International Traffic in Arms Regulations: International Trade Data System, Reporting

AGENCY:

Department of State.

ACTION:

Final rule.

SUMMARY:

The Department of State amends the International Traffic in Arms Regulations (ITAR) to enable U.S. Customs and Border Protection (CBP) to implement the International Trade Data System (ITDS), which will allow businesses to electronically submit the data required to import or export cargo, as provided by Executive Order 13659 and the Security and Accountability for Every Port Act of 2006 (SAFE Port Act).

DATES:

This final rule is effective on December 31, 2016.

FOR FURTHER INFORMATION CONTACT:

Mr. C. Edward Peartree, Director, Office of Defense Trade Controls Policy, Department of State, telephone (202) 663-2792; email DDTCResponseTeam@state.gov. ATTN: International Trade Data System, reporting.

SUPPLEMENTARY INFORMATION:

The Directorate of Defense Trade Controls (DDTC) of the Department of State regulates the export and temporary import of defense-related goods and defense services under the Arms Export Control Act (AECA) and its implementing regulations, the International Traffic in Arms Regulations (ITAR). This rule is being issued to conform DDTC's regulations to ITDS, “an electronic information exchange capability, or `single window', through which businesses will transmit data required by participating agencies for the importation or exportation of cargo” (Executive Order 13659, Sec. 3, Feb. 19, 2014). Executive Order 13659 requires government-wide implementation of ITDS by December 31, 2016. Additionally, Section 405 of the Security and Accountability for Every Port Act of 2006 (SAFE Port Act) mandates agency participation in ITDS for all Federal agencies that have oversight of imports and exports. A consortium of 47 Federal agencies led by CBP are implementing ITDS.

ITDS represents a shift in the way that imports and exports are declared to CBP by importers and exporters engaged in international commerce. Traders will only need to create and submit a single set of data for each import or export, thus significantly reducing the paperwork and reporting burden currently experienced by importers and exporters. Beginning on December 31, 2016, traders will access the ITDS system via an integrated web portal hosted by CBP. Users may visit https://www.cbp.gov/trade/automated for more information on the single portal.

Through the CBP Partner Government Agency (PGA) program, DDTC promulgated a PGA Message Set that requires traders to enter data relevant to DDTC's jurisdiction. Beginning December 31, 2016, when declaring permanent or temporary exports and/or temporary imports of defense articles controlled by the U.S. Munitions List (USML), traders will input data relevant to DDTC in CBP's electronic system(s). CBP will transmit the relevant shipment details to DDTC via an electronic data exchange, eliminating the need for traders to notify DDTC separately.

This rule amends pertinent provisions throughout the ITAR to reflect this new submission mechanism and allow for successor systems to be put in place.

This rule will make the following changes to the ITAR (22 CFR parts 120-130):

Section 120.28—Listing of Forms Referred to in This Subchapter

Section 120.28 is revised to strike the reference to the Automated Export System and add, in its place, “U.S. Customs and Border Protection's electronic system(s)”.

Section 120.30—The Automated Export System (AES)

Section 120.30 is removed and reserved.

Section 123.4—Temporary Import License Exemptions

Section 123.4(d)(2) is revised to strike the reference to the Automated Export System (AES) and add, in its place, instructions to electronically file information with CBP.

Section 123.5—Temporary Export Licenses

Section 123.5(b) is revised to update certain reporting procedures and to clarify that license information will be submitted to CBP electronically.

Section 123.16—Exemptions of General Applicability

Sections 123.16(b)(4) and (5) are revised to clarify that certifications will be sent to CBP electronically and not via hard copy.

Section 123.17—Exports of Firearms, Ammunition, and Personal Protective Gear

All references to AES in § 123.17 are struck and, in their place, instructions to electronically file with CBP are inserted. Additionally, § 123.17(g)(2) and (h) are revised to update certain documentation procedures.

Section 123.22—Filing, Retention, and Return of Export Licenses and Filing of Export Information

Section 123.22 of the ITAR is revised by making certain grammatical changes and to clarify procedures for the electronic reporting of exports and temporary imports of defense articles, services, and technical data pursuant to a license or other approval. All references to AES in § 123.22 are struck and, in their place, instructions to electronically file with CBP are inserted.

Section 123.22(a) is revised to clarify electronic reporting procedures for exports. Paragraphs (a)(1) and (a)(2) are also revised for clarification of certain procedures.

Section 123.22(b)(2) is revised to clarify that emergency shipment data shall no longer be required to be sent directly to DDTC, but rather be electronically declared to CBP, which will make the data available to DDTC via an electronic data exchange.

Section 123.22(b)(3)(iii) is revised to update electronic reporting procedures for technical data and defense service exemptions.

Section 123.22(c) is revised to strike a provision relating to the return of licenses and to reorder the sub-paragraphs.

Section 123.24—Shipments by U.S. Postal Service

Section 123.24 is revised to strike references to AES and insert, in their place, instructions to electronically file with CBP. The underlying content of this section is not affected by this change.

