accordance with this subchapter and subject to DDTC’s disallowance. If an affiliate listed on a registration ceases to meet the requirements of this section, the registrant must immediately remove the affiliate from its registration and notify DDTC pursuant to Sec. 122.4(a) of this subchapter.
4. Section 120.43 is added to read as follows:
Sec. 120.43 Natural person.
Natural person means an individual human being, as distinguished from a corporation, business association, partnership, society, trust, or any other entity, organization or group.
PART 122–REGISTRATION OF MANUFACTURERS AND EXPORTERS
5. The authority citation for part 122 continues to read as follows:…
6. Section 122.1 is amended by revising paragraph (a) and adding a note to paragraph (a) to read as follows:
(a) Any person who engages in the United States in the business of manufacturing, exporting, or temporarily importing defense articles or furnishing defense services; and any U.S. person who engages in the business of furnishing defense services wherever located, is required to register with the Directorate of Defense Trade Controls under Sec. 122.2. For the purpose of this subchapter, engaging in such a business requires only one occasion of manufacturing or exporting or temporarily importing a defense article or furnishing a defense service. A manufacturer who does not engage in exporting must nevertheless register. (See part 129 of this subchapter for requirements for registration of persons who engage in brokering activities.)
Note to paragraph (a): Any natural person directly employed by a DDTC-registered person, or by a person listed on the registration as a subsidiary or affiliate of a DDTC-registered U.S. person, is deemed to be registered.
Sec. 122.2 [Amended]
7. Section 122.2(a) is amended by adding a comma between the words “registrant” and “or” in the third sentence.
8. Section 122.4 is amended by revising paragraph (a)(2)(v) to read as follows:
Sec. 122.4 Notification of changes in information furnished by registrants.
(v) The establishment, acquisition, or divestment of a U.S. or foreign subsidiary or other affiliate who is engaged in manufacturing defense articles, exporting defense articles or defense services, or the inability of an affiliate listed on the registration to continue meeting the requirements in Sec. 120.40 of this subchapter;
PART 124–AGREEMENTS, OFF-SHORE PROCUREMENT, AND OTHER DEFENSE SERVICES
9. The authority citation for part 124 continues to read as follows: . . . .
10. Section 124.1 is amended as follows:
a. Add two sentences at the end of paragraph (a).
The addition and revision read as follows: Sec. 124.1 Manufacturing license agreements and technical assistance agreements.
(a) * * * The provision of defense services by a natural U.S. person may be authorized on a Form DSP-5. Natural U.S. persons employed as regular employees of a foreign subsidiary or affiliate listed on the registration of a U.S. person may receive authorization to provide defense services via an agreement between the registered U.S. person and the foreign subsidiary or affiliate, provided the registered U.S. person accepts responsibility for, and demonstrates ability to ensure, the natural U.S. person’s compliance with the provisions of this subchapter.
(b) Classified Articles. Copies of approved agreements involving the release of classified defense articles will be forwarded by the applicant to the Defense Security Service of the Department of Defense.
11. Section 124.17 is added to read as follows:
Sec. 124.17 Exemption for natural U.S. persons employed by foreign persons.
(a) A natural U.S. person employed by a foreign person may furnish defense services to and on behalf of the foreign person employer without a license if all of the following conditions are met:
(1) The employer is located within a NATO or EU country, Australia, Japan, New Zealand, and/or Switzerland, and the defense services are provided only in these countries;
(2) The end user(s) of the associated defense article(s) are located within NATO, EU, Australia, Japan, New Zealand, and/or Switzerland;
(3) No U.S.-origin defense articles, to include technical data, are transferred from the U.S. persons to the employer without separate authorization;
(4) No classified, SME, or MT technical data is transferred (even if separately authorized) in connection with the furnishing of defense services; and
(5) The U.S. person furnishing the defense services maintains records of such activities and complies with registration requirements in accordance with part 122 of this subchapter.
PART 125–LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED DEFENSE ARTICLES
12. The authority citation for part 125 continues to read as follows: . . . .
Sec. 125.4 [Amended]
13. Section 125.4 is amended by removing and reserving paragraphs (b)(2) and (b)(12).
PART 126–GENERAL POLICIES AND PROVISIONS
14. The authority citation for part 126 continues to read as follows: . . . .
15. Section 126.6 is amended by revising paragraph (c) introductory text and adding paragraph (c)(7) to read as follows:
Sec. 126.6 Foreign-owned military aircraft and naval vessels, and the Foreign Military Sales program.
(c) Foreign Military Sales Program. A license from the Directorate of Defense Trade Controls is not required if the classified or unclassified defense article or defense service to be transferred was sold, leased, or loaned by the Department of Defense to a foreign country or international organization under the Foreign Military Sales (FMS) Program of the Arms Export Control Act pursuant to a Letter of Offer and Acceptance (LOA) authorizing such transfer (permanent or temporary), which meets the criteria stated below:
(7) Natural U.S. persons employed by foreign persons may provide defense services to and on behalf of their employers without a license if all of the following conditions are met:
(i) The defense services are provided in support of an active FMS contract and are identified in an executed LOA;
(ii) No U.S.-origin defense articles are transferred from the U.S. person to the employer, without separate authorization;
(iii) The provision of defense services is not to a country identified in Sec. 126.1;
(iv) No classified or SME technical data is disclosed (even if separately authorized) in connection with the furnishing of defense services; and
(v) The U.S. person furnishing the defense services maintains records of such activities and complies with registration requirements in accordance with part 122 of this subchapter.
Posted in 2015, BIS, CCL, Commerce Dept, DDTC, Defense Trade Controls, Defense Trade Controls, EAR, ITAR, State Dept | Comments Off on DDTC Looking for Comments Regarding Amendments to Parts 120, 122, 124, 125 & 126