OFAC Announces Travel Ban to Iran

Posted by at 3:22 pm on June 9, 2015
Category: Iran SanctionsOFAC

Imam Khomeini by Kaymar Adl [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/kamshots/515002010/ [cropped]Okay, yes, the headline is clickbait, but it’s also not too far from the truth. (Unlike typical clickbait — such as “Four Foods You Eat That Are Poisonous: Number 4 Will Really Surprise You” or “Twelve Really Famous Movie Stars With Really Bad Teeth” — which is largely untrue.) The basis for this (slightly) sensationalized headline is something an official from the Office of Foreign Assets Control (“OFAC”) said yesterday at the meeting here in DC of the Association of University Export Control Officers.

During a Q&A period, an audience member posed three scenarios and asked which ones, if any, would require an OFAC license. Scenario 1: a faculty member goes to Tehran to attend an open conference and presents a paper in collaboration with Iranian professors that is intended to be published. Scenario 2: a faculty member goes to Tehran to attend the same open conference and reads an already published paper and answers no questions from the audience. Scenario 3: a faculty member goes to Tehran to attend the conference and does nothing but listen.

Easy, said the OFAC representative. (And the answer will really surprise you.) “All three require a license. Merely attending the conference is the provision of a service in Iran.”

By that logic, of course, all travel to Iran is banned. If you go to Iran to see your relatives, you’re providing a service in Iran to your relatives. If you go to Iran to write a story on contemporary Iranian youth, you’re providing a service to contemporary youth in Iran. If you go to Iran to ski, you’re providing a service to Iranian ski resorts. If you go as a tourist and give a fellow tourist directions, you’re providing a service in Iran to your fellow tourist.

Okay, I’m being somewhat unfair. Not all travel is banned to Iran. If you are a penniless, uneducated vagrant unable to speak, hear or otherwise communicate, you can go to Iran without a license. Bon voyage.

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Once Upon a Time in a Public Domain Far, Far Away

Posted by at 9:19 pm on June 4, 2015
Category: DDTCTechnical Data Export

England's Oldest Working Catapult by Thoms Euler [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/thomaseuler/3656736595/ [cropped]Once upon a time, and long before the Internet, in a distant and dank corner of Washington, D.C., there lived an obscure agency called the Directorate of Defense Trade Controls (“DDTC”), which, among other things, kept watch, like a jealous dragon, over certain types of information that it believed it was destined to protect, information such as how to build a catapult or the best timber to use for a battering ram or the deadliest method for swinging a mace at an enemy. And it sent out a decree, far and wide, that anyone who should dare to disseminate such information without its permission, except in locked rooms with less than three other citizens present between the hours of midnight and dawn, would be sentenced to immediate gibbeting. Fortunately, there was no Internet, so few, in those days, were seen hanging in cages in Foggy Bottom.

Of course, this little fairy tale is a preface to the recent release by DDTC of proposed revised definitions of, among other things, the term “public domain” which, as you might imagine, does not mean to DDTC what it means to anyone else who speaks English. The proposed new definition seems to have been written by people who have heard of the Internet only as something the kids use to tweet things and post selfies.

The importance of the definition of “public domain” is that information about defense articles (like muskets and missiles) is not subject to export controls if it is in the “public domain” as defined in section 120.11 of the International Traffic in Arms Regulations (the “ITAR”). DDTC has previously taken the position that pictures on the Internet were not “public domain” because section 120.11 does not specifically mention the Internet. (Never mind, of course, that the definition includes information available “[a]t libraries open to the public” and that every single library in the United States, save apparently for the one at DDTC, has Internet terminals.)

The newly proposed rules, coming more than twenty years after the appearance of the World Wide Web, finally (and grudgingly) acknowledges the existence of the Internet.  The new definition would define “public domain” to include information made available to the public through

Public dissemination (i.e.,unlimited distribution) in any form (e.g., not necessarily in published form), including posting on the Internet on sites available to the public;

Before you get to excited, however, there’s this: an exception that eats up the entire definition from any practical point of view.

