International Traffic in Arms Regulations: Electronic Payment of Registration Fees, 45195-45198 [2011-19115]

Agencies

• DEPARTMENT OF STATE

[Federal Register Volume 76, Number 145 (Thursday, July 28, 2011)]
[Rules and Regulations]
[Pages 45195-45198]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19115]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF STATE

22 CFR Parts 120, 122, 123, and 129

RIN 1400-AC74
[Public Notice 7538]


International Traffic in Arms Regulations: Electronic Payment of 
Registration Fees

AGENCY: Department of State.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Department of State is amending the International Traffic 
in Arms Regulations (ITAR) to change the method of payment to 
electronic submission of registration fees. The institution of the 
electronic submission of registration fees will simplify the collection 
and verification of payments, eliminate the need to manually process 
and collect returned payments, and eliminate the possibility of lost 
payments. Definitions for ``Foreign Ownership'' and ``Foreign Control'' 
are also added.

DATES: Effective Date: This rule is effective September 26, 2011.

FOR FURTHER INFORMATION CONTACT: Lisa V. Aguirre, Director, Office of 
Defense Trade Controls Compliance, Directorate of Defense Trade 
Controls, Department of State, 2401 E Street, NW., SA-1, Room H1200, 
Washington, DC 20522-0112; telephone 202-632-2798 or fax 202-632-2878; 
or e-mail through DDTCResponseTeam@state.gov, with the subject line, 
``Electronic Payment of Registration Fees.''

SUPPLEMENTARY INFORMATION: The Directorate of Defense Trade Controls 
(DDTC) is responsible for the collection of registration fees from 
persons in the business of manufacturing, exporting,

[[Page 45196]]

and/or brokering defense articles or defense services.
    Previously, registrants submitted registration fees to DDTC by 
check or money order, and these payments were processed manually. The 
institution of the electronic submission of registration fees will 
simplify the collection and verification of payments, eliminate the 
need to manually process and collect returned payments, and eliminate 
the possibility of lost payments.
    Section 122.2(a) is revised to provide for electronic payment as 
the sole means of registration fee submission. The form used for 
obtaining registration, the DS-2032 Statement of Registration, has been 
revised to reflect that fee payments are to be made electronically. 
Additionally, the certifications previously required through the 
transmittal letter referenced in Sec.  122.2(b) of the ITAR are 
incorporated into the revised DS-2032. Consequently, Sec.  122.2(b) no 
longer requires a separate transmittal letter; rather, it addresses 
certain certifications to be made on the Statement of Registration that 
previously were provided via the transmittal letter. The new Sec.  
122.2(b) title will be ``Statement of Registration Certification.''
    Definitions for ``ownership'' and ``control'' are removed from part 
122 by the removal of Sec.  122.2(c). Definitions for ``Foreign 
Ownership'' and ``Foreign Control'' constitute the new Sec.  120.37.
    Section 122.3(a) is revised to remove reference to the transmittal 
letter.
    The revision to Sec.  129.4(a) is in line with the change in part 
122 regarding the provision of electronic payment of registration fees. 
References to the transmittal letter are removed from Sec. Sec.  
129.4(a) and (b).
    Title and number of the registration form is corrected in Sec.  
120.28(a)(2), and Sec.  123.16(b)(9) is revised to correct a reference 
to Sec.  122.2(c) and replace it with a reference to Sec.  120.37.
    This rule was first presented as a proposed rule for public comment 
on February 24, 2011. That comment period ended April 25, 2011. No 
comments pertinent to this rule were received.
    Having thoroughly reviewed and evaluated the rule, the Department 
has determined that it will accept, and hereby does adopt, the proposed 
rule as a final rule.

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 Sec.  553 (Rulemaking) and Sec.  554 
(Adjudications) of the Administrative Procedure Act. Although the 
Department is of the opinion that this rule is exempt from the 
rulemaking provisions of the APA, the Department published this rule 
with a 60-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 this amendment is not subject to the notice-and-comment 
procedures of 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.

Executive Order 13175

    The Department 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 requirements of Executive Order 13175 do not apply to 
this rulemaking.

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 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

    The Department of State does not consider this rule to be a 
``significant regulatory action'' under Executive Order 12866, section 
3(f), Regulatory Planning and Review. The Department 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 governing the conduct of this function are exempt from the 
requirements of Executive Order 12866.

Executive Order 13563

    The Department of State has considered this rule in light of 
Executive Order 13563, dated January 18, 2011, and affirms that this 
regulation is consistent with the guidance therein.

Executive Order 12988

    The Department of State has reviewed the amendment 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.

Paperwork Reduction Act

    The information collection (IC) requirements for the current 
Statement of Registration (Department of State form DS-2032) are 
approved under Office of Management and Budget (OMB) control number 
1405-0002. This rule imposes new reporting requirements subject to the 
Paperwork Reduction Act, 44 U.S.C. chapter 35. The Department published 
a notice in the Federal Register (76 FR 10291, with correction at 76 FR 
16588) soliciting public comments on the revised information collection 
and notifying the public that this collection was submitted to OMB for 
review and approval. No comments pertinent to this rule were received.
    Formerly, the ITAR, Sec.  122.2(b), required the respondent to 
provide separate correspondence (via a ``transmittal letter,'' to 
accompany the DS-2032, Statement of Registration, submission) 
certifying criminal history, eligibility, and foreign ownership. Often, 
this mandate was overlooked by the respondent, resulting in the return 
without action of the incomplete application. The revised DS-2032 
incorporates these certifications within the form, only requiring the 
user to click on the appropriate response.
    Other changes to the Statement of Registration include additional 
data fields necessary to match electronic payment to the form. Whereas 
payments

[[Page 45197]]

will be received electronically, respondents will continue submitting 
the DS-2032 in paper format. New data elements specific to electronic 
payment were not previously required on the DS-2032 because such 
information is visible on U.S. and foreign bank drafts.
    Additionally, data elements are added to ensure clarification 
during analysis as well as standardization of responses. Specifically, 
necessary information is listed in the form, only requiring the 
respondent to make a selection by clicking the applicable checkbox 
rather than manually entering the information. This enhancement 
eliminates typographical errors and the misinterpretation of 
information requested, which often results in the submission of 
incorrect information.
    With these changes, the estimated burden time for completion of the 
DS-2032 is reduced from two hours to one hour.

List of Subjects in 22 CFR Parts 120, 122, 123, and 129

    Arms and munitions, Registration, Exports, Brokering.

    Accordingly, for the reasons set forth in the preamble, Title 22, 
Chapter I, Subchapter M, parts 120, 122, 123, and 129 are amended as 
follows:

PART 120--PURPOSE AND DEFINITIONS

0
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; E.O. 11958, 42 FR 4311; 
E.O. 13284, 68 FR 4075; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 2651a; 
Pub. L. 105-261, 112 Stat. 1920.


0
2. In Sec.  120.28, paragraph (a)(2) is revised to read as follows:


Sec.  120.28  Listing of forms referred to in this subchapter.

* * * * *
    (a) * * *
    (2) Statement of Registration (Form DS-2032).
* * * * *


Sec. Sec.  120.33-120.36  [Reserved]

0
3. Part 120 is amended by reserving Sec. Sec.  120.33 through 120.36 
and adding Sec.  120.37 to read as follows:


Sec.  120.37  Foreign ownership and foreign control.

    Foreign ownership means more than 50 percent of the outstanding 
voting securities of the firm are owned by one or more foreign persons 
(as defined in Sec.  120.16). Foreign control means one or more foreign 
persons have the authority or ability to establish or direct the 
general policies or day-to-day operations of the firm. Foreign control 
is presumed to exist where foreign persons own 25 percent or more of 
the outstanding voting securities unless one U.S. person controls an 
equal or larger percentage.

PART 122--REGISTRATION OF MANUFACTURERS AND EXPORTERS

0
4. The authority citation for part 122 continues to read as follows:

    Authority: Secs. 2 and 38, Public Law 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311; 1977 Comp. p. 79, 22 
U.S.C. 2651a.


0
5. Section 122.2 is revised to read as follows:


Sec.  122.2  Submission of registration statement.

    (a) General. An intended registrant must submit a Department of 
State Form DS-2032 (Statement of Registration) to the Office of Defense 
Trade Controls Compliance by registered or overnight mail delivery, and 
must submit an electronic payment via Automated Clearing House payable 
to the Department of State of one of the fees prescribed in Sec.  
122.3(a) of this subchapter. Automated Clearing House (ACH) is an 
electronic network used to process financial transactions in the United 
States. Intended registrants should access the Directorate of Defense 
Trade Control's Web site at https://www.pmddtc.state.gov for detailed 
guidelines on submitting an ACH electronic payment. Electronic payments 
must be in U.S. currency and must be payable through a U.S. financial 
institution. Cash, checks, foreign currency, or money orders will not 
be accepted. In addition, the Statement of Registration must be signed 
by a senior officer (e.g., Chief Executive Officer, President, 
Secretary, Partner, Member, Treasurer, General Counsel) who has been 
empowered by the intended registrant to sign such documents. The 
intended registrant also shall submit documentation that demonstrates 
that it is incorporated or otherwise authorized to do business in the 
United States. The Directorate of Defense Trade Controls will notify 
the registrant if the Statement of Registration is incomplete either by 
notifying the registrant of what information is required or through the 
return of the entire registration package. Registrants may not 
establish new entities for the purpose of reducing registration fees.
    (b) Statement of Registration Certification. The Statement of 
Registration of the intended registrant shall include a certification 
by an authorized senior officer of the following:
    (1) Whether the intended registrant, chief executive officer, 
president, vice presidents, other senior officers or officials (e.g., 
Comptroller, Treasurer, General Counsel) or any member of the board of 
directors:
    (i) Has ever been indicted for or convicted of violating any of the 
U.S. criminal statutes enumerated in Sec.  120.27 of this subchapter; 
or
    (ii) Is ineligible to contract with, or to receive a license or 
other approval to import defense articles or defense services from, or 
to receive an export license or other approval from, any agency of the 
U.S. Government.
    (2) Whether the intended registrant is foreign owned or foreign 
controlled (see Sec.  120.37 of this subchapter). If the intended 
registrant is foreign owned or foreign controlled, the certification 
shall also include whether the intended registrant is incorporated or 
otherwise authorized to engage in business in the United States.


0
6. Section 122.3 is amended by revising paragraph (a) introductory text 
to read as follows:


Sec.  122.3  Registration fees.

    (a) A person who is required to register must do so on an annual 
basis upon submission of a completed Form DS-2032 and payment of a fee 
as follows:
* * * * *

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

0
7. 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; 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, 112 Stat. 1920; Sec 1205(a), Pub. L. 107-228.


0
8. Section 123.16 is amended by revising paragraph (b)(9) introductory 
text to read as follows:


Sec.  123.16  Exemptions of general applicability.

* * * * *
    (b) * * *
    (9) Port Directors of U.S. Customs and Border Protection shall 
permit the temporary export without a license by a U.S. person of any 
unclassified component, part, tool or test equipment to a subsidiary, 
affiliate or facility owned or controlled by the U.S. person (see Sec.  
120.37 of this subchapter for definition of foreign ownership and

[[Page 45198]]

foreign control) if the component, part, tool or test equipment is to 
be used for manufacture, assembly, testing, production, or modification 
provided:
* * * * *

PART 129--REGISTRATION AND LICENSING OF BROKERS

0
9. The authority citation for part 129 continues to read as follows:

    Authority: Sec. 38, Pub. L. 104-164, 110 Stat. 1437, (22 U.S.C. 
2778).

0
10. Section 129.4 is amended by revising paragraphs (a) and (b) to read 
as follows:


Sec.  129.4  Registration statement and fees.

    (a) General. An intended registrant must submit a Department of 
State Form DS-2032 (Statement of Registration) to the Office of Defense 
Trade Controls Compliance by registered or overnight mail delivery, and 
must submit an electronic payment via Automated Clearing House (ACH) or 
Society for Worldwide Interbank Financial Telecommunications (SWIFT), 
payable to the Department of State of the fees prescribed in Sec.  
122.3(a) of this subchapter. Automated Clearing House is an electronic 
network used to process financial transactions originating from within 
the United States and SWIFT is the messaging service used by financial 
institutions worldwide to issue international transfers for foreign 
accounts. Payment methods (i.e., ACH and SWIFT) are dependent on the 
source of the funds (U.S. or foreign bank) drawn from the applicant's 
account. The originating account must be the registrant's account and 
not a third party's account. Intended registrants should access the 
Directorate of Defense Trade Control's Web site at https://www.pmddtc.state.gov for detailed guidelines on submitting ACH and 
SWIFT electronic payments. Payments, including from foreign brokers, 
must be in U.S. currency, payable through a U.S. financial institution. 
Cash, checks, foreign currency, or money orders will not be accepted. 
The Statement of Registration must be signed by a senior officer (e.g., 
Chief Executive Officer, President, Secretary, Partner, Member, 
Treasurer, General Counsel) who has been empowered by the intended 
registrant to sign such documents. The intended registrant, whether a 
U.S. or foreign person, shall submit documentation that demonstrates it 
is incorporated or otherwise authorized to do business in its 
respective country. Foreign persons who are required to register shall 
provide information that is substantially similar in content to that 
which a U.S. person would provide under this provision (e.g., foreign 
business license or similar authorization to do business). The 
Directorate of Defense Trade Controls will notify the registrant if the 
Statement of Registration is incomplete either by notifying the 
registrant of what information is required or through the return of the 
entire registration package. Registrants may not establish new entities 
for the purpose of reducing registration fees.
    (b) A person registering as a broker who is already registered as a 
manufacturer or exporter in accordance with part 122 of this subchapter 
must cite their existing manufacturer or exporter registration, and 
must pay an additional fee according to the schedule prescribed in 
Sec.  122.3(a) of this subchapter for registration as a broker.
* * * * *

    Dated: July 20, 2011.
Ellen O. Tauscher,
Under Secretary, Arms Control and International Security, Department of 
State.
[FR Doc. 2011-19115 Filed 7-27-11; 8:45 am]
BILLING CODE 4710-25-P