January 2010
Written by Jason M. Wong Monday, 04 January 2010 00:00
Happy New Year, and welcome to the inaugural issue of the Firearms Law Group monthly newsletter, updating clients on what's happening in the firearms and export industry.
You're busy. I'm busy. Our time is limited and valuable. I will always include a table of contents for you to scan and review. If you see something that applies to your situation, click or scroll to that feature. If you don't see anything of value within the table of contents, you can delete the message without having to scan the entire message.
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ATF Update:
ATF FAQ on Short-Barreled Rifles to be forthcoming.
While at the Small Arms Review show in Phoenix, Arizona, Ernie Lintner publically announced that the FTB and NFA Branches are working on an FAQ regarding Short Barreled Rifles (SBR) and Short Barreled Shotguns (SBS). While the information has not been publically released, I anticipate the FAQ to address the statutory definition of an SBR/SBS, and the temporary versus permanent removal of a barrel on an SBR/SBS. As some readers will note, I continue to maintain that the statutory definition of an SBR requires that a rifle have a barrel less than 16-inches in length. If there is no barrel, or if the barrel exceeds 16-inches in length, one cannot possess an SBR even if the receiver is already registered as an SBR.
Steven Albro, Chief of ATF NFA Banch Promoted.
Steven Albro, former chief of ATF NFA Branch was promoted to oversee the FFL Licensing Center, Explosives Licensing Center, Explosives Branch, and NFA Branch. Ernie Lintner has been named Acting Chief of the NFA Branch until a replacement can be named.
Additional ATF E-Forms Being Developed.
Prior to departing ATF Branch, Mr. Albro announced an E-form project, similar to the current E-Form 6. The project is still being worked out, however initial reports indicate that an electronic submission system will be implemented for Forms 1, 2, 3, 4, and 5. Credit card processing will be available for processing Forms 1 and 4.
Proposed Machinegun Amnesty is DEAD
ATF insiders report that despite public statements to the contrary, any effort to open an amnesty has effectively been killed by ATF legal counsel. While the situation may change at any time, as of right now, the issue is dead.
ATF Newsletter Issued
The most recent issue of the ATF FFL Newsletter dated November 2009 has been released. Of note, ATF reminds FFLs that the sale of a shotgun without a butt stock is restricted to persons over 21 years old, as a shotgun sold with only a pistol grip (and without a butt stock) is not intended to be fired from the shoulder.
The newsletter also contains a wealth of information on the forms required for NFA firearms.
A copy of the newsletter may be found online here: http://www.atf.gov/publications/newsletters/ffl/ffl-newsletter-2009-11.pdf
ATF Manufacturing and Marking Requirements Eased
On November 19, 2009, ATF released Ruling 2009-5 that relieves subcontractors from marking receivers and/or other restricted parts manufactured on behalf of another FFL, assuming all 7 conditions listed within the ruling are satisfied. Additional information regarding may be found online here: http://www.atf.gov/regulations-rulings/rulings/atf-rulings/atf-ruling-2009-5.pdf
State Department Update
Proposed Amendment to 22 CFR 125.4(b)(9), Export Exemptions for Technical Data
The Department of State is proposing to amend the International Traffic in Arms Regulations (ITAR) regarding an exemption for technical data, to clarify that the exemption covers technical data, regardless of media or format, sent or taken by a U.S. person who is an employee of a U.S. corporation or a U.S. Government agency to a U.S. person employed by that U.S. corporation or to a U.S. Government agency outside the United States.
The Department of State will accept comments on this proposed rule until January 25, 2010.
Interested parties may submit comments by email or U.S. Postal Mail to the following addresses:
E-mail:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
with an appropriate subject line.
Mail:
Department of State,
Directorate of Defense Trade Controls
Office of Defense Trade Controls Policy
Attn: Regulatory Change, Section 125.4
SA–1, 12th Floor, Washington, DC 20522–0112.
A full account of the Federal Register notice may be found online here: http://www.pmddtc.state.gov/FR/2009/74FR61292.pdf
Addition of a Sixth Exception to the 60-day Rule.
On December 7, 2009, the Directorate of Defense Trade Controls (DDTC) announced in the Federal Register that it is adding a sixth exception to the 60-day processing time for export license applications. The new exemption would exempt approval of export licenses from the 60-day deadline "when a related export policy is under active review and pending final determination by the Department of State." A full account of the Federal Register notice may be found online here: http://www.pmddtc.state.gov/FR/2009/74FR63497.pdf
The current five exemptions to the 60-day rule include the following situations:
- Congressional notification is required. (i.e., the value of the export exceeds USD$1 Mil.)
- Required Governmental assurances have not been received. (Typically applied to missile technology and cluster munitions.)
- End-use checks have not been completed. (i.e., Blue Lantern background checks on foreign end users.
- The Department of Defense has not completed its review of the export application. (i.e., review of the sale of significant military equipment to foreign governments and/or foreign militaries.)
- A Waiver of Restrictions is required. (i.e., a waiver to export goods or services to a proscribed country.)
Temporary Import Violations
DDTC reminds companies conducting import/export activity to properly account for temporary imports. A temporary import requires either a DSP-61 (Temporary Import license) or an exemption under 22 CFR 123.4. An issue arises when a foreign end user returns a defective defense article without first coordinating with the US Party. In most cases, a DSP-61 is not applied for and the proper notations required under 22 CFR 123.4 may not be met.
