The scope of defense articles, technical data, and defense services subject to Department of State export control jurisdiction under the International Traffic in Arms Regulations (“ITAR”) (22 C.F.R. Parts 120-130) is described at ITAR Section 121.1, better known as the U.S. Munitions List (“USML”).
The USML is divided into 21 broad categories, many of which contain vague or complex descriptions subject to varying interpretations. As a result, private industry and government agencies routinely submit written requests to the Department of State for official determinations on whether a particular item or information is subject to ITAR control. These requests are known as “commodity jurisdiction” or “CJ” requests. Department of State responses to CJ requests are called “final CJ determinations.”
On average, the Department of State takes over two months to issue a final CJ determination. However, U.S. government agencies routinely disagree on the scope of ITAR control, resulting in regular escalations of CJ requests to the deputy assistant secretary level and, at times, to even higher levels to resolve interagency disputes. These escalations can delay final CJ determinations for a year or more.
CJ Requests Reflect Uncertainty
The problems experienced by the private industry and the government in determining commodity jurisdiction evidences how people of common intelligence must necessarily guess at the scope of ITAR control. These problems are aggravated by the fact that, since 2010, the ITAR has been the subject of over 65 proposed and final notices of rulemaking in the Federal Register. Many of these changes were made in the context of the President’s Export Control Reform Initiative (“ECR”), a key goal of which is to establish a bright line of Department of State export control jurisdiction. [F/N 1]
Final CJ determinations are issued on a case-by-case basis and are expressly limited to the specific details of the CJ request at issue. Because of this, final CJ determinations cannot generally be relied upon as precedents in determining jurisdiction for items not specifically identified in a final determination at issue. This inability to rely on final CJ determinations to establish rules of interpretation with more general application perpetuates uncertainties surrounding ITAR control.
What the Numbers Show
In response to repeated criticism on the lack of transparency into the CJ process, the Department of State began publishing limited information on final CJ determinations in 2010. This information is pulled from Block 5 of the Department’s DS-4076 CJ Request form, which contains the manufacturer name, model number, and a generic description of the item or information at issue.
Because the DS-4076 and supplemental documents submitted with CJ requests often contain proprietary information, the Department of State requests permission from submitters before publishing Block 5 information. When permission is provided, the Block 5 information is published with the Department’s jurisdictional determination and the date of the final determination. However, some submitters do not provide permission, and, as a result, many Final CJ Determinations are not published.
Of 4,586 final CJ determinations reportedly made by DDTC from 2010 to 2014 [F/N 2], approximately 70% are published (Figure 1).
Although the published Block 5 information provides very limited information on the details of CJ requests, it reveals a broad trend. Specifically, of the 2010 to 2014 published final determinations, 28% resulted in an ITAR determination, 71% resulted in an EAR determination, and 1% resulted in a split jurisdiction determination (i.e., EAR and ITAR) (Figure 2).
CJ Requests on the Rise
As noted above, a key goal of ECR is to establish a bright line defining ITAR jurisdiction. Because persons who are unable to confidently determine ITAR jurisdiction submit CJ requests, the volume of CJ requests provides a strong indicator of whether ECR is achieving its goal of establishing a bright line.
This is why post-ECR CJ request numbers are controversial (i.e., an increase in the number of CJ requests evidences that ECR has failed to meet the bright line goal).
The Department of State has not yet released the number of CJ requests submitted in 2014. However, based on a Department of State presentation [F/N 3] provided at the 2014 BIS Update Conference, 3,820 commodity jurisdiction requests were submitted between 2011 and 2013, which represents a 63% increase from the 2,343 requests submitted between 2008 and 2010. This surge in CJ requests coincides with over 59 Federal Register notices implementing ECR between December 2010 and December 2014. [F/N 4]
This upward trend in the number of CJ requests will continue to significantly increase as a result of various changes made by ECR. These changes include:
- The new standard for commodity jurisdiction at ITAR Section 120.3 that relies on subjective determinations on whether a particular item, technology, or service “provides a critical military or intelligence advantage such that it warrants control.”
- Increasing use of the term “Specifically Designed” in the USML to carve out certain items from ITAR control. This definition for this term is over 900 words long, difficult to understand, and subject to varying interpretations. [F/N 5]
- Increasing use of the term “Military Use” in the USML, which is not defined in the ITAR and subject to varying interpretations.
- Upcoming changes to the ITAR definitions for “Defense Service,” “Public Domain,” “Fundamental Research,” and other key terms relevant to determining commodity jurisdiction. [F/N 6]
- Express imposition of ITAR control over certain items and related technical information developed with a dollar or more of Department of Defense funding. [F/N 7] This “Magic DoD Dollar” catchall applies regardless of whether or not the funding involves a military application and applies unless there is a final CJ determination establishing a lack of ITAR control.
