In my last post I answered the question of whether or not an FFL is required if one is only manufacturing and selling AR-15 uppers.
Almost immediately I was asked a follow-up question about whether or not a person who is only manufacturing uppers (and therefore not subject to the requirement of holding an FFL) would still need to register with ITAR.
For those of you unfamiliar with ITAR, I have a detailed article on the registration requirements of ITAR for those holding a manufacturing FFL. However, here we are talking about manufacturing uppers without holding an FFL of any kind.
To evaluate this unique question, we start with the regulation which governs the registration requirements or the International Traffic in Arms Regulations (ITAR) which were promulgated to implement the provisions of the Arms Export Control Act of 1976 (AECA). The relevant section (emphasis added) is as follows:
Any person who engages in the United States in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register with the Directorate of Defense Trade Controls. For the purpose of this subchapter, engaging in the business of manufacturing or exporting defense articles or furnishing defense services requires only one occasion of manufacturing or exporting a defense article or furnishing a defense service. Manufacturers who do not engage in exporting must nevertheless register.
As for what constitutes ‘defense articles’, 22 CFR 121.1 contains a complete listing under what is known as The United States Munitions List (USML). The relevant section is contained in Category I of the list in subsections g and h (with reference to subsection a):
(a) Nonautomatic and semi-automatic firearms to caliber .50 inclusive (12.7 mm).
(g) Barrels, cylinders, receivers (frames) or complete breech mechanisms for the articles in paragraphs (a) through (d) of this category.
(h) Components, parts, accessories and attachments for the articles in paragraphs (a) through (g) of this category.
The short answer is that, despite not requiring an FFL, those seeking to manufacture uppers for the AR-15 platform are required to register for ITAR and pay the registration fee.
So … how bad is this fee? It’s pretty bad. If you are not engaged in exporting then you would be considered a ‘Tier 1’ registrant. Therefore you would only have to pay the lowest possible fee.
A set fee of $2,250 per year is required for new registrants or registrants for whom the Directorate of Defense Trade Controls has not reviewed, adjudicated or issued a response to any applications during a 12-month period ending 90 days prior to expiration of the current registration.
I understand that this registration requirement imposes a significant barrier to entry into the firearms industry. However, until we see federal action on the issue I will continue to educate my clients on the ITAR requirements.
Disclaimer: This information is presented for educational purposes only and does not give rise to an attorney-client relationship. Additionally, I am licensed to practice law in the Commonwealth of Virginia and this answer may not be appropriate for other states.