Amendment to the International Traffic in Arms Regulations: Removing Requirement for Prior Approval for Certain Proposals to Foreign Persons Relating to Significant Military Equipment, 52622-52625 [2010-21451]
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Federal Register / Vol. 75, No. 166 / Friday, August 27, 2010 / Rules and Regulations
congressional review requirements in 5
U.S.C. 801–808.
List of Subjects
21 CFR Part 510
Administrative practice and
procedure, Animal drugs, Labeling,
Reporting and recordkeeping
requirements.
21 CFR Parts 520 and 522
Animal drugs.
Therefore, under the Federal Food,
Drug, and Cosmetic Act and under the
authority delegated to the Commissioner
of Food and Drugs and redelegated to
the Center for Veterinary Medicine, 21
CFR parts 510, 520, and 522 are
amended as follows:
■
(c) Conditions of use in horses and
ponies—(1) Amount. One implant per
mare subcutaneously in the neck.
(2) Indications for use. For inducing
ovulation within 48 hours in estrous
mares with an ovarian follicle greater
than 30 millimeters in diameter.
(3) Limitations. Do not use in horses
or ponies intended for human
consumption. Federal law restricts this
drug to use by or on the order of a
licensed veterinarian.
Dated: August 23, 2010.
Bernadette Dunham,
Director, Center for Veterinary Medicine.
[FR Doc. 2010–21296 Filed 8–26–10; 8:45 am]
BILLING CODE 4160–01–S
DEPARTMENT OF STATE
PART 510—NEW ANIMAL DRUGS
22 CFR Parts 124, 125, 126, and 129
1. The authority citation for 21 CFR
part 510 continues to read as follows:
■
[Public Notice: 7134]
RIN 1400–AC62
Authority: 21 U.S.C. 321, 331, 351, 352,
353, 360b, 371, 379e.
§ 510.600
[Amended]
2. In § 510.600, in the table in
paragraph (c)(1), remove the entries for
‘‘Church & Dwight Co., Inc.’’ and
‘‘Peptech Animal Health Pty, Ltd.’’; and
in the table in paragraph (c)(2), remove
the entries for ‘‘010237’’ and ‘‘064288’’.
■
PART 520—ORAL DOSAGE FORM
NEW ANIMAL DRUGS
3. The authority citation for 21 CFR
part 520 continues to read as follows:
Authority: 21 U.S.C. 360b.
[Amended].
4. In paragraph (b)(1) of § 520.580,
remove ‘‘010237,’’.
■
§ 520.2043
[Amended]
5. In paragraph (b)(2) of § 520.2043,
remove ‘‘010237’’ and in its place add
‘‘055246’’.
■
PART 522—IMPLANTATION OR
INJECTABLE DOSAGE FORM NEW
ANIMAL DRUGS
6. The authority citation for 21 CFR
part 522 continues to read as follows:
■
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Authority: 21 U.S.C. 360b.
7. In § 522.533, revise the section
heading and paragraph (b), add
paragraph (c), and remove paragraph (d)
to read as follows:
■
§ 522.533
Deslorelin.
*
*
*
*
*
(b) Sponsor. See No. 043264 in
§ 510.600(c) of this chapter.
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Department of State.
Final rule.
AGENCY:
ACTION:
The Department of State is
amending the International Traffic in
Arms Regulations (ITAR) to remove the
requirements for prior approval or prior
notification for certain proposals to
foreign persons relating to significant
military equipment.
DATES: Effective Date: This rule is
effective August 27, 2010.
FOR FURTHER INFORMATION CONTACT:
Director Charles Shotwell, Office of
Defense Trade Controls Policy,
Department of State, Telephone (202)
663–2792 or Fax (202) 261–8199; E-mail
DDTCResponseTeam@state.gov. ATTN:
Regulatory Change, Section 126.8.
SUPPLEMENTARY INFORMATION: In
accordance with the President’s Export
Control Reform effort, on March 29,
2010, the Department published a
Notice of Proposed Rulemaking (NPRM)
to eliminate the requirements for prior
approval or prior notification for certain
proposals to foreign persons relating to
significant military equipment at § 126.8
of the ITAR. Effective September 1,
1977, the Department of State amended
§ 123.16 to require Department of State
approval before a proposal or
presentation is made that is designed to
constitute the basis for a decision to
purchase significant combat equipment,
SUMMARY:
■
§ 520.580
Amendment to the International Traffic
in Arms Regulations: Removing
Requirement for Prior Approval for
Certain Proposals to Foreign Persons
Relating to Significant Military
Equipment
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involving the export of an item on the
U.S. Munitions List, valued at
$7,000,000 or more for use by the armed
forces of a foreign country (42 FR 41631,
dated August 18, 1977). Also, § 124.06,
entitled, ‘‘Approval of proposals for
technical assistance and manufacturing
license agreements,’’ was amended to
require similar prior approval with
respect to proposals and presentations
for technical assistance and
manufacturing license agreements
involving the production or assembly of
significant combat equipment.
‘‘Proposals to foreign persons relating
to significant military equipment’’
became § 126.8 in a final rule effective
January 1, 1985 (49 FR 47682, dated
December 6, 1984). Section 126.8 did
not require prior approval of the
Department of State when the proposed
sale was to the armed forces of a
member of the North Atlantic Treaty
Organization (NATO), Australia, Japan,
or New Zealand, except with respect to
manufacturing license agreements or
technical assistance agreements.
A prior notification requirement,
instead of prior approval, was added to
§ 126.8 in a final rule effective March
31, 1985 (50 FR 12787, dated April 1,
1985). Prior notification to the
Department of State was required 30
days in advance of a proposal or
presentation to any foreign person
where such proposals or presentations
concerned equipment previously
approved for export.
The current § 126.8 requires prior
approval or prior notification for certain
proposals and presentations to make a
determination whether to purchase
significant military equipment valued at
$14,000,000 or more (other than a
member of NATO, Australia, New
Zealand, Japan, or South Korea), or
whether to enter into a manufacturing
license agreement or technical
assistance agreement for the production
or assembly of significant military
equipment, regardless of dollar value.
These types of proposals and
presentations usually involve large
dollar amounts. Before the defense
industry undertakes the effort involved
in formulating its proposals and
presentations, if there is any doubt that
the corresponding license application or
proposed agreement would be
authorized by the Department of State,
the industry may request an advisory
opinion (see § 126.9). The written
advisory opinion, though not binding on
the Department, helps inform the
defense industry whether the
Department would likely grant a license
application or proposed agreement.
Currently, the time between submitting
a license application or proposed
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agreement and obtaining a decision
from the Department of State whether to
authorize such transactions has been
decreased sufficiently that requiring
prior approval or prior notification for
proposals is unnecessary and imposes
an administrative burden on industry.
References to § 126.8 have been
removed at §§ 124.1(a), 125.4(a), 126.13,
129.7(e), and 129.8(c).
The Proposed Rule had a comment
period ending May 28, 2010. Three
parties filed comments by May 28
recommending changes. Having
thoroughly reviewed and evaluated the
comments and the recommended
changes, the Department has
determined that it will, and hereby
does, adopt the Proposed Rule, with
minor edits, and promulgates it as a
Final Rule. The Department’s evaluation
of the written comments and
recommendations follows.
Comment Analysis
One commenting party commended
the proposed change as removing an
unnecessary and redundant licensing
burden, without suggesting any changes.
One commenting party supported the
proposed change, but recommended
certain ‘‘clerical’’ changes to other parts
of the ITAR for purposes of consistency.
Specifically, § 126.1(e) requires the
Directorate of Defense Trade Controls’
(DDTC) written approval or a license
prior to a proposal to sell defense
articles or services to any country
covered in that section (i.e., restricted
destinations). The commenting party
suggested the definition of ‘‘proposal’’ in
§ 126.8(b) be incorporated into
§ 126.1(e). We believe the incorporation
of the § 126.8(b) definition of ‘‘proposal’’
could confuse exporters, potentially
encouraging ‘‘preliminary discussions’’
with prohibited destinations. Therefore,
we do not support that change. We do,
however, concur with this commenting
party’s recommendation that we delete
the references to § 126.8 in §§ 124.1(a),
125.4(a), and 129.7(e). This has been
accomplished in our proposed change to
§ 124.1(a). Appropriate changes to
§ 125.4(a) and § 129.7(e) have been
added to this notice.
One commenting party expressed
concern that the elimination of the prior
notification requirement would
contravene ‘‘the fundamental goals of
the ITAR’’ through arms deals furthering
the persecution of individuals, denial of
human rights, terrorism, and genocide,
with special concern about foreign
military sales. We note at the outset that
foreign military sales are not controlled
by the ITAR, as opposed to direct
commercial sales. We also note that we
are not lessening control over the export
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of any defense article, technology, or
service. Nor are we lessening scrutiny
over prohibited/restricted destinations
(§ 126.1(e) remains in place). Rather, we
are eliminating the requirement for
reviewing an export transaction twice,
which we consider to be a redundant
burden on industry and government.
One commenting party stated that the
change would ‘‘limit or eliminate the
President’s ability to remain informed of
‘negotiations’ * * * ’’ in contravention
of the spirit of § 2778(a)(3) of the Arms
Export Control Act (AECA). Our
experience from a practical day-to-day
review of exports gives us a different
perspective. We note that advance
notice of pending export transactions
was a meaningful concept in the days
when the average license processing
time was over 60 days. But when the
average processing time is
approximately 15 days, it is easier and
faster to review the export transaction
(e.g., manufacturing licensing
agreement) as a whole rather than
piecemeal. With the challenge of over
84,000 licenses per year, a requirement
to review export transactions (in effect)
twice is an unnecessary burden that
provides the executive branch with
effectively no advance notice. Most
importantly, the requirement to obtain a
license or other authorization before
passing ITAR controlled technical data
remains in place, placing a significant
limitation on the content of
negotiations. Furthermore, we will
maintain the § 126.1(e) requirement of
notice for proposed transactions with
restricted destinations, where in most
cases there would be a presumption
against the export.
