20-1102 Monday “Daily Bugle”

20-1102 Monday “Daily Bugle”

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Monday, 2 November 2020

  1. Treasury/OFAC: “Blocking or Unblocking of Persons and Properties”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. DHS/ICE: “US Files Complaint to Forfeit Iranian Missiles and Sells Previously Transferred Iranian Petroleum”
  5. Federal Court Denies Exporter’s Petition for Preliminary Injunction of DDTC for de facto Debarment
  6. EU Council Amends Decision (CFSP) 2015/1763 Concerning Restrictive Measures in View of the Situation in Burundi”
  1. Eurasiantimes: “China Formally Enacts ‘Export Control Law’ to Regulate International Military Sales”
  2. EUS: “OFAC Issues General Licence Authorising Online Teaching for Iranian Students”
  1. Kelley Drye: “OFAC Eases Rules to Allow for more Remote Learning in Iran During COVID-19 Pandemic”
  2. Lowenstein Sandler: “Hypersonics Race Raises National Security Concerns for U.S. Businesses”
  1. Monday List of Ex/Im Job Openings: 65 Jobs Available – 20 New Job Openings This Week
  1. ECS Presents: “ECS ITAR/EAR Webinar Series”
  2. FCC Academy Presents: 1 and 3 Dec; “U.S. Export Controls: ITAR/EAR” and “FMS”
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here. 
  3. Weekly Highlights of the Daily Bugle Top Stories 
  4. Submit Your Job Opening and View All Job Openings 
  5. Submit Your Event and View All Approaching Events 

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(Source: Federal Register) [Excerpts]
85 FR 69385: Notice
* AGENCY: Office of Foreign Assets Control, Treasury.
* ACTION: Notice.
* SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List based on OFAC’s determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
* DATES: See SUPPLEMENTARY INFORMATION section for effective date(s).

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(Source: Federal Register)
* Treasury/OFAC; Notices; Blocking or Unblocking of Persons and Properties; [Pub. Date: 3 Nov 2020] (PDF)

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OGS_a23. Commerce/BIS: (No new postings)

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OGS_a45. DHS/ICE: “US Files Complaint to Forfeit Iranian Missiles and Sells Previously Transferred Iranian Petroleum”

(Source: DHS/ICE, 30 Oct 2020) [Excerpts]
U.S. Navy Central Command (NAVCENT) seized the weapons from two flagless vessels in the Arabian Sea on Nov. 25, 2019 and Feb. 9, 2020, respectively. The weapons included 171 guided anti-tank missiles, eight surface-to-air missiles, land attack cruise missile components, anti-ship cruise missile components, thermal weapons optics, and other components for missiles and unmanned aerial vehicles.

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OGS_a56. Federal Court Denies Exporter’s Petition for Preliminary Injunction of DDTC for de facto Debarment

