By Johanna Reeves, Esq.
On January 19, 2022, the Firearms and Ammunition Import/Export Roundtable (FAIR) Trade Group hosted its annual membership meeting in Las Vegas, Nevada. It was a full house, with people coming together to hear legal and policy updates from federal regulators, and to discuss the challenges facing the firearms and ammunition industries domestically and abroad. Present were top officials from the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Department of Commerce’s Bureau of Industry and Security, and members representing a cross-section of industry, from the collector to the big defense contractor. It was a highly productive meeting and very well received. The following is a rundown of the issues discussed.
ATF Updates
After introductory remarks from FAIR’s new Executive Director, Michael Faucette, and its president, Charles Fowler, ATF took the floor to discuss recent updates and policy clarifications. Alphonso Hughes, the Assistant Director of ATF’s Office of Enforcement Programs and Services, kicked off the session by introducing the top officials present from the following branches and divisions of ATF:
- Firearms and Explosives Industry Division
- Firearms and Ammunition Technology Division
- Firearms and Explosives Services Division
- Firearms and Explosives Imports Branch
- National Firearms Act Division
- Office of Regulatory Affairs
- Office of Legal Counsel
ATF addressed the following questions and topics of interest from F.A.I.R. members:
Clarification of the role between the Department of State and ATF on imports and foreign policy questions.
A little background is helpful to appreciate the question and understand ATF’s answer. The U.S. government controls firearms and ammunition imports primarily through two statutes, the Gun Control Act of 1968 (GCA) and the Arms Export Control Act (AECA), but the underlying policies and Congress’s motivations in passing these two statutes are quite different. In the years preceding the GCA’s passage, U.S. firearms manufacturers lobbied Congress, primarily Thomas Dodd, Senator from Connecticut, for a legislative remedy to the growing competition the industry was facing from imports of inexpensive foreign surplus military firearms. Thanks in large part to this effort, the GCA has a general prohibition on the importation of any firearm or ammunition. See generally, David T. Hardy, “The Firearms Owners’ Protection Act: A Historical and Legal Perspective,” 17 Cumb. L. Rev. 585-682 (1986). Other than imports by federal, state, or local government agencies, there are only four types of firearm or ammunition imports permitted under the GCA: imports for scientific or research purposes; imports of unserviceable firearms (except machineguns) imported as curios or museum pieces; return of U.S. goods; and finally, imports of firearms and ammunition meeting the sporting purposes test (except NFA firearms and surplus military firearms).
Comparatively, the AECA came about out of the desire for world peace. “[A]n ultimate goal of the United States continues to be a world which is free from the scourge of war and the dangers and burdens of armaments; in which the use of force has been subordinated to the rule of law; and in which international adjustments to a changing world are achieved peacefully. In furtherance of that goal, it remains the policy of the United States to encourage regional arms control and disarmament agreements and to discourage arms races,” from 22 U.S.C. Ch. 39, § 2751. The controls over arms exports and imports is presented in section 2778, which gives the president the authority to control the export and import of defense articles and defense services “in furtherance of world peace and the security and foreign policy of the United States,” as stated in 22 U.S.C. § 2778(a)(1). By way of executive order, the president has delegated the authority to enforce the statute to various agencies. For the permanent import of defense articles, authority is vested with the attorney general, who in turn has delegated these functions to the ATF. The executive order instructs the attorney general to be “guided by the views of the Secretary of State on matters affecting world peace, and the external security and foreign policy of the United States.” Furthermore, any changes to designations of items or categories of items considered defense articles subject to the AECA permanent import controls must also be made with the concurrence of the secretary of state and the secretary of defense and with notice to the secretary of commerce. E.O. 13637, 78 Fed. Reg. 16129 (Mar. 8, 2013).
Since the first days of implementation of the AECA, firearms and ammunition have been classified as “defense articles” and therefore subject to ATF permitting requirements for permanent imports. In addition, the ATF regulations implementing the permanent import provisions of the AECA have always specified that “the administration of the provisions of this part will be subject to the guidance of the Secretaries of State and Defense on matters affecting world peace and the external security and foreign policy of the United States.” 27 C.F.R. § 447.55.
