International Legal Affairs: V8N6

ITAR Registration, Yet Again

On July 22, 2016, the U.S. State Department, Directorate of Defense Trade Controls (DDTC) released new guidance on whether gunsmiths must register under the International Trade in Arms Regulations (ITAR) as a manufacturer. For purposes of this discussion, two major laws govern firearms within the United States – the Gun Control Act (GCA), promulgated under 22 U.S.C. 2751 et seq., and the Arms Export Control Act (AECA), promulgated under 18 U.S.C. 921 et seq. The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) governs firearms under the GCA. The ATF and the U.S. State Department share responsibility in enforcing the AECA. ATF relies upon the AECA for the permanent import of firearms and firearm parts into the United States. Firearm importers are required to register with ATF and pay an AECA registration fee for import activity. DDTC relies upon the AECA for authority governing the temporary import into the United States, and the temporary or permanent export of firearms from the United States. The ITAR is the regulatory mechanism used by DDTC to enforce their responsibilities detailed within the AECA.

Registration Requirements

The AECA has a statutory requirement for firearm manufacturers to register with DDTC under section 122.1. It reads:

(a) Any person who engages in the United States in the business of manufacturing or exporting or temporarily importing defense articles, or furnishing defense services, is required to register with the Directorate of Defense Trade Controls under §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.

This column has previously written in detail on the requirement for all those who hold an ATF Type 7 or Type 11 Federal Firearms License to register under the ITAR, regardless of export activity. Currently, the lowest form of registration under the ITAR is $2,250 per year.

According to the July 22 guidance, the following activities are NOT considered manufacturing:

a) Occasional assembly of firearm parts and kits that do not require cutting, drilling, or machining;

b) Firearm repairs involving one-for-one drop-in replacement parts that do not require any cutting, drilling, or machining for installation;

c) Repairs involving replacement parts that do not improve the accuracy, caliber, or other aspects of firearm operation;

d) Hydrographic paint or Cerakote application or bluing treatments for a firearm;

e) Attachment of accessories to a completed firearm without drilling, cutting, or machining—such as attaching a scope, sling, or light to existing mounts or hooks, or attaching a flash suppressor, sound suppressor, muzzle brake, or similar item to a pre-threaded muzzle;

f) Cosmetic additions and alterations (including engraving) that do not improve the accuracy, caliber, or other aspects of firearm operation beyond its original capabilities;

g) Machining new dovetails or drilling and tapping new holes for the installation of sights which do not improve the accuracy or operation of the firearm beyond its original capabilities; and

h) Manual loading or reloading of ammunition of .50 caliber or smaller.

Additionally, “the occasional assembly of firearms without drilling, cutting, or machining, and/or specific gunsmithing activities that do not improve the accuracy, caliber, or operations of the firearm beyond its original capabilities (as described above) are not manufacturing. Emphasis added.

DDTC’s guidance does not take into account actual instances that occur within the firearms community. As an example, manufacturing a parts kit into a complete firearm would be classified as manufacturing under ATF regulations, but seemingly not so under DDTC regulations. Assembly of an AR-15 lower receiver into a complete rifle is considered manufacturing under ATF regulations, but not so under DDTC. Brainstorming this issue will raise any number of instances where ATF and DDTC guidance diverge.

What constitutes “manufacturing,” according to DDTC?

Under this section of the guidance, DDTC has extended the definition of “manufacturer” to include some activities traditionally performed as gunsmiths. Within DDTC’s guidance, there is an acknowledgement that “[t]he term “manufacturing” is not defined in the ITAR.” For purposes of the drafting the guidance, DDTC claims to apply the “ordinary, contemporary, [and] common” meaning to the terms gunsmithing and manufacturing.

According to DDTC, the following activities require ITAR registration:

a) Use of any special tooling or equipment upgrading in order to improve the capability of assembled or repaired firearms;

b) Modifications to a firearm that change round capacity;

c) The production of firearm parts (including, but not limited to, barrels, stocks, cylinders, breech mechanisms, triggers, silencers, or suppressors);

d) The systemized production of ammunition, including the automated loading or reloading of ammunition;

e) The machining or cutting of firearms, e.g., threading of muzzles or muzzle brake installation requiring machining, that results in an enhanced capability;

f) Rechambering firearms through machining, cutting, or drilling;

g) Chambering, cutting, or threading barrel blanks; and

h) Blueprinting firearms by machining the barrel.

Based upon the guidance, there are many instances where a gunsmith could stray into ITAR territory, and run afoul with DDTC.

Under this guidance, does use of a special tool used to install night sights on a pistol constitute manufacturing? Arguably, such activity would be classified as manufacturing by DDTC – the use of a special tool, that once complete, improves the capability of the firearm, via use of night sights would appear to satisfy subsection (a). Similarly, would the use of a Beta C-Mag on an AR-15 constitute manufacturing? Use of the Beta C-mag increases the round capacity on an AR-15 rifle from the standard 30-round magazine to 100-round capacity. A gunsmith installs a magazine extension on a 1911 pistol magazine to allow 8-rounds of ammunition instead of the standard 7-round capacity. Would that act be classified as manufacturing by DDTC? In both cases, arguably yes – both actions seemingly act as “modifications to a firearm that change round capacity” under subsection (b). Additional examples of the madness behind this guidance are easily imagined by those within the firearms community.

Webster’s Dictionary defines manufacturing as:

1. something made from raw materials by hand or by machinery

2a :  the process of making wares by hand or by machinery especially when carried on systematically with division of labor

2b :  a productive industry using mechanical power and machinery

3. the act or process of producing something.

DDTC claims that the “ordinary, contemporary, [and] common” meaning of manufacturing is applied within the guidance. Expanding upon the three above examples, DDTC has clearly not used the “ordinary, contemporary, [and] common” meaning of manufacturing. Instead, DDTC seems to have written the guidance to fit it’s political agenda in an effort to further regulate firearms. In furtherance of this argument, DDTC states that procedures that “involve cutting, drilling, or machining of an existing firearm in order to improve its accuracy, operation or to change its caliber” is classified as manufacturing. The problem with this definition is that no new firearm was created. Nothing was made from raw materials. Nothing new was created. Under the ATF definition, many such activities would not be considered “manufacturing.”

“Cutting, drilling, [and] machining of… existing firearm[s] in order to improve… accuracy, operation or to change… caliber” are traditional gunsmithing activities. The United States has a long history of innovation and invention within the small arms arena, usually at the individual, or hobbyist level. Under this guidance, DDTC seeks to regulate and govern activities that have never previously been subject to regulation. Sadly, as an executive branch of the Federal Government, the U.S. State Department takes its orders from the President in how to implement existing U.S. Law. Congress passes the law; agencies, (such as the ATF and DDTC) determine how to implement the law.

A copy of the guidance may be found on the DDTC website here: