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Export Regulatory and Policy Update Roundup: Fall 2024

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In addition to recent proposals and changes for space-related export controls, here’s a wrap-up of other recent export-related actions.

Department of State: DDTC / ITAR

AUKUS Authorized Users Available         

As required for the new AUKUS Exemption at International Traffic in Arms Regulations (ITAR) § 126.7, the list of “authorized users” in Australia and the United Kingdom is now available in the Department of State, Directorate of Defense Trade Controls (DDTC)’s DECCS.  Currently including 87 entities, the authorized users are approved by their respective governments and the list is subject to change.

Precision Castparts Consent Agreement

DDTC announced a Consent Agreement with Precision Castparts:

Precision Castparts Corp. settled allegations that it violated the International Traffic in Arms Regulations (ITAR) in connection with unauthorized exports of technical data to foreign-person employees from Bhutan, Burundi, El Salvador, Honduras, Mexico, and Peru pertaining to tools (specifically, wax pattern and core dies) and wax patterns consumed in the subsequent production of casting blades used in gas turbine engines.

This is the third Consent Agreement from DDTC this year, following The Boeing Company and RTX Corporation.

Cyprus

Cyprus remains in the unique situation of being found in the ITAR § 126.1 list of proscribed destinations, but with an annually suspended status.   Under 89 FR 79140 (September 27, 2024), the Republic of Cyprus’ status as a proscribed destination is suspended from October 1, 2024, through September 30, 2025.

Department of Commerce: BIS / EAR & CCL

Data Center Validated End User Authorization

The Department of Commerce, Bureau of Industry and Security (BIS) expanded the Validated End User Authorization (VEU) at Export Administration Regulations (EAR) § 748.15 to include data centers.

Connected Vehicles Supply Chain

Notice of Proposed Rulemaking (NPRM) would “prohibit transactions involving Vehicle Connectivity System (VCS) hardware and covered software designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of the People’s Republic of China, including the Hong Kong Special Administrative Region (PRC), or the Russian Federation (Russia).”

  • Part of effort to secure the information and communications technology and services supply chain
  • 89 FR 79088, September 26, 2024
  • Press release

Implemented Export Controls (IEC)

At EAR § 740.24 License Exception Implemented Export Controls (IEC) authorizes exports, reexports, and transfers (in-country) of eligible items to, among, or within specified destinations.

Best Practices for Financial Institutions

BIS Issues Guidance to Financial Institutions on Best Practices for Compliance with the Export Administration Regulations

  • Recommendations include due diligence best practices, red flags, and a real-time screening.
  • Press Release, October 9, 2024

Department of Defense

Cybersecurity Maturity Model Certification (CMMC) Program

Under development since 2010, the CMMC Program is intended “to verify contractors have implemented required security measures necessary to safeguard Federal Contract Information (FCI) and Controlled Unclassified Information (CUI).”

  • Tiered model based on the type and sensitivity of relevant information.
  • Levels include self-assessment, third party assessment, and government assessment.
  • Phased implementation, with four phases over three years.
  • 89 FR 83092, October 15, 2024
  • Effective December 16, 2024

Department of the Treasury: OFAC

 Recordkeeping Requirements Extended to Ten Years

 The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has extended recordkeeping requirements for sanctions-related transactions from five years to ten years to match the related statute of limitations.

  • Statute of limitations for civil and criminal violations of the International Emergency Economic Powers Act (IEEPA), and the Trading with the Enemy Act, (TWEA) was extended from five to ten years in April 2024.
  • Includes transactions authorized under general or specific licenses after April 24, 2019
  • Effective March 12, 2025
  • 89 FR 74832, September 13, 2024

Maritime Shipping Industry Sanctions Guidance

OFAC issued scenario-based guidance to the maritime shipping industry.

  • Scenarios identifying new or common fact patterns include deceptive shipping practices, Specially Designated Nationals (SDNs) on trade documentation, obscured or complex ownership structures, and mid-voyage notification of sanctions risk.

Press Release, October 31, 2024

Commerce Updates: Firearms, Countries, and Turkey Antiboycott Advisory

BIS Revises Firearms License Requirements

On April 30, 2024, the Department of Commerce, Bureau of Industry and Security (BIS) issued an interim final (89 FR 34680) making to the Export Administration Regulations (EAR) to revise firearms license requirements. 

Overall, the new rule makes the following changes:

  • Identifies semi-automatic firearms under new Export Control Classification Numbers (ECCNs);
    • ECCN 0A506 controls semi-automatic rifles
    • ECCN 0A507 controls semi-automatic pistols
    • ECCN 0A508 controls semi-automatic shotguns, and
    • ECCN 0A509 controls certain “parts,” “components,” devices, “accessories,” and “attachments” for items controlled under ECCNs 0A506, 0A507, and 0A508.
  • Adds additional license requirements for Crime Control and Detection (CC) items, thereby resulting in additional restrictions on the availability of license exceptions for most destinations;
  • Amends license review policies so that they are more explicit as to the nature of review that will accompany different types of transactions and license exception availability (including adding a new list of high-risk destinations);
  • Updates and expands requirements for support documentation submitted with license applications; and
  • Better accounts for the import documentation requirements of other countries (such as an import certificate or other permit prior to importation) when firearms and related items are authorized under a BIS license exception.

