House Committee on Small Business: Dear Under Secretary Estevez, December 5, 2023

Summary

A letter dated December 5, 2023 from House Committee on Small Business Chairman Roger Williams and committee members to Alan F. Estevez, Under Secretary of Commerce for Industry and Security. The letter questions the Bureau of Industry and Security's 90-day pause on issuing commercial firearm export licenses, announced in a Frequently Asked Questions document dated Oct. 27, 2023. It argues that the announcement does not adequately explain the basis for the pause, may require a rulemaking under the Administrative Procedure Act, and does not consider the impact on small entities under the Regulatory Flexibility Act. It requests five items of information by December 19, 2023, including estimates of affected applications, costs to small manufacturers and the constitutional basis for the pause.

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                                            December 5, 2023

The Honorable Alan F. Estevez
Under Secretary of Commerce for Industry and Security
U.S. Department of Commerce
4th and Constitution Avenue, NW, Room 3876
Washington, DC 20230

Dear Under Secretary Estevez:

        The House Committee on Small Business writes to inquire about the Bureau of Industry
and Security’s (BIS), recent 90-day pause on issuing commercial firearm export licenses.1 This
prohibition places a substantial burden on those businesses and individuals that rely on exporting
as a source of income and for manufacturers of weapons and ammunition. It appears that the
Department of Commerce and BIS may not have properly considered the impact of this decision
on American businesses, especially smaller entities, nor sufficiently rationalized its decision to
comply with the Constitution and its principles.

        The Committee is unsure of how to properly characterize the document the BIS’s made
its announcement with, as it is listed as a Frequently Asked Question (FAQ) document.2 A FAQ
document hardly seems like the proper venue for announcing a restriction that touches and
concerns a fundamental right enumerated in the Bill of Rights.3 Further, this announcement does
not adequately explain the basis for why such a prohibition is necessary.4 The FAQ document’s
only rationale for this action is that it “will enable the Department to more effectively assess and
mitigate risk of firearms being diverted to entities, or activities that promote regional instability,
violate human rights, or fuel criminal activities.”5 While these reasons could potentially be
sufficient if fully explained, BIS has not articulated why these things are of concern, to what
extent an issue exists, nor does the BIS tie this action, either directly or indirectly, to any ongoing
foreign policy issues. Additionally, in this order the BIS did not prohibit licensure for the export



1
  BUREAU OF INDUSTRY AND STATISTICS, FIREARMS PAUSE & REVIEW: FREQUENTLY ASKED QUESTIONS (Oct. 27,
2023)(For the purposes of this letter, the terms pause, ban, and moratorium will be used interchangeably).
2
  BUREAU OF INDUSTRY AND STATISTICS, FIREARMS PAUSE & REVIEW: FREQUENTLY ASKED QUESTIONS (Oct. 27,
2023) (The Committee also located document from the International Trade Administration which more closely
resembled an announcement document but contained even fewer details).
3
  U.S. Const. amend. II.
4
  BUREAU OF INDUSTRY AND STATISTICS, FIREARMS PAUSE & REVIEW: FREQUENTLY ASKED QUESTIONS (Oct. 27,
2023).
5
  Id.
The Honorable Alan F. Estevez
December 5, 2023
Page 2 of 3

of Torture Devices (ECCN 0A983).6 If the BIS’s order is based on the fear of human rights
abuses, this seems a more obvious place to start.

        The BIS’s actions, are not rooted in a delegation from Congress as was the case in United
States v. Curtiss-Wright Export Corp., and the document contains far too little information to
support a claim of unilateral executive authority.7 What’s more, this FAQ document borders on
carrying the force of law, meaning it may require an actual rulemaking to effectuate lawfully
under the Administrative Procedure Act. For example, in General Electric Company v. E.P.A.,
the D.C. Circuit found that a guidance document issued by the Environmental Protection Agency
(EPA), which outlined when and how it would accept applications for plans to conduct certain
types of waste disposal, carried the force of law, and required a rulemaking.8 Rulemakings which
have a significant impact on a substantial number of small entities are required to comply with
the Regulatory Flexibility Act, and explain the rules impact on small entities.9

        It is clear that this pause will have negative impacts on small entities, which this FAQ
document does not, in any way, consider. While this FAQ document is not itself a rule,
notwithstanding whether this action requires a rulemaking, it is certain to have economic effects.
These effects will be amplified for small businesses, who are less financially insulated from
changes in the economy; especially when those changes may upend their business for 90 days.
Additionally, this “pause” serves as an outright ban on new, potentially small exporters entering
the market. Additionally, the FAQ document lacks important details and is difficult to find on the
BIS’s or Department of Commerce’s website. It is unclear how the BIS anticipates businesses,
especially smaller businesses, would even understand that this moratorium has been put in place,
let alone understand how to comply.

        It is important for agencies to examine small business interests—which make up 99.9
percent of all businesses in the United States. America’s small businesses deserve to have their
voices heard and considered. We therefore request the following information as soon as possible
but no later than December 19, 2023:

    1. An explanation for why the BIS believes a Frequently Asked Question document is the
       best forum to announce a 90-day “pause” on the issuance of export licenses.

    2. An estimate on the number applications the BIS will not review during this moratorium,
       including a specific estimate for small entities.


6
  BUREAU OF INDUSTRY AND STATISTICS, FIREARMS PAUSE & REVIEW: FREQUENTLY ASKED QUESTIONS (Oct. 27,
2023) (The committee understands that pursuant to CCL Control § 742.11 there is a presumption licenses to export
torture devices will be denied absent sufficient reasoning. Still, torture devices were still not included in the 90-day
export license prohibition).
7
  United States v. Curtiss-Wright Export Corp., held that the President had substantial authority to restrict exports
based on the foreign policy powers inherent in Article II of the United States Constitution. However, the export
restrictions at issue in Curtis-Wright involved a power explicitly granted by Congress through a Joint Resolution,
and that the export restrictions at issue were taken for clearly stated reasons, that being the Chaco Wars.
8
  Gen. Elec. Co. v. EPA, 290 F.3d 377, 382 (D.C. Cir. 2002).
9
  See Generally The Regulatory Flexibility Act, 5 U.S.C. § 301-612.
The Honorable Alan F. Estevez
December 5, 2023
Page 3 of 3

      3. An estimation of the true cost to firearm, component, and ammunition manufactures of
         this rule, including a specific estimate for small firearm, component, and ammunition
         manufacturers.

      4. The average estimated lost profits for an export license applicant, whose application will
         be held for up to 90 days.

      5. An explanation of the constitutional basis and rationale used by the BIS to determine it
         had the authority to establish this prohibition.

       To schedule the delivery of your response or ask any related follow-up questions, please
contact the Committee on Small Business Majority Staff at (202) 225-5821. The Committee on
Small Business has broad authority to investigate “problems of all types of small business” under
House Rule X. Thank you in advance for your cooperation with this inquiry.

                                          In God We Trust,



_________________________                              _________________________
Roger Williams                                         Tracey Mann
Chairman                                               Member
Committee on Small Business                            Committee on Small Business



________________________                               _________________________
Mark Alford                                            Eli Crane
Member                                                 Member
Subcommittee on Oversight,                             Committee on Small Business



_________________________
Aaron Bean
Member
Committee on Small Business



cc:      The Honorable Nydia M. Velasquez, Ranking Member
         Committee on Small Business


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