In the event that this type of incident occurs, DDTC advises filing a voluntary disclosure detailing the incident, followed by the filing of a DSP-5 (Permanent Export License) application. When filing the DSP-5, a transmittal letter must be submitted with the DSP-5 application explaining the situation, the parties involved, and any measures taken to prevent a reoccurrence of the situation.
Presumably, the DSP-5 filing would trigger a $250 application fee against the Applicant's ITAR registration and renewal fee for the following year.
A copy of the notice may be found online here: http://www.pmddtc.state.gov/licensing/documents/WebNotice_TemporaryImportViolations.doc
Electronics Submission of TAA and MLA now Permitted
Submission of Technical Assistance Agreements and Manufacturing Licensing Agreements may now be submitted online via the D-Trade system. Clients who have submitted TAAs and MLAs in the past will recall submission of seven complete applications to DDTC for review. With electronic submissions, the need to make multiple copies is eliminated. Mandatory submission of all agreements via electronic means is anticipated to occur sometime in 2010. Additional guidelines on preparing and submitting agreements electronically may be found online here: http://www.pmddtc.state.gov/licensing/documents/PreparingElectronciAgreements-Guidelines.pdf
(Caution – the file is 3MB in size)
Miscellaneous
Firearms Law Group
Please welcome Jayme Croskey to the Firearms Law Group team. Jayme previously worked with me at Dickson Maher Ingels, a Tacoma-based law firm, and is happy to be part of the Firearms Law Group team.
As my administrative assistant, you'll likely encounter Jayme when calling the office. She also maintains my daily schedule, and coordinates administrative tasks within the office.
Hurricane Butterfly Research Corporation
What is the Hurricane Butterfly Research Corporation? In response to several clients who were unwilling or unable to conduct exports, I transformed Hurricane Butterfly from a small 07 FFL manufacturing company into an exporting clearinghouse. Hurricane Butterfly conducts temporary and permanent exports on behalf of domestic clients, manages export contracts on behalf of foreign clients, and provides logistical solutions in support of legal exports of defense articles worldwide.
Hurricane Butterfly is fully licensed and holds a Type 7 FFL (manufacturing license), a Type 8 FFL (import license), and is registered with DDTC to conduct exports. In the last four months of 2009, Hurricane Butterfly exported nearly US$750,000 worth of defense articles in over 45 transactions to more than 25 countries. At the end of 2009, Hurricane Butterfly had a 97.8% success rate in DSP-5 approvals.
Why should domestic clients consider letting Hurricane Butterfly conduct exports on their behalf?
- The sale of defense articles can be expanded beyond the domestic US market. Given the current state of the economy and the value of the U.S. Dollar, legitimate sales to Canada, Europe, and Asia present an unparalleled business opportunity.
- No cost to the US client – the foreign end user pays for our services via a transparent fee, or an increase in the product price. We're reasonable and flexible in assessing our fees.
- Because Hurricane Butterfly conducts exports on a nearly daily basis, we are current on all US regulatory requirements governing the export of defense articles.
- All civil and criminal liability for an improper export lies with Hurricane Butterfly .
- All financial liability for increased ITAR registration and renewal fees lies with Hurricane Butterfly .
- All document retention requirements following the export transaction lies with Hurricane Butterfly .
- Experience has allowed Hurricane Butterfly to build working relationships with many of the DDTC licensing officers, providing Hurricane Butterfly with an unparalleled two-way dialogue with the licensing officers when submitting an unusual or difficult export application.
Why should foreign clients consider letting Hurricane Butterfly conduct exports on their behalf?
- Hurricane Butterfly offers contract management and logistic services, allowing the foreign client peace of mind that the contract is being monitored and key milestones are being met by domestic US manufacturers in a timely manner.
- Excellent working relationships with many firearm manufacturers and distributors within the United States.
- Hurricane Butterfly will negotiate the best possible price for defense articles on behalf of foreign clients with a pre-established and known commission rate for the export transaction. There are no hidden charges.
For exports valued over $250,000, our fee is negotiable and can be adjusted to fit the transaction. A new website is being developed for Hurricane Butterfly, but in the mean time, basic information can be found online at www.HurricaneButterflyResearch.com.
Please contact me if you'd like to discuss any aspect of import/export transactions in greater detail.
Where in the World is Jason?
All travel performed on behalf of clients is held in confidence, and will never be listed within this section.
January 2010
NDIA Armaments Division, Small Arms Committee meeting in Dallas, Texas on January 14, 2010.
SHOT Show 2010 in Las Vegas, Nevada.
I arrive in Las Vegas on Sunday, January 17, 2010. If you are hosting a private event on Monday, January 18th, I welcome the opportunity to test and evaluate your products. If you wish to meet with me during the week of the show, please contact me immediately, as my schedule is filling quickly. Depending upon my schedule, I am available to meet at any reasonable hour, (on or off site) during the week of the show.
February 2010
February 7 – 10, 2010. Honolulu, Hawaii
March 2010
IWA and Outdoor Classics, in Nuremberg, Germany from March 10 – 17, 2010.
If our paths cross, I look forward to seeing you soon.
Regards,
Jason M. Wong