(Source: US District Court , D. Nevada. 23 Dec 2019; Slip Copy 2019 WL 10960605)
Case: ROBERT D. THORNE, JR., et al., v. U.S. DEPARTMENT OF STATE, et al.
Case No.: 2:19-CV-1982 JCM (EJY), Filed 12/23/2019
Court: USDC, D. Nevada. 23 Dec 2019; Slip Copy 2019 WL 10960605
Judge: James C. Mahan
I. Background
The instant action arises from the denial of Thorne’s licenses for the permanent export of firearms and ammunition to the entity plaintiffs. (ECF No. 2 at 3). Plaintiffs characterize the government’s denial and subsequent conduct-including classifying one of the entity plaintiffs as an “unreliable recipient” of US-origin defense articles-as a “de facto debarment” of the entity plaintiffs and Denysschen. 
Thorne sold firearms and ammunition to the entity plaintiffs, which are various South African businesses, between 2014 and 2017. Id. at 3. In order to do so, he would apply to the DDTC for a license as required by the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”). Id. During that time, the DDTC routinely approved Thorne’s licenses. Id.  However, in 2018, the government reviewed several of Thorne’s applications and “identified … information suggesting that there has been at least one instance in which arms from the [entity plaintiffs] have been diverted outside South Africa to an unauthorized end user.” (ECF No. 20 at 5). Accordingly, the DDTC determined that at least one of the entity defendants is “an unreliable recipient of U.S.-origin defense articles, defense services and technical data” and began denying Thorne’s license applications. (ECF No. 2 at 4). The government “concluded, as to each export application, that denial of the applications would further world peace, the national security or foreign policy of the United States, or was otherwise advisable.” (ECF No. 20 at 5).
Thorne sought clarification from the DDTC regarding the basis of its determination and asked “whether it would help with export approval ‘to resubmit the [South African export] permits.’ “1 (ECF Nos. 3 at 4-5; 20 at 5-6). The government informed Thorne that “U.S. persons are accorded an opportunity to present additional information requesting reconsideration of an adverse decision,” but that “new permits would not overcome the presumption of denial for these transactions.” (ECF No. 2 at 4-5).
Thorne took the government’s response to mean that there was an “across-the-board ‘presumption of denial’ for all exports to the [entity defendants].” Id. at 8. The government represents that “Director Hamilton’s email intended to state merely that, in any reconsideration proceeding, [p]laintiffs would need to overcome the reasons for the original denial.” (ECF No. 20 at 6). Thereafter, all plaintiffs began petitioning the government in order to “clear their names.” (ECF No. 2 at 5).
*2 Thorne believes he was denied his opportunity to appeal the government’s decision and subsequently filed the instant action.
. . . .
*6 Thorne’s license applications were denied, Thorne sought clarification regarding the basis of its determination, and the government expressly informed him that “U.S. persons are accorded an opportunity to present additional information requesting reconsideration of an adverse decision.” (ECF No. 2 at 4-5). The government also told him that resubmitting export permits from the entity plaintiffs would not change the determination. Id. It was the latter clarification that Thorne took to mean that there was an “across-the-board ‘presumption of denial’ for all exports to the [entity defendants].” Id. at 8.
However, Director Hamilton expressly states that the government “has not imposed any ineligibility or debarment, de facto or otherwise,” on any of the plaintiffs. (ECF No. 20-1 at 23). Director Hamilton clarified that none of the plaintiffs are statutorily or administratively debarred. Id. at 23-24. Instead, Director Hamilton noted that the government will consider all future export applications on a case-by-case basis. Id. at 24.  ….
As discussed above, the court cannot second-guess the government’s determination regarding the reliability of the entity defendants. The court similarly cannot second-guess the government’s decision to deny Thorne’s applications. The government made its determination after conducting a case-by-case review and used its discretion to make a foreign policy judgment call. On the other hand, none of the plaintiffs have a vested property right in the license or ability to export/import firearms and ammunition. The denial of a permit or license is one of the hazards of importing and exporting arms and ammunition.  To the extent Thorne asserts due process claims on behalf of the other plaintiffs or asserts an APA claim, Thorne has not submitted any evidence or even alleged that he has reapplied for a license. But the government has indicated that such an appeal was available to him. The government further indicated that Thorne is free to apply for another license, and that application will be considered on a case-by-case basis.
* HOLDING: the court finds that none of the plaintiffs have a likelihood of success on the merits of their due process or APA claims to justify injunctive relief.
Accordingly, IT IS HEREBY ORDERED, ADJUDGED, and DECREED that plaintiffs’ motion for preliminary injunction (ECF No. 2) be, and the same hereby is, DENIED.

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OGS_a67. EU Council Amends Decision (CFSP) 2015/1763 Concerning Restrictive Measures in View of the Situation in Burundi”

(Source: Official Journal of the European Union, 2 Nov 2020) [Excerpts]
Having regard to the Treaty on European Union, and in particular Article 29 thereof,
Having regard to the proposal from the High Representative of the Union for Foreign Affairs and Security Policy,
On 1 October 2015, the Council adopted Decision (CFSP) 2015/1763 concerning restrictive measures in view of the situation in Burundi.
On the basis of a review of Decision (CFSP) 2015/1763, the restrictive measures should be renewed until 31 October 2021 and the information concerning two natural persons should be amended.
Decision (CFSP) 2015/1763 should therefore be amended accordingly,
Article 1
Decision (CFSP) 2015/1763 is amended as follows:
the second paragraph of Article 6 is replaced by the following:
‘This Decision shall apply until 31 October 2021.’;
the Annex is amended as set out in the Annex to this Decision.
Article 2
This Decision shall enter into force on the day following that of its publication in the Official Journal of the European Union.

