When a license is denied or revoked

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1. Required denials and discretionary ones

Under the International Traffic in Arms Regulations (ITAR), licenses and approvals must be denied or revoked whenever a federal statute requires it (22 CFR 120.18(a)). Beyond that, any application may be disapproved, and any license, approval or exemption may be revoked, suspended or amended, without prior notice, in nine kinds of case. The power reaches applications, licenses, other approvals and exemptions alike (22 CFR 120.18(a)). The State Department’s wider authority to act on approvals is covered in authorizations and who may hold them.

2. Policy grounds

The first ground is policy (22 CFR 120.18(a)(1)). The State Department may act whenever it considers that doing so furthers world peace, national security or American foreign policy, or is otherwise advisable. The regulations explain why this is hard to challenge. The administration of the Arms Export Control Act falls within the military and foreign affairs exclusion of the Administrative Procedure Act, which expressly exempts it from various provisions of that Act (22 CFR 120.20). Because the decisions needed to carry out the Arms Export Control Act are highly discretionary, they are excluded from review under the Administrative Procedure Act.

3. Violations and criminal cases

Several grounds turn on wrongdoing. The State Department may act if it believes a party to the export, or anyone with a significant interest in it, has broken 22 U.S.C. 2778, the regulations or an export authorization’s terms (22 CFR 120.18(a)(2)). That includes the terms of a manufacturing license or technical assistance agreement, and authorizations under the Commerce Department’s Export Administration Regulations in 15 CFR parts 730 through 774. It may act if an applicant is the subject of a criminal complaint, other charge or indictment under the statutes listed in section 120.6 (22 CFR 120.18(a)(3)). It may also act if an applicant or any party has been convicted under them (22 CFR 120.18(a)(4)).

4. Ineligibility and sanctions

Other grounds concern status. An applicant may be refused if it cannot contract with, or receive import authorizations from, any federal agency (22 CFR 120.18(a)(5)). The same applies if the applicant, any party, any source or manufacturer, or anyone with a significant interest has been debarred, suspended or otherwise made ineligible for export authorizations by any agency (22 CFR 120.18(a)(6)). The regulation’s examples are Commerce Department orders denying export privileges under 15 CFR part 766, and State Department actions under parts 127 or 128. How debarment works is covered in penalties, debarment and the presumption of denial.

Sanctions under other laws also count (22 CFR 120.18(a)(8)). The regulation names the missile technology controls title of the 1991 defense authorization act, the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991, and the Iran-Iraq Arms Non-Proliferation Act of 1992.

5. Missing information and end-use checks

An application may be refused if it leaves out information or documents that the regulations or the relevant form require. The same applies if the applicant has failed to give a required notice (22 CFR 120.18(a)(7)). The last ground is an unfavorable end-use check on anyone involved in the transaction (22 CFR 120.18(a)(9)).

End-use checks have a statutory basis. Section 40A of the Arms Export Control Act, at 22 U.S.C. 2785, requires a State Department monitoring program for articles and services sold, leased or exported under its licenses or approvals. Its stated aim is better accountability (22 CFR 120.17(a)). All exports of articles, technical data and services, and all brokering, under the ITAR are subject to end-use monitoring through the Blue Lantern program (22 CFR 120.17(b)). End-use monitoring of government sales is covered in what end use monitoring is.

6. Notice and reconsideration

The Directorate of Defense Trade Controls (DDTC) tells applicants, licensees or other appropriate American persons of any such action (22 CFR 120.18(b)). It states the reasons as specifically as security and foreign policy considerations allow. A person informed of an adverse decision may ask in writing for reconsideration within 30 days (22 CFR 120.18(c)). The person then has a chance to present more information, and DDTC reviews the case.

Repeated omissions are treated more strictly (22 CFR 120.18(d)). Applications denied for repeatedly failing to provide required information or documents will normally not be reconsidered in the 30 days after denial. After that, they are reconsidered only once a final decision has been made on whether to impose an administrative penalty. Any request must come with a letter explaining what has been done to fix the failure and ensure compliance.

7. What happens to a revoked license

Section 123.21 sends unused, expired, suspended and revoked licenses to the return provisions of section 123.22 (22 CFR 123.21(b)). Under those provisions, revocation by DDTC makes a license count as expired (22 CFR 123.22(c)(4)). An electronically issued license that customs has decremented electronically stays with the applicant, who holds a copy as section 122.5 requires (22 CFR 123.22(c)(1)). Those rules are covered in filing export information for ITAR shipments.

8. Exceptions in hard cases

The regulations also contain a general power to make exceptions (22 CFR 126.3). Where hardship is exceptional or undue, or the government’s interest otherwise calls for it, the Deputy Assistant Secretary of State for Defense Trade Controls may depart from the regulations. The same official, or a designee, issues licenses under the definitions in section 120.57 (22 CFR 120.57(a)).

9. Reporting possible violations

The regulations point to part 127 for the conduct that counts as a violation and the sanctions that may follow (22 CFR 120.19(a)). They also strongly encourage anyone who believes they may have broken the Act, the regulations or the terms of an authorization to disclose it to DDTC (22 CFR 120.19(b)). How that works is covered in the voluntary disclosure policy.

Key terms

Revocation	Withdrawal of a license or approval, possible without prior notice.
Suspension	A temporary stop on a license, approval or exemption.
Party to the export	The applicant’s senior officers and directors, its forwarders, and any consignee or end user.
Blue Lantern	The State Department’s end-use monitoring program for licensed exports.
Reconsideration	A review of an adverse decision, requested in writing within 30 days.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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