Jurisdictional uncertainty also remains for emerging technologies under USML Category XXI, which is used by the Department of State to impose ITAR control over items, information, and services not yet enumerated on the USML. Pursuant to official agency guidance, the only way to know whether something is controlled under Category XXI is through official pronouncements by the Department of State on a case-by-case basis.
The Administration advises that, while it expects an additional surge in the number of CJ requests as a result of the ECR changes, these numbers will decrease over time as industry adjusts to new norms. However, the Administration provides no convincing reason why, at some point in time, the confusion caused by ECR will suddenly disappear. Rather, considering the lack of detailed information available on final CJ determinations and the Department of State’s refusal to treat final CJ determinations as precedent, the new norm will more likely involve a continuing surge of CJ requests for years to come.
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[F/N 1] See e.g. Statement of K. Wolf , Assistant Secretary of Commerce Bureau of Industry and Security United States Department of Commerce, as provided to “Hearing Before the Committee on Foreign Affairs U.S. House of Representatives on Advancing Export Control Reform: The Agenda Ahead,” April 24, 2013 (“These reforms will create a clearer, more reliable and more predictable export control system by creating bright lines between agencies’ jurisdictions thus ensuring that industry is able to easily self-classify their items”); Remarks of E. Hirschhorn Under Secretary for Industry and Security, U.S. Department of Commerce Bureau of Industry and Security Update 2011 Conference, July 19, 2011 (“An important reform objective is that a person who is not an expert on U.S. export controls, but who understands the technical capabilities of an item, should be able to determine jurisdiction and classification reliably.”).
[F/N 2] See E. McPherson, “Defense Trade Controls Commodity Jurisdiction Overview,” BIS Update Conference on Export Controls and Policy 2014.
[F/N 3] Ibid.
[F/N 4] See 75 Fed Reg. 76653, 75 Fed Reg. 76664, 75 Fed Reg. 76935, 76 Fed Reg. 41948, 76 Fed Reg. 68675, 76 Fed Reg. 76072, 76 Fed Reg. 76085, 76 Fed Reg. 76097, 76 Fed Reg. 76100, 76 Fed Reg. 76664, 76 Fed Reg. 80291, 77 Fed Reg. 22191, 77 Fed Reg. 25932, 77 Fed Reg. 25944, 77 Fed Reg. 29564, 77 Fed Reg. 29575, 77 Fed Reg. 33698, 77 Fed Reg. 35317, 77 Fed Reg. 35310, 77 Fed Reg. 33688, 77 Fed Reg. 36409, 77 Fed Reg. 36428, 77 Fed Reg. 37346, 77 Fed Reg. 37524, 77 Fed Reg. 70945, 77 Fed Reg. 70958, 77 Fed Reg. 71214, 78 Fed Reg. 22660, 78 Fed Reg. 22740, 78 Fed Reg. 31444, 78 Fed Reg. 31431, 78 Fed Reg. 35276, 78 Fed Reg. 40892, 78 Fed Reg. 40922, 78 Fed Reg. 45026, 78 Fed Reg. 61744, 78 Fed Reg. 61750, 78 Fed Reg. 61874, 79 Fed Reg. 00022, 79 Fed Reg. 00026, 79 Fed Reg. 00034, 79 Fed Reg. 00264, 79 Fed Reg. 17024, 79 Fed Reg. 27180, 79 Fed Reg. 27418, 79 Fed Reg. 32612, 79 Fed Reg. 37551, 79 Fed Reg. 37536, 79 Fed Reg. 45089, 79 Fed Reg. 48660, 79 Fed Reg. 58704, 79 Fed Reg. 61226, 79 Fed Reg. 61571, 79 Fed Reg. 66608, 79 Fed Reg. 67055, 79 Fed Reg. 76867, 79 Fed Reg. 76874, 79 Fed Reg. 77862, 79 Fed Reg. 77884.
[F/N 5] 22 C.F.R. § 120.41.
[F/N 6] See e.g. Statement of K. Wolf , Assistant Secretary of Commerce Bureau of Industry and Security United States Department of Commerce, as provided at BIS Update Conference on Export Controls and Policy 2014 (“There are other efforts that we described at length last year regarding harmonization of definitions… One of the bigger ones that we have yet to get to but we’re working on are the harmonized definitions of technology, fundamental research, public domain, and export.”); see also “Amendment to the International Traffic in Arms Regulations: Revision of U.S. Munitions List Category XV and Definition of ‘‘Defense Service”,” 78 Fed. Reg. 31444 (May 14, 2013).
[F/N 7] USML Categories VI(c), VIII(f), XI(a)(7), and XX(a)(8).
*The above is not intended as an exhaustive list of restrictions that may apply to a particular transaction nor advice for a specific transaction because the specifics of an individual case may implicate application of other U.S. laws as well as foreign laws that carry added or different requirements. In addition, U.S. export control and sanctions laws are frequently subject to change. Such changes can affect the continued validity of the information above, which is based on U.S. law existing as of January 26, 2015. For these reasons, assistance from a qualified attorney competent to advise on such matters is highly recommended.