Amendment to the International Traffic in Arms Regulations: Exports and Temporary Imports Made to or on Behalf of a Department or Agency of the U.S. Government; Procedures for Obtaining State Department Authorization To Export Items Subject to the Export Administration Regulations; Revision to the Destination Control Statement; and Other Changes

AGENCY:

Department of State.

ACTION:

Proposed rule.

SUMMARY:

As part of the President's Export Control Reform (ECR) effort, the Department of State is proposing to amend the International Traffic in Arms Regulations (ITAR) to: clarify regulations pertaining to the export of items subject to the Export Administration Regulations (EAR); revise the licensing exemption for exports made to or on behalf of an agency of the U.S. government; revise the destination control statement in ITAR § 123.9 to harmonize the language with the EAR; and make several minor edits for clarity. The proposed revisions contained in this rule are part of the Department of State's retrospective plan under E.O. 13563.

DATES:

The Department of State will accept comments on this proposed rule until July 6, 2015.

ADDRESSES:

Interested parties may submit comments by one of the following methods:

• Email: DDTCPublicComments@state.gov with the subject line, “ITAR Amendment—To or on behalf of”;
• Internet: At www.regulations.gov,, search for this proposed rule by using this proposed rule's RIN (1400-AC88).

Comments received after that date will be considered if feasible, but consideration cannot be assured. Those submitting comments should not include any personally identifying information they do not desire to be made public or information for which a claim of confidentiality is asserted because those comments and/or transmittal emails will be made available for public inspection and copying after the close of the comment period via the Directorate of Defense Trade Controls Web site at www.pmddtc.state.gov. Parties who wish to comment anonymously may do so by submitting their comments via www.regulations.gov,, leaving the fields that would identify the commenter blank and including no identifying information in the comment itself. Comments submitted via www.regulations.gov are immediately available for public inspection.

FOR FURTHER INFORMATION CONTACT:

Mr. C. Edward Peartree, Director, Office of Defense Trade Controls Policy, Department of State, telephone (202) 663-2792; email DDTCPublicComments@state.gov. ATTN: ITAR Amendment—To or on behalf of. The Department of State's full retrospective plan can be accessed at http://www.state.gov/documents/organization/181028.pdf.

SUPPLEMENTARY INFORMATION:

The Department proposes to make the following revisions in this rule:

Items subject to the EAR: This proposed rule adds clarifying language to various provisions of the ITAR pertaining to the export of items subject to the EAR pursuant to a Department of State authorization, when such exports are made in conjunction with items subject to the ITAR. These revisions include guidance on the use of licensing exemptions for export of such items, as well as clarification that items subject to the EAR are not considered defense articles, even when exported under a license or other approval (to include exemptions, see § 120.20) issued by the Department of State.

Items exported to or on behalf of an agency of the U.S. government: This proposed rule revises the licensing exemption language in ITAR § 126.4 to clarify when exports may be made to or on behalf of an agency of the U.S. government without a license. Additionally, the scope of this exemption is expanded in that it will allow for permanent exports, rather than only temporary exports. The Department seeks comments from the public on whether the proposed revision adequately eliminates ambiguity as to when the exemption may be applied, and whether it creates any unintended compliance burden.

Revision to the Destination Control Statement: This proposed rule revises the destination control statement in ITAR § 123.9 to harmonize its language with the EAR. This change is being made to facilitate the President's Export Control Reform initiative, which has transferred thousands of formerly ITAR-controlled defense article parts and components, along with other items, to the Commerce Control List in the EAR under the jurisdiction of the Department of Commerce.

This change in jurisdiction for many parts and components, along with other items, for military systems has increased the incidence of exporters shipping articles subject to both the ITAR and the EAR in the same shipment. Both regulations have a mandatory destination control statement that must be on the export control documents for shipments that include items subject to both sets of regulations. This has caused confusion to exporters as to which statement to include on mixed shipments, or whether to include both. Harmonizing these statements will ease the regulatory burden on exporters.

