Commerce, State Issue Final Rules for Transfer of Gun Export Controls

The Commerce Department released its final rule for transferring export controls of firearms, ammunition and other defense items from the State Department to Commerce. The rule revises the Export Administration Regulations to transfer items that no longer “warrant control” on the U.S. Munitions List to the Commerce Control List. The rule will be published alongside a final rule from the State Department, which details the changes made to Categories I, II and II of the USML and describes “more precisely” the items that warrant “export or temporary import control” on the USML. The rules, which have been highly anticipated by the firearms industry (see 1908130066), will be published Jan. 23 and take effect March 9.

The changes made in both final rules are based on a “thorough interagency review” of the categories, in which Commerce, State and the Defense Department agreed that the Export Administration Regulations is an “appropriate source of authority” to control certain defense items previously controlled under the USML. Commerce said there is a “significant worldwide market” for these items, including in sectors that cater to “hunting, marksmanship, competitive shooting, and other non-military activities.”

Although gun-control advocates and some Congress members have said the transfer would loosen necessary control over dangerous weapons (see 1904230049 and 1912160057), Commerce said the rule “does not deregulate the transferred items.” The Bureau of Industry and Security will require authorization to export any weapon being removed from the USML, “including releases of related technology and software to foreign persons” in the United States. Commerce said it will work to “ensure that appropriate regulatory oversight will be exercised” while “reducing the procedural burdens and costs of export compliance on the U.S. firearms industry and allowing the U.S. Government to make better use of its export control resources.” As part of the transfer, BIS created a new set of “600-series” Export Control Classification Numbers to control items moved from the USML to the CCL.

BIS said it received nearly 3,000 public comments on its 2018 proposed rule. The final rule includes hundreds of pages in Commerce responses to commenter questions, including a section in which the agency describes each of the changes made to the proposed rule. Commerce said it will create 17 new ECCNs to control the items being removed from the USML and made several “minor” technical clarifications to several other ECCNs. The rule also added language that addressed 3D printing of a “firearm, firearm frame or receiver.” Commerce said the software or technology that is available online and that can lead to the 3D printing of firearms controlled under ECCN 0A501 remains subject to the EAR.

BIS said “many” of the items will “generally” be eligible for license exceptions. BIS did, however, add several restrictions for when license exceptions can be used. One change restricts the use of a license exception if there is a component in the item that is not subject to the International Traffic in Arms Regulations -- but would normally meet the criteria in USML -- that is incorporated into the firearm or exported with the firearm with “knowledge” that the part will eventually be incorporated into the firearm, BIS said. Another rule would restrict license exceptions for exports, re-exports or transfers of any item classified under ECCN 0x5xx if a party to that transaction is listed on the Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons List.

Another change, made in response to comments, amends the license exception for servicing and replacement of parts and equipment (License Exception RPL) by clarifying certain requirements that need to be met in order to temporarily import the item into the U.S. for service or repair before eventually exporting it again. The item must be in the U.S. for a period “not exceeding one year or the time it takes to service or replace the commodity, whichever is shorter,” in order to use License Exception RPL. The rule also imposes restrictions when the license is used for firearms shipped to or manufactured in certain countries, such as Russia, Georgia, Ukraine and Kazakhstan.

The State Department rule describes in detail revisions to Categories I, II and III, including a change that renames Category I to “Firearms and Related Articles” instead of “Firearms, Close Assault Weapons and Combat Shotguns.” Category I will only control defense items that are considered “inherently military” or not “widely available” for commercial sale, and will no longer control “non-automatic and semi-automatic firearms to .50 caliber (12.7mm) inclusive.” The changes also add language to Category I that allow ITAR licensing for “all commodities, software, and technology subject to the EAR” if those items “are to be used in or with defense articles controlled in USML Category I and are described in the purchase documentation submitted with the license application.”

The State Department said it revised Category II, which covers guns and armament, to establish a “bright line between the USML and the CCL for the control of these articles.” The agency said the most significant change was an amendment to a paragraph that describes “controlling parts and components,” including a clarification that the control “applies only to recoil systems specially designed to mitigate the shock associated with the firing process of guns integrated into air platforms.”

Category III will be revised to “remove broad catch-alls,” the State Department said. The agency agreed with a commenter that said language within the category could be misinterpreted to cover “all ammunition for fully automatic firearms.” The agency said it revised the control to limit its scope to “ammunition that is not used with semi or nonautomatic firearms (i.e., firearms not on the USML).”

The rules are a “tremendous achievement” for the firearms industry, said Larry Keane, senior vice president of the National Shooting Sports Foundation. The NSSF said the rules remove “unnecessary and outdated regulations” and will allow the State Department to focus its export controls on military items that “give our warfighters a tactical advantage.”