But what can be confusing to industry is the extent to which ATF involves the State Department in its implementation of the AECA import controls. At the F.A.I.R. meeting, ATF cited to the regulations and executive order 13637 (above) and confirmed that it consults with the State Department on import cases involving the Russian sanctions and proscribed countries, including the Voluntary Restraint Agreement (VRA) with Russia. More specifically, the following policies were reviewed:
- Russia Sanctions – the U.S. government utilizes economic and trade sanctions against other countries, individuals, or entities to force a change in policies. In August 2021, the State Department and the Treasury Department announced a new round of sanctions against Russia on the one-year anniversary of the poisoning of Russian lawyer and opposition figure Alexei Navalny. These sanctions included a minimum 12-month restriction on the permanent importation of firearms and ammunition manufactured or located in Russia pursuant to new or pending import applications. Subsequently, pursuant to State Department direction, ATF began denying Form 6 applications to permanently import firearms or ammunition manufactured or located in Russia on September 7, 2021. At the F.A.I.R. meeting, ATF stated that the only Russian firearms or ammunition that can be imported are those listed on permits issued prior to September 7, 2021. There is no exception for curios or relics stored in a non-proscribed country or area. The Biden administration will reevaluate these sanctions after one year.
- Proscribed Country Policy for Imports (27 C.F.R. § 447.52) – ATF clarified that State Department modifications to the list of proscribed countries in the International Traffic in Arms (22 C.F.R. § 126.1) does not automatically impact the list of proscribed countries in ATF’s list in section in section 447.52. In fact, ATF will not initiate any changes to country policies unless and until the State Department officially directs it in writing to do so. This includes making changes to the list of approved firearms under the Voluntary Restraint Agreement.
Third Party Transfers of U.S. – Origin firearms – do firearms now controlled for export under the Commerce regulations still require State Department retransfer approval?
ATF explained that the requirement for State Department retransfer approval stems from statutes that compel such prior authorization whenever there is a transfer, change in end-use or destination not previously identified in the original acquisition. This requirement extends to firearms and ammunition originally exported through the Foreign Military Sales (FMS) Program, grants under the Military Assistance Program (MAP), and direct commercial sales. The foreign government wishing to sell such articles to U.S. importers should first obtain the retransfer authorization from the appropriate State Department office in the Bureau of Political-Military Affairs (PM). The Office of Regional Security and Arms Transfers (PM-RSAT) handles retransfers of government-to-government sales and grant-origin defense articles, while exports of direct commercial sales are handled by the Directorate of Defense Trade Controls (DDTC). The appropriate retransfer authorization should be obtained prior to submitting the Form 6 import permit application to ATF.
What firearm operations can occur in a Foreign Trade Zone (FTZ)?
ATF explained that all U.S. laws apply to operations in an FTZ, which means that firearms may not be manufactured in an FTZ pursuant to the GCA and the NFA restrictions. Firearms can be stored in an FTZ (no addition of parts, no manipulation, except repackaging is permissible). ATF would allow destruction and disassembly of firearms, but it is important to point out that pursuant to the Department of Commerce rules on FTZ operations, activities involving destruction of firearms must be approved in advance by the Commerce Department’s FTZ Board (the FTZ Board defines any process that results in a change to Customs import classification as requiring prior clearance from the board).
Firearms may be transferred between FTZs, but approval for the transfer must be obtained from ATF in a letter request.
Is ATF changing the requirements for demonstration letters in support of import applications?
ATF is in the process of preparing a new form that may be used by importers to establish the import is for demonstration to government and law enforcement entities. The date of introduction is not yet determined but is expected to occur in the next few months. The form will include a checklist of requirements along with a penalty of perjury statement to be signed by the licensee and the government entity. The form will be optional, but importers who choose to continue using request letters from law enforcement and government customers are forewarned that ATF will continue to verify the veracity of demonstration letters by contacting the signing officials and superiors.
Information required on the Form 6 Import Permit Application
ATF explained that importers should include the seller and shipper information, if known (blocks 6 and 7 on the application). This information is necessary for ATF to confirm no party to the transaction is subject to sanctions or is otherwise prohibited.