Section 126.4—Shipments by or for United States Government Agencies

Section 126.4(d) is amended by revising the first sentence to account for electronic reporting, and by striking the second sentence.

Section 126.6—Foreign-Owned Military Aircraft and Naval Vessels, and the Foreign Military Sales Program

Section 126.6(c) is revised to clarify certain procedures relating to the declaration of information to CBP, and to remove references to form DSP-94. Section 126.6(c)(5)(iii) is revised to require that the exporter provide CBP with a copy of the transportation plan under the Department of Defense National Industrial Security Program Operating Manual for shipments of classified defense articles exported pursuant to a Foreign Military Sale Letter of Offer and Acceptance. Section 126.6(c)(6)(iii) is revised to correct a punctuation error made in a previous rulemaking.

Section 126.16—Exemption Pursuant to the Defense Trade Cooperation Treaty Between the United States and Australia

Section 126.16(l) is revised to strike references to the Automated Export System and insert, in their place, instructions to electronically file with CBP. The underlying content of this section will not be affected by this change.

Section 126.17—Exemption Pursuant to the Defense Trade Cooperation Treaty Between the United States and the United Kingdom

Section 126.17(l) is revised to strike references to the Automated Export System and insert, in their place, instructions to electronically file with CBP. The underlying content of this section will not be affected by this change.

Regulatory Analysis

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 sections 553 (rulemaking) and 554 (adjudications) of the Administrative Procedure Act. As this rule serves to implement the requirements of the Security and Accountability for Every Port Act of 2006 (Pub. L. 109-347), the Department of State is publishing this final rule using the “good cause” exception to the Administrative Procedure Act, as this rule is being published to fulfill the requirements outlined in Executive Order 13659. The Department has determined that public comment on this rulemaking would be impractical, unnecessary, and contrary to the public interest.

Regulatory Flexibility Act

Because this rulemaking is exempt from Section 553 of the Administrative Procedures Act, a Regulatory Flexibility Analysis is not required and has not been prepared.

Unfunded Mandates Reform Act of 1995

This rule 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 within the definition of 5 U.S.C. 804.

Executive Orders 12372 and 13132

This 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, the Department has determined that this 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 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. The Department has determined that the benefits of this rulemaking outweigh any cost to the public, which the Department believes will be minimal. OMB has designated this rule non-significant.

Executive Order 12988

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

Paperwork Reduction Act

This rulemaking does not impose or revise any information collections subject to 44 U.S.C. Chapter 35.

List of Subjects

22 CFR Part 120

• Approvals
• Arms and munitions
• Definitions
• Forms

22 CFR Part 123

• Arms and munitions
• Exemptions
• Licenses
• Reporting
• Shipments

22 CFR Part 126

• Arms and munitions
• General policies and provisions

For the reasons set forth above, title 22, chapter I, subchapter M, parts 120, 123 and 126 are 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, Public Law 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; 22 U.S.C. 2651a; Public Law 105-261, 112 Stat. 1920; Public Law 111-266; Section 1261, Public Law 112-239; E.O. 13637, 78 FR 16129.

2. Amend § 120.28 (b)(2) to read as follows:

3. Remove and reserve § 120.30.

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

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

Authority: Secs. 2, 38, and 71, Public Law 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; Public Law 105-261, 112 Stat.1920; Sec. 1205(a), Public Law 107-228; Sec 520, Public Law 112-55; Section 1261, Public Law 112-239; E.O. 13637, 78 FR 16129.

5. Section 123.4 is amended by revising paragraph (d)(2) to read as follows:

6. Section 123.5 is amended by revising the last three sentences of paragraph (b) to read as follows:

7. Section 123.16 is amended by revising the penultimate sentence of paragraph (b)(4), and the last sentence of paragraph (b)(5), to read as follows:

8. Section 123.17 is amended by revising paragraphs (a)(2)(iii), (a)(3)(iii), (c)(1), (f)(1), the second sentence of paragraph (g)(2), and the penultimate sentence of paragraph (h) to read as follows:

9. Section 123.22 is amended by:

a. Revising paragraph (a);

b. Revising paragraphs (b)(1) introductory text, (b)(2) introductory text, (b)(2)(ii), and (b)(3)(iii); and

c. Revising paragraph (c).

The revisions read as follows:

10. Amend § 123.24 by revising paragraph (a) as follows:

PART 126—GENERAL POLICIES AND PROVISIONS

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

Authority: Secs. 2, 38, 40, 42, and 71, Public Law 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, Public Law 108-375; Sec. 7089, Public Law 111-117, Public Law 111-266; Section 7045, Public Law 112-74; Section 7046, Public Law 112-74; E.O. 13637, 78 FR 16129.

12. Section 126.4 is amended by revising paragraph (d) as follows:

13. Section 126.6 is amended by revising paragraphs (c)(5)(ii), (c)(5)(iii), and (c)(6)(iii) as follows:

14. Section 126.16 is amended by revising paragraphs (l)(1)(xv) and (l)(2) introductory text to read as follows:

15. Section 126.17 is amended by revising paragraphs (l)(1)(xv) and (l)(2) introductory text to read as follows: