The D.C. District Court has dismissed a challenge to the Department of State’s application of the International Traffic Arms Regulations’ (ITAR) brokering provisions to attorneys. Notably, the challenge was filed by international trade law firm Matthew A. Goldstein, PLLC on its own behalf, regarding the application of the brokering provisions to legal services provided to its clients. Specifically, Goldstein sought a judgment declaring that any application of these ITAR provisions to its legal services would be unconstitutional, and requested that the court estop the State Department from applying the provisions to the firm.

A 1996 amendment to the Arms Export Control Act (AECA), which provides the statutory authority for the ITAR, states that every person (other than a U.S. government officer/employee) “who engages in the business of brokering activities with respect to the manufacture, export, import, or transfer” of a defense article or service must register with the government and obtain a license.  In 2013, the State Department clarified the ITAR to exclude “activities by an attorney that do not extend beyond the provision of legal advice to clients” from the definition of “brokering activities.”

However, Goldstein alleged that the ITAR’s brokering provisions did apply to certain other broadly defined activities by attorneys (e.g., introducing or recommending specific parties and structuring transactions), rendering unclear the scope of attorney activities considered to be subject to the provisions. In 2013, Goldstein filed an advisory opinion request with the State Department seeking further guidance. Finding the response insufficient, Goldstein filed suit, alleging in part that State’s position that the ITAR brokering provisions apply to certain legal services offered by attorneys, coupled with the agency’s alleged failure to confirm whether the provisions apply to a list of specific activities by attorneys, caused Goldstein great and irreparable harm. Part of this harm resulted from the conflict between the brokering provisions’ reporting requirements and ethical rules requiring the protection of attorney-client confidentiality.

On January 26, finding that Goldstein lacked standing and that the case was not yet ripe, the court granted a motion to dismiss the case.  The court found that Goldstein failed to demonstrate an injury in fact, as it did not show that it has, or will, engage in any activities that would be considered “brokering activities” by State, and that the threat of enforcement was merely speculative. Even if it was required to comply with the brokering provisions, the court found, Goldstein did not show that it would be injured, as it did not specifically identify what type of information it would be required but unable to provide without violating ethical rules. The court suggested that Goldstein may have been able to simply “advise its client about the requirements of {the brokering provisions}, and seek informed consent before obtaining from its clients or providing to State any confidential information that might be necessary to comply with those requirements.”  For similar reasons, the court also concluded that plaintiff’s claims were not ripe for judicial review, and the case was dismissed.