(b) Technical data or software, whether or not developed with government funding, is not in the public domain if it has been made available to the public without authorization from:

(1) The Directorate of Defense Trade Controls;

(2) The Department of Defense’s Office of Security Review;

(3) The relevant U.S. government contracting entity with authority to allow the technical data or software to be made available to the public; or

(4) Another U.S. government official with authority to allow the technical data or software to be made available to the public.

So, you see a picture of a fighter jet on the Internet. Is it “public domain” or not?  Will you get in trouble for re-posting it? Well, you have no idea because you have no way of knowing whether any official falling in the four categories above has authorized it to be posted. You probably can’t even tell who falls in category (3) or (4). In fact, nobody can probably tell which government officials fall in those categories.

DDTC attempts to address this issue with a note saying that if somebody else put the information on the Internet you are not breaking the law unless you “know” that they did so without authority.  But does “know” mean actual knowledge or does it slide, like it often does, into not engaging in due diligence to determine that it was authorized?  Your guess is as good as mine.   So use the Internet at your own risk, unless you’re just posting selfies on Instagram.

For companies in the defense industry, this proposed definition is equally problematic if they use the Internet at all.  Every time they post information on their own products, thinking that the information they are posting is already in the “public domain,” they need to ask permission from DDTC if they haven’t already done so.  And, of course, since there are no time limits in the proposed definition, this issue would exist for everything the company has ever posted on the Internet.

Dark times for the Internet ahead when (and if, as is likely) this new definition goes into effect.


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ITAR? What’s An ITAR? Isn’t That a News Bureau in Russia or Something?

Posted by at 10:12 pm on June 2, 2015
Category: DDTCPart 129

Matthew VanDyke via https://www.facebook.com/vandyke.matthew/photos/pb.102993809826639.-2207520000.1433297042./653912191401462/?type=3&theater[Fair Use]
ABOVE: Matthew VanDyke

A guy named Matthew VanDyke announced this on Facebook:

I have been in ‪#‎Iraq‬ helping to raise and train a Christian army to fight ‪#‎ISIS‬. Sons of Liberty International (SOLI), my new company that provides free military consulting and training to local forces fighting terrorists and oppressive regimes, has been consulting and training the Nineveh Plain Protection Units (NPU) in Iraq. In December I took a US Army veteran with me to Iraq to open a covert training facility north of Mosul, and SOLI began training Christian fighters.

Oh, surely, you say, if you’re a regular reader of this blog, he must have a State Department license before he provides defense services in Iraq, right? No one would just go on Facebook and announce to the entire world that he’s training soldiers in Iraq without getting a license first, would they?

So, a reporter at Mother Jones asks VanDyke just that:

VanDyke told Mother Jones that initially “nobody was sanctioning it.” He added, “Part of the whole purpose of SOLI is to step in where governments had failed, so going and asking permission from the governments that have already failed is not particularly productive.”

Uh oh.

Later, after telling Mother Jones “repeatedly” that no one in the State Department had the slightest idea he was training soldiers in Iraq, VanDyke seems to have changed his story. According to Mother Jones:

He subsequently stated in an email that “Sons of Liberty International complied with US registration requirements prior to signing a contract with the Nineveh Plain Protection Units (NPU), as required by U.S. law.”

Well, there you have it, yet another undocumented benefit of registration: once registered with DDTC, you can provide military training in the foreign country of your choosing. (DISCLAIMER: Professional scofflaw on closed course. Do not try this on your own. Serious legal injury, including criminal prosecution, could result.)

