by Steven Pelak and Gwen Green
On October 23, 2015, Mozaffar Khazaee was sentenced to 8 years in prison and ordered to pay $50,000 in fines for violating the Arms Export Control Act, 22 U.S.C. § 2778 (the “AECA”), by attempting to transfer to Iran proprietary, trade secret and export controlled material relating to the U.S. Air Force’s F-35 Joint Strike Fighter (JSF) Program. The sentence comes almost eight months after Mr. Khazaee pled guilty in February 015 to one count of the unlawful export of technical data from the United States in violation of the AECA. To the surprise of many, the Government originally charged and indicted Mr. Khazaee solely with the federal offense of Interstate Transportation of Stolen Property (“ITSP”) rather than a violation of the AECA and the International Traffic in Arms Regulations (“ITAR”), even though the stolen information was apparently well marked as “technical data” controlled under the ITAR. The prosecution demonstrates the challenges and difficulties confronted by law enforcement in light of recent and ongoing deregulation of aspects of international commercial arms sales by the Obama Administration.
According to court documents, from approximately 2009 through late 2013, Mr. Khazaee offered to provide and did provide documents containing stolen export controlled defense technology to gain employment with state-controlled Iranian technical universities. In or about November 2013, Mr. Khazaee attempted to send a container of stolen material to Iran, including thousands of technical manuals, specification sheets, test results, technical drawings and data and other proprietary material relating to military jet engines and the U.S. Air Force’s F-35 JSF Program and the F-22 Raptor. Mr. Khazaee allegedly stole the materials from U.S. defense contractors where he had formerly worked, and many of the documents were prominently labeled as “Export-Controlled” and stamped with “ITAR-controlled” warnings.
by Gwen Green
On June 3, 2015, the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”) and the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) published proposed rules to amend the International Traffic in Arms Regulations (“ITAR”) and the Export Administration Regulations (“EAR”) to harmonize key definitions and terms between the two regulations. The proposed rules are a part of the continuing Export Control Reform (“ECR”) initiative to enhance U.S. national and economic security, facilitate compliance with export controls, and streamline the U.S. export control system.
Harmonization of Definitions Between ITAR and EAR
DDTC and BIS have identified a series of similar terms in the ITAR and the EAR that are defined differently and that warrant either harmonization or the creation of similar structures that would identify more unambiguously the differences in how similar concepts are treated under the two regulations. DDTC proposes to therefore revise the ITAR’s definitions of the terms “defense article,” “defense services,” “technical data,” “public domain,” “export,” and “reexport or retransfer,” and create definitions for the terms “required,” “technical data that arises during, or results from, fundamental research,” “release,” “retransfer,” and “activities that are not exports, reexports, or retransfers.” Likewise, BIS proposes amendments to the EAR regarding the definitions of the terms “technology,” “required,” “peculiarly responsible,” “proscribed person,” “published,” results of “fundamental research,” “export,” “reexport,” “release,” “transfer,” and “transfer (in-country).”
by Gwen Green
On May 5, 2015, the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”) and the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) concurrently published proposed rules to transfer certain less-sensitive items from Category XII of the U.S. Munitions List (“USML”), which currently controls fire control, range finder, optical and guidance and control equipment, to the Export Administration Regulations (“EAR”) Commerce Control List (“CCL”). The proposed rules are intended to create a “bright line” regarding control of these items between the USML and CCL.
The revised Category XII, with a few exceptions for “specially designed” parts, components, accessories, and attachments, would describe in more precise detail the specific parts, components, accessories, and attachments that still warrant control on the USML. Items formerly controlled under Category XII would largely be transferred to new and pre-existing “600 Series” Export Control Classification Numbers (“ECCNs”) on the CCL. New ECCNs 6A615, 6B615 and 6D615 would control military fire control, ranger finder, and optical equipment, and revised ECCN 7A611 and new ECCNs 7B611, 7D611 and 7E611 would include military optical and guidance equipment. The proposed rules would revise several existing ECCNs outside of the 600 Series, including 0A987, 2A984, and several 6Axxx and 7Axxx ECCNs, to add notes to the Related Controls paragraph or Items subparagraphs to reference corresponding Category XII control(s).