The same commenting party also
advised that an unintended
consequence of the change is the
‘‘elimination of any recordkeeping
requirements’’ for proposals. We do not
agree, since the § 126.8 requirement to
report certain proposals is an obligation
separate and independent from
recordkeeping requirements. It will
continue to be good practice to maintain
records of such transactions for an
appropriate duration in compliance
with § 122.5, particularly to rebut any
post hoc allegations that ITAR
controlled technical data were
transferred without a license or
authorization.
The same commenting party
recommended alternatively that § 126.8
be retained, but the definition of
‘‘proposal’’ in § 126.8(b) be expanded to
better define what constitutes ‘‘sufficient
detail.’’ For the reasons already
mentioned above, we believe that
elimination of § 126.8 altogether is
simpler and less confusing than
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whittling away at the definition of
proposal. Another alternative
recommended was elimination of
§ 126.8, but replacement with an
exemption. We note that exemptions are
used to exempt transactions from
licensing requirements when they
would otherwise apply. If we eliminate
§ 126.8, there would be no requirement
from which the exporter would require
exemption. Therefore, the
recommendation is rejected.
Finally, we disagree with the
commenting party’s allegation that by
this action DDTC would ‘‘abandon its
authority to implement § 2778(a)(3) of
the AECA.’’ Since the operative language
was that the ‘‘President may require that
persons engaged in the negotiation of
defense articles and services keep the
President fully and currently informed
of the progress and future prospects of
such negotiations,’’ this is a
discretionary authority. Practical
experience has demonstrated that the
prior notification/approval requirement
is an unnecessary burden on industry
without adding any information of value
to DDTC’s review of exports.
Regulatory Analysis and Notices
Administrative Procedure Act
This amendment involves a foreign
affairs function of the United States and,
therefore, is not subject to the
procedures contained in 5 U.S.C. 553
and 554.
Regulatory Flexibility Act
Since this amendment is not subject
to 5 U.S.C. 553, it does not require
analysis under the Regulatory
Flexibility Act.
Unfunded Mandates Reform Act of 1995
This amendment 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
This amendment has been found not
to be a major rule within the meaning
of the Small Business Regulatory
Enforcement Fairness Act of 1996.
Executive Orders 12372 and 13132
This amendment will not have
substantial direct effects on the States,
on the relationship between the national
government and the States, or on the
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distribution of power and
responsibilities among the various
levels of government. Therefore, in
accordance with Executive Order 13132,
it is determined that this amendment
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 amendment.
Executive Order 12866
This amendment is exempt from
review under Executive Order 12866,
but has been reviewed internally by the
Department of State to ensure
consistency with the purposes thereof.
Executive Order 12988
The Department of State has reviewed
the proposed amendments in light of
sections 3(a) and 3(b)(2) 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 pre-empt tribal law.
Accordingly, the requirement of Section
5 of Executive Order 13175 does not
apply to this 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.
List of Subjects
22 CFR Parts 124 and 129
Arms and munitions, Exports,
Technical assistance.
22 CFR Part 125
Arms and munitions, Exports.
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22 CFR Part 126
PART 124—AGREEMENTS, OFFSHORE PROCUREMENT AND OTHER
DEFENSE SERVICES
1. The authority citation for part 124
is revised to read as follows:
■
14:41 Aug 26, 2010
2. Section 124.1 is amended by
revising paragraph (a) to read as follows:
■
§ 124.1 Manufacturing license agreements
and technical assistance agreements.
(a) Approval. The approval of the
Directorate of Defense Trade Controls
must be obtained before the defense
services described in § 120.9(a) of this
subchapter may be furnished. In order
to obtain such approval, the U.S. person
must submit a proposed agreement to
the Directorate of Defense Trade
Controls. Such agreements are generally
characterized as manufacturing license
agreements, technical assistance
agreements, distribution agreements, or
off-shore procurement agreements, and
may not enter into force without the
prior written approval of the Directorate
of Defense Trade Controls. Once
approved, the defense services
described in the agreements may
generally be provided without further
licensing in accordance with §§ 124.3
and 125.4(b)(2) of this subchapter. The
requirements of this section apply
whether or not technical data is to be
disclosed or used in the performance of
the defense services described in
§ 120.9(a) of this subchapter (e.g., all the
information relied upon by the U.S.
person in performing the defense
service is in the public domain or is
otherwise exempt from licensing
requirements of this subchapter
pursuant to § 125.4 of this subchapter).