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Last Second Reprieve For BEA Victims, Er, Filers

Posted by and at 5:51 pm on May 29, 2015
Category: Bureau of Economic Analysis

Brian Moyer via http://www.bea.gov/about/images/moyer-brian.png [Public Domain]
ABOVE: Dr. Brian Moyer,
BEA Director

We have previously reported on the impending deadline of May 29, 2015 for all U.S. individuals and entities with 10% or greater interest in any “foreign affiliate” to file Form BE-10 with the U.S. Bureau of Economic Analysis (“BEA”) – a deadline which caused no small amount of consternation among many who had no idea of their obligation to report or who realized that the BEA’s own estimate of the burden to complete this report was 144 hours per response. Many were scrambling to complete their report or file for an extension as the deadline neared.

With little fanfare, the following message appeared on the BEA BE-10 Form website sometime on May 28, 2015:

BEA Website Screen Grab

While no press release or Federal Register Notice accompanies this announcement, this blurb on the website amounts to a last-minute reprieve for all new filers of Form BE-10.  One can only imagine that BEA was inundated with extension requests, an outcome that would have been obvious to everyone but the BEA economists hunkered down in their cubicles and with little contact, apparently, with the outside world.

Those who have previously filed Forms BE-10, BE-11 or BE-577 are not off the hook for the May 29, 2015 filing deadline and must complete their report or file for an extension by the deadline.June 30 will arrive soon enough, and the amount of data and effort necessary to complete the Form BE-10 report should prompt those new filers given a brief respite to start working on this onerous task now rather than on June 29th.

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Are You A Natural Person or an Unnatural One?

Posted by at 9:43 pm on May 27, 2015
Category: General

Harry S. Truman Building, United States Department of State, Washington, D.C. by Ken Lund [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/kenlund/14299552757/DDTC issued proposed rules yesterday dealing, mostly, with the conundrum of what to do with U.S. citizens who work, either in the U.S. or abroad, for foreign defense contractors. Since most normal people (viz., natural persons) do not pore over the ITAR in their spare time, it often comes as a surprise to them, particularly if they are working for foreign defense contractors who don’t care much about the ITAR, that they can go to jail for undertaking such employment in certain circumstances, unless they register with, and get advance permission from, the State Department’s Directorate of Defense Trade Controls.

The proposed rules ease up on this restriction, at least for U.S. citizens who work for foreign defense contractors in a “NATO or EU country, Australia, Japan, New Zealand, and/or Switzerland.” The end-users for the defense articles involved must be in one of those countries, and no U.S. defense articles can be involved. Oh, and no SME either, meaning the foreign defense article cannot be defined on the United States Munitions List as “Significant Military Equipment,” which includes not just obvious things like bombers and missiles but also less obvious things like certain lasers.

Before you run off and email your job application to BAE, there’s one more thing. Although U.S. persons in such situations do not need prior DDTC approval for such employment, they still need to register with DDTC. There is an exemption for people working for DDTC-registered companies but, obviously, this may not be the case for the scenario of a U.S. person working for a foreign defense company.

Two additional things should be pointed out about the proposed rules: one is useful and the other is, frankly, rather hilarious. Let’s take the useful one first. As most readers will know, there has been a bewildering lack of clarity about which subsidiaries can be included on a registration statement, particularly inasmuch as section 122.2 allowed such inclusion for subsidiaries that were more than 50 percent owned by the registrant or were “otherwise controlled.” It’s always those “otherwises” that keep lawyers employed. The proposed rules add a note to say that “otherwise controlled” can be

rebuttably presumed to exist where there is ownership of 25 percent or more of the outstanding voting securities if no other person controls an equal or larger percentage.

Now for the somewhat hilarious one. In order to allow U.S. citizens to work for foreign defense contractors, but not to create a new exemption for U.S. companies in their dealings with these foreign companies, DDTC has decided that it needed to say that this exemption is restricted to “natural persons.” And, because “natural person” seemed to them apparently to be an incomprehensible and esoteric term, the new rules actually define natural person. It means, in case you were wondering, an “individual human being.” Of course, “human being” probably needs to be defined as well.  I, for one,  know plenty of people who are not really “human beings.”  For example, New York Yankees fans aren’t human beings. They’re animals, pure and simple.

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