UPDATE 9/1/2016:

The Bureau of Alcohol, Tobacco, Firearms and Explosives has walked back an announcement it now viewed wetted nitrocellulose as a high explosive and will work with the firearms industry on clarification.

From Ammoland:

ATF’s sudden and unexpected change in policy on wetted nitrocellulose will likely have a significant impact on industry’s ability to deliver products to the military and commercial markets. Industry members have relied on the exemption for wetted nitrocellulose for many years and are aware of no accidental detonations or diversion of this product into illicit channels. Consequently, it is unclear why ATF believed it necessary to change its policy and, more importantly, why ATF announced the change in a newsletter article with no advance notice to industry.