Effective July 1, 2024, BIS also revoked “existing licenses for the export and reexport of firearms and related items to non-government end users in destinations identified in supplement no. 3 to part 742 ” and modified other licenses to expire on May 30, 2025.

The new Supplement No. 3 to part 742 (High-Risk Destinations for Firearms and Related Items) includes:

  • The Bahamas
  • Bangladesh
  • Belize
  • Bolivia
  • Burkina Faso
  • Burundi
  • Chad
  • Colombia
  • Dominican Republic
  • Ecuador
  • El Salvador
  • Guatemala
  • Guyana
  • Honduras
  • Indonesia
  • Jamaica
  • Kazakhstan
  • Kyrgyzstan
  • Laos
  • Malaysia
  • Mali
  • Mozambique
  • Nepal
  • Niger
  • Nigeria
  • Pakistan,
  • Panama
  • Papua New Guinea
  • Paraguay
  • Peru
  • Suriname
  • Tajikistan
  • Trinidad and Tobago
  • Uganda
  • Vietnam
  • Yemen

Complete details can be found in the Federal Register Notice.  Comments were accepted through July 1, 2024.

BIS Updates Country Information

On May 10, 2024, BIS issued a final rule (89 FR 40369) updating country names, license requirements, and Country Group D:5 as follows:

  • Updates country names of Swaziland (now Eswatini), Macedonia (The Former Yugoslav Republic of) (now North Macedonia), and Turkey (now Türkiye).
  • Corrects license requirements for Australia and the United Kingdom following the publication of the BIS AUKUS rule and the firearms rule (above).
  • Updates Country Group D:5 to remove Cyprus (currently annually suspended as a member of the ITAR § 126.1 prohibited destination list) and finally add Russia (added to §126.1 in 2021).  Of note, when there is a discrepancy between Country Group D:5 and ITAR § 126.1, § 126.1 controls.  Additional changes were made to remove redundant references to Russia.       

BIS Issues Turkey Antiboycott Advisory

On May 14, 2024, BIS issued a press release following the Turkish government’s recent announcement that it will suspend all exports and imports to and from Israel.  The press release reminds U.S. persons that “taking certain actions in furtherance or support of an unsanctioned foreign boycott maintained by a country against a country friendly to the United States and require reporting of receipt of a boycott-related request to BIS.”  In particular, U.S. companies operating in Turkey should be aware of potential boycott requests originating in that country.  Examples of recent boycott requests are posted on the BIS website.

Prohibited actions and reporting requirements are defined in EAR Part 760.  More information is also available from the BIS Office of Antiboycott Compliance (OAC).  The U.S. Department of the Treasury administers additional restrictions.

SUBMIT YOUR ADVISORY OPINIONS ON-LINE TO DDTC! REVIEW AND MAKE COMMENTS ON THE NEW CJ FORM

Advisory Opinions Accepted Online Through DECCS

Following last year’s testing, the Department of State, Directorate of Defense Trade Controls (DDTC) has announced the release of their new Advisory Opinions application for DDTC’s cloud-based Defense Export Control and Compliance System (DECCS).

The new Advisory Opinions application covers the following ITAR requests:

  • 126.9(a) – Whether DDTC would likely grant approval for a particular defense article or service to a particular country.*
  • 126.9(c) – ITAR interpretation
  • 129.9 – Guidance on whether an activity constitutes brokering under Part 129.

*Note that in many cases, it is preferable to submit a DSP-5 technical data license for marketing a defense article rather than a General Correspondence Advisory Opinion request.  While the new application is intended improve the submission and review process, a DSP-5 can avoid the need for two separate submissions for the same activity. (See DDTC’s 2016 guidance on advisory opinions.)

Other General Correspondence requests, such as §123.9 reexports or retransfers are still submitted in hard copy by mail.

The new application can be found at the DECCS Industry Service Portal: https://deccspmddtc.service-now.com/deccs

See the DDTC News & Events page (02/04/2019) for more information on this release.

Comment on Commodity Jurisdiction Form

In related DECCS news, on February 6, 2019, DDTC published a notice (84 FR 2295) requesting comments on the DS-4076 Request for Commodity Jurisdiction Determination form.  This request is part of the Office of Management and Budget (OMB) approval process.

Comments may be submitted until April 8, 2019.  Please see the Federal Register Notice for additional details.

Comment on DDTC Registration Form

On February 13, 2019, DDTC published a notice (84 FR 3846) requesting comments on the DS-2032 Statement of Registration form.  This request is also part of the OMB approval process.  Notably, DDTC plans to remove the fields for Social Security Numbers and home addresses for the various senior officers listed on the form.

Comments may be submitted until March 15, 2019.  Please see the Federal Register Notice for additional details.