Alert - Commerce Publishes New Rule Requiring Congressional Notification for Semiautomatic Firearm Exports

 

It's Back... New Commerce Rule Requires Congressional Notification for Semiautomatic Firearm Exports Today the U.S. Department of Commerce Bureau of Industry and Security (BIS) published a Final Rule adopting a new requirement for Congressional Notification for certain semiautomatic firearms exports under the Export Administration Regulations (EAR). The final rule will become effective on July 18, 2022. This final rule will add a new section to the EAR, 15 C.F.R. §743.6 (Prior notifications to Congress of exports of semiautomatic firearms), to adopt a congressional notification requirement for license applications having semiautomatic firearms that are (i) classified under Export Control Classification Number (ECCN) 0A501.a, and (ii) valued at $4 million or more. The dollar value threshold of $4 million will be based only on the portion of the license application for ECCN 0A501.a firearms. The congressional notification requirement will not apply in the following instances:  If the total value of the application is valued at $4 million or more but contains 0A501.a semiautomatic firearms valued at less than $4 million. If the 0A501.a semiautomatic firearms are destined for countries in Country Group A:5 or A:6 (see supplement no.1 to part 740 of the EAR), except for Mexico, South Africa, and Turkey.  If the export is to personnel and agencies of the U.S. Government under License Exception GOV (§ 740.11(b) of the EAR) or when for the official use by an agency of the North Atlantic Treaty Organization (NATO). BIS advises this final rule will not change the interagency license review process or how license applicants apply for licenses for semiautomatic firearm exports. Applicants may continue to apply for prospective sales, but any activity intended to circumvent notification requirements is prohibited. For example, applicants cannot split or structure contracts to avoid exceeding the $4 million dollar threshold. While the rule does not add a requirement of a purchase order to support a license application that would meet the congressional notification threshold, if the license application includes 0A501.a semiautomatic firearms subject to a signed contract (which may be a purchase order), a copy of that signed contract would need to be included as a supporting document. Additionally, written explanation from the applicant will be required when the export does not include a contract as well as a statement of the value of the ECCN 0A501.a semiautomatic firearms to be exported.  Finally, with this final rule BIS is adding a new general restriction on the use of EAR license exceptions under §740.2. New paragraph (a)(23) will specify that exports of semiautomatic firearms subject to the congressional notification requirement are not eligible for any license exception other than exports to personnel and agencies of the U.S. Government under License Exception GOV (§ 740.11(b) of the EAR), for official use by an agency of NATO, or destined to a country listed in Country Groups A:5 or A:6 (see supplement no. 1 to part 740 of the EAR) except Mexico, South Africa, or Turkey. The congressional notification requirement will not be applied retroactively. In other words, it will not attach to license applications already in the queue - only license applications received on or after this rule becomes effective will be subject to the new congressional notification requirements.

The above alert is for informational purposes only and is not intended to be construed or used as legal advice. Receipt of this alert does not establish an attorney-client relationship.