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(Source: Eurasiantimes, 30 Oct 2020) [Excerpts] 
China has now formally enacted the “Export Control Law” during the 22nd Session of the Standing Committee of the 13th National People’s Congress. This law will regulate China’s international military sales in effect from December 1, 2020.
This law builds upon China’s existing export control regulations, which are scattered across multiple laws, administrative regulations, and rules and measures issued by various departments, with the goal of creating a unified export control system to promote China’s national security and interests and ‘commitment to nonproliferation’, according to Lexology.

The law will effectively control the exports based upon various factors like licensing requirements based on product features, end-users, destinations, or end-uses. It is to be noted that Chinese systems, especially UAVs and other munitions are in growing demand around the world and are now a common sight in the battlefields of the middle east.

OFAC has issued General Licence 8M, which authorises US universities, and their contractors, to provide certain online educational services to Iranian students who are eligible for student visas, but are not physically present in the US due to the Covid-19 pandemic. The licence also authorises the export of related educational software. It is effective until 1 September 2021. See FAQ 853 for further details.


(Soure: Kelley Drye, 30 Oct 2020)
* Principal Author: Robert Slack, Esq., 1-202- 342-8622, Kelley Drye
Yesterday, the Office of Foreign Assets Control (OFAC) issued General License M, authorizing U.S. academic institutions to export certain online learning services and software to Iranian students to facilitate remote learning during the COVID-19 pandemic.  Students that are in Iran, or are ordinarily resident in Iran, are eligible to receive services under the general license if they qualify for an F (student) or M (non-academic student) non-immigrant U.S. visa classification, have a U.S. visa, and are located outside the United States due to the pandemic.

OFAC also issued a new FAQ clarifying OFAC policy on the types of remote learning services and software that are authorized pursuant to other Iran general licenses.  In the FAQ, OFAC indicates that General License G authorizes U.S. academic institutions to export services and related software that allow Iranian students to sign up for, and participate in, online undergraduate courses.  OFAC also indicates that Section 560.540 of the Iranian Transactions and Sanctions Regulations and General License D-1 generally authorize exports of video conferencing software and educational technology software that allow students to view course materials, complete assignments, receive grades, participate in discussions and other remote learning activities, because those services are “incidental to the personal exchange of communications over the internet.”  OFAC will prioritize the review of specific license requests for online learning services involving Iranian students that fall outside the scope of these general licenses.

Universities and technology companies using these licenses will need to pay close attention to the specific terms of each license in order to ensure compliance.  For example, General License M does not authorize the export of software that is listed on the Export Administration Regulations Commerce Control List. General License M currently expires on September 1, 2021.