This requirement also applies to the
training of any foreign military forces,
regular and irregular, in the use of
defense articles. Technical assistance
agreements must be submitted in such
cases. In exceptional cases, the
Directorate of Defense Trade Controls,
upon written request, will consider
approving the provision of defense
services described in § 120.9(a) of this
subchapter by granting a license under
part 125 of this subchapter.
*
*
*
*
*
§ 125.4 Exemptions of general
applicability.
(a) The following exemptions apply to
exports of technical data for which
approval is not needed from the
Directorate of Defense Trade Controls.
The exemptions, except for paragraph
(b)(13) of this section, do not apply to
exports to proscribed destinations under
§ 126.1 of this subchapter or for persons
considered generally ineligible under
§ 120.1(c) of this subchapter. The
exemptions are also not applicable for
purposes of establishing offshore
procurement arrangements or producing
defense articles offshore (see § 124.13),
except as authorized under § 125.4(c).
Transmission of classified information
must comply with the requirements of
the Department of Defense National
Industrial Security Program Operating
Manual (unless such requirements are
in direct conflict with guidance
provided by the Directorate of Defense
Trade controls, in which case the latter
guidance must be followed) and the
exporter must certify to the transmittal
authority that the technical data does
not exceed the technical limitation of
the authorized export.
*
*
*
*
*
PART 126—GENERAL POLICIES AND
PROVISIONS
5. 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); E.O. 11958, 42 FR
4311; 3 CFR, 1977 Comp., p. 79; 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.
§ 126.8
[Removed and Reserved]
6. Section 126.8 is removed and
reserved.
■ 7. Section 126.13 is amended by
revising paragraph (a) introductory text
to read as follows:
■
§ 126.13
Arms and munitions, Exports.
■ Accordingly, for the reasons set forth
above, Title 22, Chapter I, Subchapter
M, parts 124, 125, 126, and 129 are
amended as follows:
VerDate Mar<15>2010
Authority: Secs. 2, 38, and 71, Pub. L. 90–
629, 90 Stat. 744 (22 U.S.C. 2752, 2778,
2797); E.O. 11958, 42 FR 4311; 3 CFR, 1977
Comp., p. 79; 22 U.S.C. 2651a; 22 U.S.C.
2776; Pub. L. 105–261.
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PART 125—LICENSES FOR THE
EXPORT OF TECHNICAL DATA AND
CLASSIFIED DEFENSE ARTICLES
3. The authority citation for part 125
is revised to read as follows:
■
Authority: Secs. 2 and 38, Pub. L. 90–629,
90 Stat. 744 (22 U.S.C. 2752, 2778); E.O.
11958, 42 FR 4311; 3 CFR, 1977 Comp. p.79;
22 U.S.C. 2651a.
4. Section 125.4 is amended by
revising paragraph (a) to read as follows:
■
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Required information.
(a) All applications for licenses (DSP–
5, DSP–61, DSP–73, and DSP–85), all
requests for approval of agreements and
amendments thereto under part 124 of
this subchapter, and all requests for
written authorizations must include a
letter signed by a responsible official
empowered by the applicant and
addressed to the Directorate of Defense
Trade Controls, stating whether:
*
*
*
*
*
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PART 129—REGISTRATION AND
LICENSING OF BROKERS
8. The authority citation for part 129
is revised to read as follows:
■
Authority: Sec. 38, Pub. L. 104–164, 110
Stat. 1437, (22 U.S.C. 2778).
§ 129.7
[Amended]
9. Section 129.7 is amended by
removing paragraph (e).
■
§ 129.8
[Amended]
10. Section 129.8 is amended by
removing paragraph (c).
■
Dated: August 18, 2010.
Ellen O. Tauscher,
Under Secretary, Arms Control and
International Security, Department of State.
[FR Doc. 2010–21451 Filed 8–26–10; 8:45 am]
BILLING CODE 4710–25–P
DEPARTMENT OF STATE
22 CFR Part 125
[Public Notice: 7135]
RIN 1400–AC59
Amendment to the International Traffic
in Arms Regulations: Export
Exemption for Technical Data
Department of State.
Final rule.
AGENCY:
ACTION:
The Department of State is
amending the International Traffic in
Arms Regulations (ITAR) to clarify an
exemption for technical data. The
clarification is that the exemption
covers technical data, regardless of
media or format, sent or taken by a U.S.
person who is an employee of a U.S.
corporation or a U.S. Government
agency to a U.S. person employed by
that U.S. corporation or to a U.S.
Government agency outside the United
States.
DATES: Effective Date: This rule is
effective August 27, 2010.
FOR FURTHER INFORMATION CONTACT:
Director Charles Shotwell, Office of
Defense Trade Controls Policy,
Department of State, Telephone (202)
663–2792 or Fax (202) 261–8199; E-mail
DDTCResponseTeam@state.gov. ATTN:
Regulatory Change, Section 125.4.
SUPPLEMENTARY INFORMATION: On
November 24, 2009, the Department
published a Notice of Proposed
Rulemaking (NPRM) to add language
clarifying 22 CFR 125.4(b)(9) to allow
technical data, including classified
information, and regardless of media or
format, sent or taken by a U.S. person
who is an employee of a U.S.
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SUMMARY:
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corporation or a U.S. Government
agency, to a U.S. person employed by
that U.S. corporation or to a U.S.
Government agency outside the United
States under certain specified
circumstances reflected in 22 CFR
125.4(b)(9)(i) through (iii) (74 FR
61292). This amendment will add after
the word ‘‘information’’ the words ‘‘and
regardless of media or format.’’ Also, the
words ‘‘sent by a U.S. corporation to a
U.S. person employed by that
corporation overseas or to a U.S.
Government agency’’ has been replaced
by ‘‘sent or taken by a U.S. person who
is an employee of a U.S. corporation or
a U.S. Government agency to a U.S.
person employed by that corporation or
to a U.S. Government agency outside the
United States.’’ Thus, the exemption
will explicitly allow hand carrying
technical data by a U.S. person
employed by a U.S. corporation or a
U.S. Government agency to a U.S.
person employed by that U.S.
corporation or to a U.S. Government
agency outside the United States, as
long as certain criteria in §§ 125.4(b)(9)
and 125.4(b)(9)(i)–(iii) are met. The
word ‘‘overseas’’ will be replaced by
‘‘outside the United States’’ at
§§ 125.4(b)(9), 125.4(b)(9)(i),
125.4(b)(9)(ii), and 125.4(b)(9)(iii). Also,
§ 125.4(b)(9)(iii) will be amended to add
the words ‘‘or taken’’ after the word
‘‘sent.’’ As stated in 22 CFR 125.4(a), this
exemption does not apply to exports to
proscribed destinations under 22 CFR
126.1.
The Proposed Rule had a comment
period ending January 25, 2010. Nine
parties filed comments by January 25
recommending changes. Having
thoroughly reviewed and evaluated the
comments and the recommended
changes, the Department has
determined that it will, and hereby
does, adopt the Proposed Rule, with
minor edits, and promulgates it as a
Final Rule. The Department’s evaluation
of the written comments and
recommendations follows:
Comment Analysis
One commenting party recommended
that ‘‘sent or taken’’ be changed to ‘‘sent,
taken or accessed.’’ This
recommendation was deemed not
necessary since it is implied the U.S.
person who is an employee of a U.S.
corporation or the U.S. person who is an
employee of a U.S. Government agency
taking the technical data outside of the
United States may access the technical
data.
One commenting party inquired
whether a U.S. corporation
(manufacturer) could use the exemption
to send (orally or via e-mail) technical
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52625
data to an employee of a U.S.
Government agency outside the United
States, as well as what steps the U.S.
manufacturer would take to ensure that
22 CFR 125.4(b)(9)(i)–(ii) are met. The
U.S. corporation (in compliance with 22
CFR part 122) is able to use the
exemption to send (orally or via e-mail)
technical data to a U.S. person
employed by a U.S. Government agency
outside the United States, so long as the
U.S. company takes reasonable
precautions to ensure that conditions in
22 CFR 125.4(b)(9)(i) through (ii) are
met:
1. The technical data will be used
outside of the United States solely by
U.S. persons; and
2. The U.S. person outside of the
United States is employed by a U.S.
Government agency.
Two commenting parties
recommended that it be explicit that the
technical data could be for ‘‘personal
use’’ by the U.S. person claiming the
exemption. That recommendation was
not adopted since it introduced
uncertainty about uses beyond those
related to employment.
One commenting party pointed out
that when technical data is exported
from a U.S. port using an exemption, the
ITAR does not require the report of such
an export using the Automated Export
System (AES); instead, the exporter is to
provide electronic notification directly
to the Directorate of Defense Trade
Controls (DDTC) (see 22 CFR
123.22(b)(3)(iii)). The commenting party
recommended that if the system to
electronically file directly to DDTC is
not going to be implemented, then
DDTC should arrange for AES to be the
reporting mechanism. The commenting
party also recommended that if
classified technical data is being
exported under the provisions of the
Department of Defense National
Industrial Security Program Operating
Manual, an Electronic Export
Information should be filed within AES.
For exports of technical data using
exemptions, there is no system to
electronically file directly to DDTC.
DDTC is reviewing carefully the
possibility of having all exports of
technical data using an exemption be
reported using an Electronic Export
Information within Census Bureau’s
Automated Export System.
Two commenting parties
recommended the exemption at
§ 125.4(b)(9) be expanded so the
exporter would be a U.S. person who is
an employee of any entity, organization,
or group incorporated or organized to do
business in the United States. Also, the
recipient would be a U.S. person
employed by that entity, organization,
E:\FR\FM\27AUR1.SGM
27AUR1
]]>Agencies
[Federal Register Volume 75, Number 166 (Friday, August 27, 2010)]
[Rules and Regulations]
[Pages 52622-52625]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-21451]
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DEPARTMENT OF STATE
22 CFR Parts 124, 125, 126, and 129
[Public Notice: 7134]
RIN 1400-AC62
Amendment to the International Traffic in Arms Regulations:
Removing Requirement for Prior Approval for Certain Proposals to
Foreign Persons Relating to Significant Military Equipment
AGENCY: Department of State.
ACTION: Final rule.
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SUMMARY: The Department of State is amending the International Traffic
in Arms Regulations (ITAR) to remove the requirements for prior
approval or prior notification for certain proposals to foreign persons
relating to significant military equipment.
DATES: Effective Date: This rule is effective August 27, 2010.
FOR FURTHER INFORMATION CONTACT: Director Charles Shotwell, Office of
Defense Trade Controls Policy, Department of State, Telephone (202)
663-2792 or Fax (202) 261-8199; E-mail DDTCResponseTeam@state.gov.
ATTN: Regulatory Change, Section 126.8.
SUPPLEMENTARY INFORMATION: In accordance with the President's Export
Control Reform effort, on March 29, 2010, the Department published a
Notice of Proposed Rulemaking (NPRM) to eliminate the requirements for
prior approval or prior notification for certain proposals to foreign
persons relating to significant military equipment at Sec. 126.8 of
the ITAR. Effective September 1, 1977, the Department of State amended
Sec. 123.16 to require Department of State approval before a proposal
or presentation is made that is designed to constitute the basis for a
decision to purchase significant combat equipment, involving the export
of an item on the U.S. Munitions List, valued at $7,000,000 or more for
use by the armed forces of a foreign country (42 FR 41631, dated August
18, 1977). Also, Sec. 124.06, entitled, ``Approval of proposals for
technical assistance and manufacturing license agreements,'' was
amended to require similar prior approval with respect to proposals and
presentations for technical assistance and manufacturing license
agreements involving the production or assembly of significant combat
equipment.
``Proposals to foreign persons relating to significant military
equipment'' became Sec. 126.8 in a final rule effective January 1,
1985 (49 FR 47682, dated December 6, 1984). Section 126.8 did not
require prior approval of the Department of State when the proposed
sale was to the armed forces of a member of the North Atlantic Treaty
Organization (NATO), Australia, Japan, or New Zealand, except with
respect to manufacturing license agreements or technical assistance
agreements.
A prior notification requirement, instead of prior approval, was
added to Sec. 126.8 in a final rule effective March 31, 1985 (50 FR
12787, dated April 1, 1985). Prior notification to the Department of
State was required 30 days in advance of a proposal or presentation to
any foreign person where such proposals or presentations concerned
equipment previously approved for export.
The current Sec. 126.8 requires prior approval or prior
notification for certain proposals and presentations to make a
determination whether to purchase significant military equipment valued
at $14,000,000 or more (other than a member of NATO, Australia, New
Zealand, Japan, or South Korea), or whether to enter into a
manufacturing license agreement or technical assistance agreement for
the production or assembly of significant military equipment,
regardless of dollar value.
These types of proposals and presentations usually involve large
dollar amounts. Before the defense industry undertakes the effort
involved in formulating its proposals and presentations, if there is
any doubt that the corresponding license application or proposed
agreement would be authorized by the Department of State, the industry
may request an advisory opinion (see Sec. 126.9). The written advisory
opinion, though not binding on the Department, helps inform the defense
industry whether the Department would likely grant a license
application or proposed agreement. Currently, the time between
submitting a license application or proposed
[[Page 52623]]
agreement and obtaining a decision from the Department of State whether
to authorize such transactions has been decreased sufficiently that
requiring prior approval or prior notification for proposals is
unnecessary and imposes an administrative burden on industry.
References to Sec. 126.8 have been removed at Sec. Sec. 124.1(a),
125.4(a), 126.13, 129.7(e), and 129.8(c).
The Proposed Rule had a comment period ending May 28, 2010. Three
parties filed comments by May 28 recommending changes. Having
thoroughly reviewed and evaluated the comments and the recommended
changes, the Department has determined that it will, and hereby does,
adopt the Proposed Rule, with minor edits, and promulgates it as a
Final Rule. The Department's evaluation of the written comments and
recommendations follows.
Comment Analysis
One commenting party commended the proposed change as removing an
unnecessary and redundant licensing burden, without suggesting any
changes.
One commenting party supported the proposed change, but recommended
certain ``clerical'' changes to other parts of the ITAR for purposes of
consistency. Specifically, Sec. 126.1(e) requires the Directorate of
Defense Trade Controls' (DDTC) written approval or a license prior to a
proposal to sell defense articles or services to any country covered in
that section (i.e., restricted destinations). The commenting party
suggested the definition of ``proposal'' in Sec. 126.8(b) be
incorporated into Sec. 126.1(e). We believe the incorporation of the
Sec. 126.8(b) definition of ``proposal'' could confuse exporters,
potentially encouraging ``preliminary discussions'' with prohibited
destinations. Therefore, we do not support that change. We do, however,
concur with this commenting party's recommendation that we delete the
references to Sec. 126.8 in Sec. Sec. 124.1(a), 125.4(a), and
129.7(e). This has been accomplished in our proposed change to Sec.
