Any business involved with 3-D printed firearms, ammunition, and technical data will now have its products subject to the Commerce Control List instead of the United States Munitions List following a Ninth Circuit ruling. On January 20, 2020, the Bureau of Industry and Security (“BIS”), an agency under the Department of Commerce, issued a new rule re-classifying accessories, ammunition, and technical data for specifically identified firearms, including those created by 3D printing. That same day, twenty states and the District of Columbia filed suit to prevent the transfer of any items related to 3D printing. Shortly after, a federal court in the Western District of Washington placed an nationwide injunction, preventing BIS from implementing the new rule. Washington v. United States Dep’t of State, 443 F.Supp. 1245, 1251 (W.D. Wash. 2020). On May 26, 2021, the Ninth Circuit Court of Appeals lifted the injunction and remanded the case for dismissal, allowing BIS to proceed. State v. United States Dep’t of State, 996 F.3d 552 (9th Cir. 2021).
Recently, BIS updated its Firearms Guidance to reflect the final rule. Previously, the products, materials, and technical data had been regulated by the International Traffic in Arms Regulations (“ITAR”), until BIS issued the rule at issue in Washington v. United States Dep’t of State, in conjunction with the State Department issuing its own in late January 2020. These rules transferred specific firearms (including shotguns, combination pistols, and non-automatic and semi-automatic firearms equal to .50 caliber or less) and their associated ammunition and components from the United States Munitions List (“USML”) to the Commerce Control List (“CCL”). The transfer of this data, materials, and equipment significantly changes the export and import controls governing articles, services, and technology related to firearms.
The USML is a list of defense articles, containing twenty-one categories of manufactured items, and technical data and services related to those items. This list is created and maintained by the Directorate of Defense Trade Controls, an agency under the State Department. Because of this, ITAR generally requires companies interested in exporting any item on the USML to register with the State Department and obtain a license. Following BIS’ new rules, firearms, their components, and related technical data are now on the CCL, a list subject to regulations under the Export Administration Regulations (“EAR”), maintained and created by BIS.
But what impact does this new rule have? BIS released additional information in its Firearms Guidance clarifying the effects that the transfer has on business practices. Prior to the new rules, anyone publishing unclassified software and technology related to 3D-printed firearms could do so without obtaining a license. Now, however, anyone who wants to post any technology or software related to 3D-printed firearms should consider the following:
- Any electronic publication of such technology or software will be considered a worldwide export under EAR. This does not apply if the publisher knows that it is only accessible by people in the United States or Canada. (Firearms Guidance, FAQ 39)
- Because it will be considered an export, anyone who wants to electronically post any technology or software related to 3D-printed firearms must first obtain a license from BIS. (Firearms Guidance, FAQ 39)
- A license must be obtained even for electronic publications made in the past. (Firearms Guidance, FAQ 38)
- Because electronic posts are considered “worldwide release[s]” to potentially “embargoed and sanctioned destinations,” applications for these licenses must pass the most restrictive review policy–a “policy of denial”–in order to obtain a license. (Firearms Guidance, FAQ 41)
- These regulations apply to electronic posts of any file type. If a file publishes technology or software in any way, it is subject to EAR. (Firearms Guidance, FAQ 35)
Violators of these new rules are subject to both administrative and criminal penalties. Administrative penalties can include fines up to $300,000 or “twice the value of the transaction” per violation, “whichever is greater.” 50 U.S.C. § 4819. Criminal penalties include imprisonment up to 20 years and/or $1 million in fines per violation. Id. Violators of EAR also face denial of export privileges. This prevents all other businesses or persons from participating in an export transaction in any way with those found in violation. Now that the Ninth Circuit has removed the injunction, thus allowing BIS to continue transferring items from the USML to the CCL, companies must compare the regulations placed by the EAR with their current business practices to prevent any exposure to the hefty penalties that come with exporting items on the CCL without a license (although the penalty is usually less harsh than ITAR penalties).
For additional information regarding EAR or ITAR, or for assistance with ensuring your business complies with export regulations, please contact the attorneys at Eckland & Blando LLP.