License Issues for Distributors of Explosive Materials

We often receive questions from distributors about their obligations to comply with regulations beyond those of the FAA or industry standards specifically addressing the aerospace distribution community. In many of these cases, distributors may not be perfectly clear on how to comply with certain regulations, or that those regulations even exist. Some examples of these scenarios include export licensing requirements, export reporting requirements, and hazmat or dangerous goods shipping requirements.

Recently, we have received a number of questions regarding regulatory requirements surrounding explosives regulated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).  Some people are not even aware that regulated explosive materials are present in a variety of aircraft parts or that they may be handling these parts or that the ATF imposes license and permit requirements on a wide range of people who handle such explosives. It is therefore important to understand what ATF licensing obligations apply when distributors are handling explosive materials.

In general, anyone who imports, manufactures, or deals in explosive materials must obtain a license from the ATF. Because “dealing” under the regulation means distributing explosive materials at wholesale or retail the license requirement casts an extremely wide net that encompasses any type of sales model.

The ATF explosives license is obtained by applying to the ATF using forms ATF F 5400.13, ATF F 5400.28 to identify employees authorized to possess explosive materials as applicable, and submitting the appropriate fee. Each license is valid for three years.

So where do regulated explosives appear in aircraft parts? Frequently explosives will appear in safety apparatus.  Fire suppression systems may contain explosive actuators (or “squibs”); similarly, emergency escape systems like door slides may also contain explosive squibs. Other articles that may contain explosives include the flares or other signaling devices found in survival kits. These explosives may be present in certain assemblies and components, so it is important to identify and ship them properly once they have been identified.

Although regulated explosive materials generally required the distributor to have a license in order to deal in those products, certain aviation articles may be exempted from the regulations. These exemptions are typically sought by the manufacturer of a particular article and when granted are specific to the article by part number. One common example of articles often subject to exemption is signaling devices.

Unfortunately, the ATF does not offer a searchable database of issued exemptions, but instead recommend that manufacturers provide a copy of the exemption with their exempted products. As a matter of practice, however, this is not always done, whether because the manufacturer is unaware that they are permitted to do provide the exemption, are unaware that the exemption follows the product, or even possibly for competitive reasons.  The net result is that some distributors may be handling exempt materials as though they were subject to the ATF licensing requirements. When dealing with exempt materials it is important to remember that it is the article itself that is exempted, and the exemption is not limited only to the manufacturer, so everyone can take advantage of the product’s exemption.

Finally, it is important to remember that the ATF licensing regime is separate from DOT hazmat shipping regulations.  An explosive article can be exempt from the ATF licensing provisions but still be regulated as a class one explosive for the purposes of hazmat shipping. It is always necessary to ensure compliance to each applicable regulatory regime, and that separate regulatory regimes are not necessarily consistent.

Overlapping regulatory regimes—ATF, DOT, FAA, BIS, DDTC, OFAC—can become quite confusing.  When in doubt about your licensing and compliance regulations always remember to consult an attorney who can help you make sense of these conflicting regimes and develop systems to help your business ensure ongoing compliance.

If you have questions about your compliance obligations be sure to visit us while you are at the ASA conference in Las Vegas, June 26-28!

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