124.1(a). Appropriate changes to Sec. 125.4(a) and Sec. 129.7(e) have
been added to this notice.
One commenting party expressed concern that the elimination of the
prior notification requirement would contravene ``the fundamental goals
of the ITAR'' through arms deals furthering the persecution of
individuals, denial of human rights, terrorism, and genocide, with
special concern about foreign military sales. We note at the outset
that foreign military sales are not controlled by the ITAR, as opposed
to direct commercial sales. We also note that we are not lessening
control over the export of any defense article, technology, or service.
Nor are we lessening scrutiny over prohibited/restricted destinations
(Sec. 126.1(e) remains in place). Rather, we are eliminating the
requirement for reviewing an export transaction twice, which we
consider to be a redundant burden on industry and government.
One commenting party stated that the change would ``limit or
eliminate the President's ability to remain informed of `negotiations'
* * * '' in contravention of the spirit of Sec. 2778(a)(3) of the Arms
Export Control Act (AECA). Our experience from a practical day-to-day
review of exports gives us a different perspective. We note that
advance notice of pending export transactions was a meaningful concept
in the days when the average license processing time was over 60 days.
But when the average processing time is approximately 15 days, it is
easier and faster to review the export transaction (e.g., manufacturing
licensing agreement) as a whole rather than piecemeal. With the
challenge of over 84,000 licenses per year, a requirement to review
export transactions (in effect) twice is an unnecessary burden that
provides the executive branch with effectively no advance notice. Most
importantly, the requirement to obtain a license or other authorization
before passing ITAR controlled technical data remains in place, placing
a significant limitation on the content of negotiations. Furthermore,
we will maintain the Sec. 126.1(e) requirement of notice for proposed
transactions with restricted destinations, where in most cases there
would be a presumption against the export.
The same commenting party also advised that an unintended
consequence of the change is the ``elimination of any recordkeeping
requirements'' for proposals. We do not agree, since the Sec. 126.8
requirement to report certain proposals is an obligation separate and
independent from recordkeeping requirements. It will continue to be
good practice to maintain records of such transactions for an
appropriate duration in compliance with Sec. 122.5, particularly to
rebut any post hoc allegations that ITAR controlled technical data were
transferred without a license or authorization.
The same commenting party recommended alternatively that Sec.
126.8 be retained, but the definition of ``proposal'' in Sec. 126.8(b)
be expanded to better define what constitutes ``sufficient detail.''
For the reasons already mentioned above, we believe that elimination of
Sec. 126.8 altogether is simpler and less confusing than whittling
away at the definition of proposal. Another alternative recommended was
elimination of Sec. 126.8, but replacement with an exemption. We note
that exemptions are used to exempt transactions from licensing
requirements when they would otherwise apply. If we eliminate Sec.
126.8, there would be no requirement from which the exporter would
require exemption. Therefore, the recommendation is rejected.
Finally, we disagree with the commenting party's allegation that by
this action DDTC would ``abandon its authority to implement Sec.
2778(a)(3) of the AECA.'' Since the operative language was that the
``President may require that persons engaged in the negotiation of
defense articles and services keep the President fully and currently
informed of the progress and future prospects of such negotiations,''
this is a discretionary authority. Practical experience has
demonstrated that the prior notification/approval requirement is an
unnecessary burden on industry without adding any information of value
to DDTC's review of exports.
Regulatory Analysis and Notices
Administrative Procedure Act
This amendment involves a foreign affairs function of the United
States and, therefore, is not subject to the procedures contained in 5
U.S.C. 553 and 554.
Regulatory Flexibility Act
Since this amendment is not subject to 5 U.S.C. 553, it does not
require analysis under the Regulatory Flexibility Act.
Unfunded Mandates Reform Act of 1995
This amendment 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
This amendment has been found not to be a major rule within the
meaning of the Small Business Regulatory Enforcement Fairness Act of
1996.
Executive Orders 12372 and 13132
This amendment will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the
[[Page 52624]]
distribution of power and responsibilities among the various levels of
government. Therefore, in accordance with Executive Order 13132, it is
determined that this amendment 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 amendment.
Executive Order 12866
This amendment is exempt from review under Executive Order 12866,
but has been reviewed internally by the Department of State to ensure
consistency with the purposes thereof.
Executive Order 12988
The Department of State has reviewed the proposed amendments in
light of sections 3(a) and 3(b)(2) 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 pre-empt
tribal law. Accordingly, the requirement of Section 5 of Executive
Order 13175 does not apply to this 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.