Export Controls Update from the U.S. Department of Commerce, Bureau of Industry and Security (BIS)
After ATF concluded its presentation, BIS officials took the floor and provided attendees with a one-hour update on the firearms and ammunition exports under the Export Administration Regulations (EAR). It has been two years since the new export rules governing firearms and ammunition, but industry can always benefit from tips and observations from the regulators. The following is a list of updates and clarifications the BIS officials provided:
Parts Classifications
- Individual magazine parts are EAR99;
- Sear springs for the 1911 are classified as 0A501.x, NOT EAR99;
- Other EAR99 items: shotgun barrels; scope mounts/rails; speed loaders or moon clips; iron sights; front and rear sights; bipods/tripods; shooting sticks; muzzle brakes; compensators; flash hiders and flash suppressors.
Clarification rule for firearms and ammunition
Attendees were reminded that back in August, BIS published a rule that implemented technical corrections to the controls over firearms, ammunition, and related articles no longer subject to the ITAR. This rule took effect on September 20, 2021, and was published in 86 Fed. Reg. 46590 (Aug. 19, 2021)).
Application Tips and Tricks
BIS reiterated that caliber ranges and multiple firearm models can be provided on the export license application (Form BIS 748-P). The risk in being too specific, they explained, is to limit the scope of the license once approved.
Countries of Concern
The following countries are subject to a policy of denial for exports of firearms and ammunition:
- China (includes Hong Kong)
- Russia
- Paraguay (the Paraguayan government has issued a moratorium on firearm imports)
- Guyana (human rights concerns)
- Commercial sales to Guatemala or El Salvador subject to strict scrutiny and may be approved subject to special conditions.
- Philippines
- Trinidad & Tobago
- Brazil – there are concerns over enforcement related to commercial resale transactions because the Commerce Department does not have anyone in country to conduct end-use checks. However, exports to commercial entities may be approved.
BIS also reminded attendees to carefully monitor any country policy changes the State Department initiates through ITAR section 126.1, as these have an immediate impact on the Commerce Country Group D:5. Applications to export firearms or ammunition to any country listed in 126.1 will be denied, even if recent changes are not immediately reflected in Country Group D:5.
Other News
We were saddened to hear of the recent passing of John Brown, who served as the president for the National Firearms Act Trade and Collectors Association (NFATCA) since its founding in 2003. Having been in the trade for more than 50 years, John fought hard for the firearms industry through diligence, professionalism and collaboration with the regulators and other industry leaders. Over the years he has had many achievements, including working with the ATF to bring about the NFA Handbook and the elimination of the CLEO signature requirement for NFA transfers. We mourn with his family, his colleagues, and his friends. Rest in peace, John. We will miss you.
In other news, at the end of 2020 I stepped down as FAIR’s executive director and turned the reins over to Michael Faucette. Although it was a difficult decision, after having had the privilege of serving this fantastic organization for almost ten years, I know that great things are in store for the organization and its members. FAIR Trade Group provides an invaluable service to the firearms and ammunition industries. By maintaining its strong relationship with the agencies regulating our businesses and keeping its members informed of policy updates and regulatory changes, FAIR will continue to be the regulatory watchdog and voice for its importer and exporter members. I look forward to continuing to work with FAIR in an advisory role.
***The information contained in this article is for general informational and educational purposes only and is not intended to be construed or used as legal advice or as legal opinion. You should not rely or act on any information contained in this article without first seeking the advice of an attorney.
About the author
Johanna Reeves is the founding partner of the law firm Reeves & Dola, LLP in Washington, DC (reevesdola.com). For more than 17 years she has dedicated her practice to advising and representing U.S. companies on compliance matters arising under the federal firearms laws and U.S. export controls. Since 2016 she has served as a member of the Defense Trade Advisory Group (DTAG). From 2011 through 2020, Johanna served as Executive Director for the Firearms and Ammunition Import/Export Roundtable (FAIR) Trade Group and she continues to serve in an advisory role. Johanna can be reached at jreeves@reevesdola.com or 202-715-9941.
| This article first appeared in Small Arms Review V26N5 (May 2022) |