Procedures for Obtaining State Department Authorization to Export Items Subject to the EAR: This proposed rule revises the ITAR in a number of places to clarify how parties may obtain authorization from the Department to export or retransfer items subject to the EAR. Section 120.5 is revised to clarify that items subject to the EAR may be authorized pursuant to an exemption with certain conditions. A new paragraph (d) is added to ITAR § 123.9 to clarify the requirements for retransferring items subject to the EAR pursuant to a letter of General Correspondence. Section 124.16 is revised to clarify that the special retransfer authorization of this section may be used for items subject to the EAR with certain conditions.

Other changes in this rule: The Department proposes to make a number of minor edits to the ITAR that will address erroneous or outdated reporting requirements. This rule would remove the requirement to provide seven paper copies for various export license requests in §§ 124.7, 124.12, 124.14, 125.2, 125.7 and 126.9, which has not been necessary for many years due to the use of electronic license submissions, change the identification of the agency responsible for permanent import authorizations in § 123.4 from the Department of the Treasury to Department of Justice, and impose the Code of Federal Regulations paragraph structure on § 124.8. Additionally, the Department proposes removing the pilot filing requirement found in § 123.13, given that it does not take into account the practices of modern airport operations and is no longer necessary.

Regulatory Analysis and Notices

Administrative Procedure Act

The Department of State is of the opinion that controlling the import and export of defense articles and services is a foreign affairs function of the United States government and that rules implementing this function are exempt from §§ 553 (rulemaking) and 554 (adjudications) of the Administrative Procedure Act (APA). Although the Department is of the opinion that this rule is exempt from the rulemaking provisions of the APA, the Department is publishing this rule with a 45-day provision for public comment and without prejudice to its determination that controlling the import and export of defense services is a foreign affairs function.

Regulatory Flexibility Act

Since the Department of State is of the opinion that this proposed rule is exempt from the provisions of 5 U.S.C. 553, there is no requirement for an analysis under the Regulatory Flexibility Act.

Unfunded Mandates Reform Act of 1995

This proposed rulemaking does not involve a mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

Small Business Regulatory Enforcement Fairness Act of 1996

The Department does not believe this rulemaking is a major rule as defined in 5 U.S.C. 804.

Executive Orders 12372 and 13132

This proposed rulemaking will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this proposed rulemaking does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this proposed rulemaking.

Executive Orders 12866 and 13563

Executive Orders 12866 and 13563 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributed impacts, and equity). These executive orders stress the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. These rules have been designated “significant regulatory actions,” although not economically significant, under Executive Order 12866. Accordingly, this proposed rule has been reviewed by the Office of Management and Budget (OMB).

Executive Order 12988

The Department of State has reviewed this proposed rulemaking in light of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

Executive Order 13175

The Department of State has determined that this proposed rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, the provisions of Executive Order 13175 do not apply to this proposed rulemaking.

Paperwork Reduction Act

This rule does not impose any new reporting or recordkeeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35. This rule removes provisions that previously required the applicant to provide seven additional copies for various export license requests. The Department believes that there will be little or no practical burden reduction since the use of electronic methods of filing has made the requirement for “seven copies” obsolete.

The following information collections are affected by this rulemaking:

1. Application/License for Permanent Export of Unclassified Defense Articles and Related Unclassified Technical Data, OMB Control No. 1405-0003;

2. Application/License for Temporary Import of Unclassified Defense Articles, OMB Control No. 1405-0013;

3. Application/License for the Permanent/Temporary Export or Temporary Import of Classified Defense Articles and Classified Technical Data, OMB Control No. 1405-0022;

4. Application/License for Temporary Export of Unclassified Defense Articles, OMB Control No. 1405-0023;

5. Application for Amendment to License for Export or Import of Classified or Unclassified Defense Articles and Related Technical Data OMB Control No. 1405-0092;

6. Request for Approval of Manufacturing License Agreements, Technical Assistance Agreements, and Other Agreements, OMB Control No. 1405-0093;

7. Request to Change End User, End Use and/or Destination of Hardware, OMB Control No. 1405-00173; and

8. Request for Advisory Opinion, OMB Control No. 1405-0174.

The Department is requesting public comment on its estimate that there will be little or no change in the burdens associated with these information collections as a result of this rulemaking.