List of Subjects
22 CFR Parts 124 and 129
Arms and munitions, Exports, Technical assistance.
22 CFR Part 125
Arms and munitions, Exports.
22 CFR Part 126
Arms and munitions, Exports.
0
Accordingly, for the reasons set forth above, Title 22, Chapter I,
Subchapter M, parts 124, 125, 126, and 129 are amended as follows:
PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT AND OTHER DEFENSE
SERVICES
0
1. The authority citation for part 124 is revised to read as follows:
Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744
(22 U.S.C. 2752, 2778, 2797); E.O. 11958, 42 FR 4311; 3 CFR, 1977
Comp., p. 79; 22 U.S.C. 2651a; 22 U.S.C. 2776; Pub. L. 105-261.
0
2. Section 124.1 is amended by revising paragraph (a) to read as
follows:
Sec. 124.1 Manufacturing license agreements and technical assistance
agreements.
(a) Approval. The approval of the Directorate of Defense Trade
Controls must be obtained before the defense services described in
Sec. 120.9(a) of this subchapter may be furnished. In order to obtain
such approval, the U.S. person must submit a proposed agreement to the
Directorate of Defense Trade Controls. Such agreements are generally
characterized as manufacturing license agreements, technical assistance
agreements, distribution agreements, or off-shore procurement
agreements, and may not enter into force without the prior written
approval of the Directorate of Defense Trade Controls. Once approved,
the defense services described in the agreements may generally be
provided without further licensing in accordance with Sec. Sec. 124.3
and 125.4(b)(2) of this subchapter. The requirements of this section
apply whether or not technical data is to be disclosed or used in the
performance of the defense services described in Sec. 120.9(a) of this
subchapter (e.g., all the information relied upon by the U.S. person in
performing the defense service is in the public domain or is otherwise
exempt from licensing requirements of this subchapter pursuant to Sec.
125.4 of this subchapter). This requirement also applies to the
training of any foreign military forces, regular and irregular, in the
use of defense articles. Technical assistance agreements must be
submitted in such cases. In exceptional cases, the Directorate of
Defense Trade Controls, upon written request, will consider approving
the provision of defense services described in Sec. 120.9(a) of this
subchapter by granting a license under part 125 of this subchapter.
* * * * *
PART 125--LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED
DEFENSE ARTICLES
0
3. The authority citation for part 125 is revised to read as follows:
Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311; 3 CFR, 1977 Comp. p.79;
22 U.S.C. 2651a.
0
4. Section 125.4 is amended by revising paragraph (a) to read as
follows:
Sec. 125.4 Exemptions of general applicability.
(a) The following exemptions apply to exports of technical data for
which approval is not needed from the Directorate of Defense Trade
Controls. The exemptions, except for paragraph (b)(13) of this section,
do not apply to exports to proscribed destinations under Sec. 126.1 of
this subchapter or for persons considered generally ineligible under
Sec. 120.1(c) of this subchapter. The exemptions are also not
applicable for purposes of establishing offshore procurement
arrangements or producing defense articles offshore (see Sec. 124.13),
except as authorized under Sec. 125.4(c). Transmission of classified
information must comply with the requirements of the Department of
Defense National Industrial Security Program Operating Manual (unless
such requirements are in direct conflict with guidance provided by the
Directorate of Defense Trade controls, in which case the latter
guidance must be followed) and the exporter must certify to the
transmittal authority that the technical data does not exceed the
technical limitation of the authorized export.
* * * * *
PART 126--GENERAL POLICIES AND PROVISIONS
0
5. 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); E.O. 11958, 42 FR
4311; 3 CFR, 1977 Comp., p. 79; 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. 126.8 [Removed and Reserved]
0
6. Section 126.8 is removed and reserved.
0
7. Section 126.13 is amended by revising paragraph (a) introductory
text to read as follows:
Sec. 126.13 Required information.
(a) All applications for licenses (DSP-5, DSP-61, DSP-73, and DSP-
85), all requests for approval of agreements and amendments thereto
under part 124 of this subchapter, and all requests for written
authorizations must include a letter signed by a responsible official
empowered by the applicant and addressed to the Directorate of Defense
Trade Controls, stating whether:
* * * * *
[[Page 52625]]
PART 129--REGISTRATION AND LICENSING OF BROKERS
0
8. The authority citation for part 129 is revised to read as follows:
Authority: Sec. 38, Pub. L. 104-164, 110 Stat. 1437, (22 U.S.C.
2778).
Sec. 129.7 [Amended]
0
9. Section 129.7 is amended by removing paragraph (e).
Sec. 129.8 [Amended]
0
10. Section 129.8 is amended by removing paragraph (c).
Dated: August 18, 2010.
Ellen O. Tauscher,
Under Secretary, Arms Control and International Security, Department of
State.
[FR Doc. 2010-21451 Filed 8-26-10; 8:45 am]
BILLING CODE 4710-25-P