(Source: Bloomberg Law, 30 Oct 2020) [Excerpts]
* Principal Author: Doreen M. Edelman, Esq., 1-202-753-3808, Lowenstein Sandler
U.S. government agencies are increasing scrutiny of the supply chain of companies developing hypersonic technologies used in military aircraft and missiles amid escalating tensions with China and Russia. … 
National security experts know that countries hostile to U.S. interests are taking advantage of our country’s current health and economic challenges by finding ways to invest in critical technologies, including hypersonics, which travel at more than five times the speed of sound.
U.S. companies engaged throughout the hypersonic technology supply chain must be vigilant about both their supply chain vulnerabilities and beneficial ownership of foreign investors to prepare for, or mitigate, U.S. government scrutiny, including review and potential intervention by the Committee on Foreign Investment in the U.S. (CFIUS).
As a critical technology vital to future warfighting capabilities, nation-states are aggressively pursuing hypersonics. Both China and Russia have been touting their growing capabilities in hypersonic technology, which is the science behind missiles that travel in excess of Mach 5 and can quickly change trajectory mid-flight.
The U.S. government worries that these countries may take advantage of “a lull in U.S. modernization” to improve their capabilities in this area, perhaps even through surreptitious means.
The increase in demand for hypersonic technology components does not come only from abroad. According to a May article in Design and Development Today, as recently as 2017 the Pentagon spent about $800 million on hypersonic weapon programs, rising to $3.4 billion in 2020. The administration’s 2021 budget request seeks $3.6 billion.
While most investment in hypersonic technology is defense-related, venture capital investment has exceeded $300 million over the last five years, including in support of commercial ventures.
Despite market demand, smaller suppliers of defense technology are struggling to keep up as their supply chains are affected by the Covid-19 pandemic and an increasingly tense U.S.-China trade war. This issue has been especially acute for hypersonics: Many of the companies involved in this technology tend to be smaller and could be more vulnerable to the economic effects of the pandemic and trade restrictions.
Agencies Are Increasing Supply Chain Scrutiny
The effects of the pandemic and trade conflict with China come on the heels of increasing U.S. government restrictions on the use of Chinese products, based on concerns that China could infiltrate the U.S. defense industry by embedding its technology in U.S. defense equipment. As a result, the Defense Department is increasingly focused on the origin of components used in weapons systems.
Many defense contracting supply chains are global and have deep roots in China. Pentagon officials have declared the need to make sure that foreign nations cannot cut off U.S. companies’ access to vital materials or buy their way into the defense-industrial base.
As part of this effort, agencies have increased their scrutiny of the supply chain to include even small companies developing components that could be incorporated into hypersonic technologies. In February, the then-acting secretary of the Navy underscored the supply chain’s vulnerabilities, stating that it’s “not so much the top tier suppliers, but it’s the second and third tier suppliers that have a lot of vulnerabilities that we’ve discovered.”
recent analysis of the hypersonic supply chain noted that “the risk of supply chain infiltration by foreign adversaries to hypersonic technology exists at deeper levels than are typically visible” by the Defense Department and prime contractors.
To address these vulnerabilities, the Defense Department has implemented rules restricting the use of some Chinese equipment and is considering increased cybersecurity requirements. Pending legislation incentivizes companies to source materials domestically.
Be Proactive to Mitigate Foreign Investment Concerns
On the foreign investment side, CFIUS has long scrutinized foreign acquisitions of U.S. companies that present national security concerns. In February, new regulations expanded CFIUS authority to cover non-controlling transactions involving foreign investors. Parties are now required to submit a declaration to CFIUS for review of a transaction if the U.S. business must obtain a U.S. regulatory authorization to export its critical technology to the foreign party involved in the transaction.
U.S. companies involved in hypersonic-related technology must be proactive about mitigating potential CFIUS concerns. Manufacturers and suppliers should seek counsel to conduct proper due diligence and CFIUS analysis ahead of any potential foreign investment transactions, especially those involving Chinese and Russian investment.
Affected companies and investors should consider filing a notice with CFIUS to obtain a safe harbor ruling that CFIUS does not object to the transaction. Parties choosing not to file for review remain vulnerable to unilateral CFIUS review, as there is no limit on when CFIUS can review a transaction.
Obtaining a safe harbor ensures that CFIUS will not later review the filing and impose penalties; force the foreign party to divest from the U.S. business; or require the parties to adhere to conditions mitigating specific national security concerns.
Due to disruptions caused by the pandemic, trade conflicts, and growing U.S. national security restrictions, companies involved in hypersonic technology should examine whether vulnerabilities exist within their supply chains, and, if so, whether alternatives are available.
Companies should also perform thorough due diligence on all foreign investment, including identification of beneficial ownership, and determine whether the company’s technology requires an export license.
Be sure that your counsel can:

– Identify any national security implications;

– Conduct export classification reviews;

– Raise alternative supply chain opportunities;

– Explore applicable exemptions; and

– Craft deal documents to position your company to successfully complete transactions while facing CFIUS and other national security obligations.



MS_a112. Monday List of Ex/Im Job Openings: 65 Jobs Available – 20 New Job Openings This Week

* AAR WASS; Rockledge, FL; Trade Compliance Specialist; Job ID: 11636
* Bombardier; Wichita, KS; Trade Compliance Specialist; Job ID: WIC04705
* CargoLux; Frankfurt, Germany; Agent Customer Service FRA; Job ID: 769
* Cobham; Richmond, VA; Export Compliance Manager; Job ID: 2020-4214
* DFDS; Immingham, UK; Trainee Customs Clearance Clerk
* FMC Corporation; Philadelphia, PA; Corporate Trade Compliance Specialist
* Horiba; Northampton, UK; Import Export Assistant
* HRL Laboratories; Malibu, CA; Contractor Program Security Officer
* Infineon; El Segundo, CA; Production Management Specialist; Job ID: 306406
* L3Harris; Rochester, NY; Procurement Associate; Job ID: SAS20201507-47920
* Leonardo; Philadelphia, PA; Import Export Manager; Contact Details: gosia.still@leonardocompany.us
* MD Helicopters; Mesa, AZ; Program Manager
* SAAB; Järfälla, Sweden; Export Control Manager
* Safran;Huntington beach, CA; Import/Export Trade Compliance Manager
* Thyssenkrupp; Troy, MI; Trade Compliance Specialist
* Tulane University; New Orleans, LA; Export Control Compliance Officer
* Varex; Salt Lake City, UT; Export Compliance Analyst; Job ID: R0002131


Click here for the full list.   

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(Source: ECS)
*What:  ECS ITAR/EAR Webinar Series
*When:  Webinars Each Week Through December 2020
*Where:  Your Computer
*Sponsor: Export Compliance Solutions & Consulting (ECS)
*ECS Speakers:  Suzanne Palmer
*Register: here for individual webinars, here for a 4-pack, here for an 8-pack, or write to phyllis@exportcompliancesolutions.com or call 1-866-238-4018

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U.S. Export Controls: ITAR & EAR from a non-U.S. Perspective (Tuesday, 1 Dec 2020)
Presenters: Jim Bartlett & Marco Crombach
Register or find more information here.

The ABC of Foreign Military Sales (FMS) (Thursday, 3 Dec 2020)
Register or find more information here.
Presenters: Mike Farrell & Jim Bartlett

* Register for both and take advantage of our discounted price!

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EN_a115. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Daniel Boone (2 Nov 1734 – 26 Sep 1820; was an American pioneer, explorer, woodsman, and frontiersman whose frontier exploits made him one of the first folk heroes of the United States. Boone is most famous for his exploration and settlement of what is now Kentucky.)
  – “All you need for happiness is a good gun, a good horse, and a good wife.” 
* Marie Antoinette (Maria Antonia Josepha Johanna; 2 Nov 1755 – 16 Oct 1793; was the last queen of France before the French Revolution. In 1774, her husband ascended the throne as Louis XVI and she became queen. Louis XVI was executed by guillotine in 1793. Two days later she was convicted by the Revolutionary Tribunal of high treason and executed, also by guillotine, on the Place de la Révolution.)
  – “There is nothing new except what has been forgotten.”
Monday is pun day.
* The coin machine at the U.S. Mint’s factory just suddenly stopped working. It just doesn’t make any cents!
* I have a few jokes about unemployed people, but none of them work. 
* The guy who invented the door knocker got a no-bell prize. 
* I don’t suffer from insanity. I enjoy every minute of it. 
* He who laughs last thinks slowest.
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The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  The latest amendments are listed below.
Latest Update 


5 Apr 2019: 84 FR 13499:

Civil Monetary Penalty Adjustments for Inflation. 

9 Oct 2020: 
85 FR 64014:  Revisions to the Unverified List (UVL)

DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.   24 Apr 2018: 83 FR 17749: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates.  

: DoD 5220.22-M. Implemented by Dep’t of Defense. 

18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary here.)  
DOE ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES: 10 CFR Part 810.    23 Feb 2015: 80 FR 9359: comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. 

15 Nov 2017, 82 FR 52823: miscellaneous corrections include correcting references, an address and a misspelling.

DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War. 
14 Mar 2019: 84 FR 9239: Bump-Stock-Type Devices.


28 Sep 2020: 

85 FR 60874: Temporary Amendment for Republic of Cyprus. The latest edition of the BITAR is 28 Sep 2020. 

DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
International Criminal Court-Related Sanctions Regulations.

1 Jan 2019: 19 USC 1202 Annex.
  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

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