Date: Comments will be accepted until July 21, 2015.

Addresses: Interested parties may submit comments within 60 days of the date of publication by one of the following methods:

• Email: DDTCPublicComments@state.gov, with the subject line “AC88 PRA Burden Reduction”;
• Internet: At www.regulations.gov;; please search for this proposed rule by using this proposed rule's RIN (1400-AC88) and indicate that you are commenting on the paperwork burden change in any (or all) of the eight information collections identified above.

List of Subjects

22 CFR Parts 120 and 125

• Arms and munitions
• Classified information
• Exports

22 CFR Part 123

• Arms and munitions
• Exports
• Reporting and recordkeeping requirements

22 CFR Part 124

• Arms and munitions
• Exports
• Technical assistance

22 CFR Part 126

• Arms and munitions
• Exports

Accordingly, for the reasons set forth above, Title 22, Chapter I, Subchapter M, parts 120, 123, 124, 125, and 126 are proposed to be amended as follows:

PART 120—PURPOSE AND DEFINITIONS

1. The authority citation for part 120 continues to read as follows:

Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; 22 U.S.C. 2651a; Pub. L. 105-261, 112 Stat. 1920; Pub. L. 111-266; Section 1261, Pub. L. 112-239; E.O. 13637, 78 FR 16129.

2. Section 120.5 is amended by revising the section heading and paragraph (b) to read as follows:

PART 123—LICENSES FOR THE EXPORT AND TEMPORARY IMPORT OF DEFENSE ARTICLES

3. The authority citation for part 123 continues to read as follows:

Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2753; 22 U.S.C. 2651a; 22 U.S.C. 2776; Pub. L. 105-261, 112 Stat. 1920; Sec. 1205(a), Pub. L. 107-228; Section 1261, Pub. L. 112-239; E.O. 13637, 78 FR 16129.

4. Section 123.4 is amended by revising paragraph (a)(4) to read as follows:

5. Section 123.9 is amended by revising paragraphs (b)(1) and (2), and adding paragraph (d) to read as follows:

6. Revise § 123.13 to read as follows:

PART 124—AGREEMENTS, OFF SHORE PROCUREMENT, AND OTHER DEFENSE SERVICES

7. The authority citation for part 124 continues to read as follows:

Authority: Sec. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2651a; 22 U.S.C. 2776; Pub. L. 105-261; Section 1261, Pub. L. 112-239; E.O. 13637, 78 FR 16129.

8. Section 124.7 is amended by designating the introductory text as paragraph (a), adding and reserving paragraph (b), and revising paragraph (a)(1) to read as follows:

9. Section 124.8 is amended by designating the introductory text as paragraph (a) and adding and reserving paragraph (b), as follows:

10. Section 124.12 is amended by revising the introductory text of paragraph (a) to read as follows:

11. Section 124.14 is amended by revising the introductory text of paragraph (e) to read as follows:

12. Section 124.16 is revised to read as follows:

PART 125—LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED DEFENSE ARTICLES

13. The authority citation for part 126 continues to read as follows:

Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778); 22 U.S.C. 2651a; E.O. 13637, 78 FR 16129.

14. Section 125.2 is amended by revising paragraph (a) to read as follows:

15. Section 125.7 is amended by revising paragraph (b) to read as follows:

PART 126—GENERAL POLICIES AND PROVISIONS

16. The authority citation for part 126 continues to read as follows:

Authority: Secs. 2, 38, 40, 42, and 71, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C. 2651a; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR, 1994 Comp., p. 899; Sec. 1225, Pub. L. 108-375; Sec. 7089, Pub. L. 111-117; Pub. L. 111-266; Section 7045, Pub. L. 112-74; Section 7046, Pub. L. 112-74; E.O. 13637, 78 FR 16129.

17. Section 126.4 is revised to read as follows:

18. Section 126.9 is amended by revising paragraph (a) to read as follows: