Amendment to the International Traffic in Arms Regulations: Definition for “Specially Designed”, 36428-36433 [2012-14471]
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Federal Register / Vol. 77, No. 118 / Tuesday, June 19, 2012 / Proposed Rules
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VI. Proposed Rule
List of Subjects in 16 CFR Part 309
Alternative fuel, Alternative fueled
vehicle, Energy conservation, Labeling,
Reporting and recordkeeping, Trade
practices.
The Commission proposes to amend
16 CFR part 309 as follows:
Secretary would achieve a significant
reduction in petroleum consumption.
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*
3. In § 309.1, remove paragraphs (dd),
(ee), and (ff) and redesignate (gg) as (dd).
4. Revise § 309.20 to read as follows:
309.20 Labeling requirements for new
covered vehicles.
(a) Before offering a new covered
vehicle for acquisition to consumers,
manufacturers shall affix or cause to be
affixed, and new vehicle dealers shall
maintain or cause to be maintained, fuel
economy labels as required by under 40
CFR part 600. For dual fueled vehicles,
such labels must include driving range
information for alternative fuel and
gasoline operation and be otherwise
consistent with provisions in 40 CFR
part 600.
(b) If an aftermarket conversion
system is installed on a vehicle by a
person other than the manufacturer
prior to such vehicle’s being acquired by
a consumer, the manufacturer shall
provide that person with the vehicle’s
fuel economy label prepared pursuant to
40 CFR part 600 and ensure that new
fuel economy vehicle labels are affixed
to such vehicles as required by
paragraph (a) of this section.
5. Remove §§ 309.21 and 309.22.
6. Redesignate § 309.23 as 309.21.
7. In Appendix A to part 309, remove
figures 4, 5, 5.1, and 6.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2012–14828 Filed 6–18–12; 8:45 am]
PART 309—LABELING
REQUIREMENTS FOR ALTERNATIVE
FUELS AND ALTERNATIVE FUELED
VEHICLES
BILLING CODE 6750–01–P
1. The authority citation for part 309
continues to read as follows:
22 CFR Part 120
Authority: 42 U.S.C. 13232(a).
Definitions.
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(f) * * *
(3) Any vehicle that is—
(i) A new qualified fuel cell motor
vehicle (as defined in 26 U.S.C.
30B(b)(3));
(ii) A new advanced lean burn
technology motor vehicle (as defined in
26 U.S.C. 30B(c)(3));
(iii) A new qualified hybrid motor
vehicle (as defined in 26 U.S.C.
30B(d)(3)); or
(iv) Any other type of vehicle that the
Administrator of the Environmental
Protection Agency demonstrates to the
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RIN 1400–AD22
[Public Notice 7921]
2. In § 309.1 add new paragraph (f)(3)
to read as follows:
§ 309.1
DEPARTMENT OF STATE
Amendment to the International Traffic
in Arms Regulations: Definition for
‘‘Specially Designed’’
Department of State.
Proposed rule.
AGENCY:
ACTION:
As part of the President’s
Export Control Reform (ECR) Initiative,
the Directorate of Defense Trade
Controls (DDTC) seeks public comment
on the proposed definition of ‘‘specially
designed’’ to be adopted in the
International Traffic in Arms
Regulations (ITAR). This proposed rule
is published concurrently with the
Department of Commerce’s proposed
revision to the definition of ‘‘specially
designed’’ in the Export Administration
SUMMARY:
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Regulations (EAR). The revisions
contained in this rule are part of the
Department of State’s retrospective plan
under E.O. 13563 completed on August
17, 2011. The Department of State’s full
plan can be accessed at https://
www.state.gov/documents/organization/
181028.pdf.
DATES: The Department of State will
accept comments on this proposed rule
until August 3, 2012.
ADDRESSES: Interested parties may
submit comments within 45 days of the
date of publication by one of the
following methods:
• Email:
DDTCResponseTeam@state.gov with the
subject line, ‘‘Specially Designed
Definition.’’
• Internet: At www.regulations.gov,
search for this notice by using this
notice’s RIN (1400–AD22).
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: Ms.
Candace M. J. Goforth, Director, Office
of Defense Trade Controls Policy, U.S.
Department of State, telephone (202)
663–2792, or email
DDTCResponseTeam@state.gov. ATTN:
Specially Designed Definition.
SUPPLEMENTARY INFORMATION: The
Directorate of Defense Trade Controls
(DDTC), U.S. Department of State,
administers the International Traffic in
Arms Regulations (ITAR) (22 CFR parts
120–130). The items subject to the
jurisdiction of the ITAR, i.e., ‘‘defense
articles,’’ are identified on the ITAR’s
U.S. Munitions List (USML) (22 CFR
121.1). With few exceptions, items not
subject to the export control jurisdiction
of the ITAR are subject to the
jurisdiction of the Export
Administration Regulations (‘‘EAR,’’ 15
CFR parts 730–774, which includes the
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Commerce Control List (CCL) in
Supplement No. 1 to Part 774),
administered by the Bureau of Industry
and Security (BIS), U.S. Department of
Commerce. Both the ITAR and the EAR
impose license requirements on exports
and reexports. Items not subject to the
ITAR or to the exclusive licensing
jurisdiction of any other set of
regulations are subject to the EAR.
Export Control Reform Update
The Departments of State and
Commerce described in their respective
Advanced Notices of Proposed
Rulemaking (ANPRM) in December
2010 the Administration’s plan to make
the USML and the CCL positive, tiered,
and aligned so that eventually they can
be combined into a single control list
(see ‘‘Commerce Control List: Revising
Descriptions of Items and Foreign
Availability,’’ 75 FR 76664 (December 9,
2010) and ‘‘Revisions to the United
States Munitions List,’’ 75 FR 76935
(December 10, 2010)). The notices also
called for the establishment of a ‘‘bright
line’’ between the USML and the CCL to
reduce government and industry
uncertainty regarding export
jurisdiction by clarifying whether
particular items are subject to the
jurisdiction of the ITAR or the EAR.
While these remain the
Administration’s ultimate Export
Control Reform objectives, their
concurrent implementation would be
problematic in the near term. In order to
more quickly reach the national security
objectives of greater interoperability
with U.S. allies, enhancing the defense
industrial base, and permitting the U.S.
Government to focus its resources on
controlling and monitoring the export
and reexport of more significant items to
destinations, end-uses, and end-users of
greater concern than NATO allies and
other multi-regime partners, the
Administration has decided, as an
interim step, to propose and implement
revisions to both the USML and the CCL
that are more positive, but not yet
tiered.
Specifically, based in part on a review
of the comments received in response to
the December 2010 notices, the
Administration has determined that
fundamentally altering the structure of
the USML by tiering and aligning it on
a category-by-category basis would
significantly disrupt the export control
compliance systems and procedures of
exporters and reexporters. For example,
until the entire USML was revised and
became final, some USML categories
would follow the legacy numbering and
control structures while the newly
revised categories would follow a
completely different numbering
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structure. In order to allow for the
national security benefits to flow from
re-aligning the jurisdictional status of
defense articles that no longer warrant
control on the USML on a category-bycategory basis while minimizing the
impact on exporters’ internal control
and jurisdictional and classification
marking systems, the Administration
plans to proceed with building positive
lists now and afterward return to
structural changes.
Definition for ‘‘Specially Designed’’
Although one of the goals of the ECR
Initiative is to describe USML controls
without using design intent criteria, a
few of the controls in the proposed
revision nonetheless use the term
‘‘specially designed.’’ It is, therefore,
necessary for the Department to define
the term. Two proposed definitions
have been published to date.
The Department first provided a draft
definition for ‘‘specially designed’’ in
the December 2010 ANPRM (75 FR
76935) and noted the term would be
used minimally in the USML, and then
only to remain consistent with the
Wassenaar Arrangement or other
multilateral regime obligations or when
no other reasonable option exists to
describe the control without using the
term. The definition provided at that
time is as follows: ‘‘For the purposes of
this Subchapter, the term ‘specially
designed’ means that the end-item,
equipment, accessory, attachment,
system, component, or part (see ITAR
§ 121.8) has properties that (i)
distinguish it for certain predetermined
purposes, (ii) are directly related to the
functioning of a defense article, and (iii)
are used exclusively or predominantly
in or with a defense article identified on
the USML.’’
The Department of Commerce
subsequently published on July 15,
2011, for public comment, (see
‘‘Proposed Revisions to the Export
Administration Regulations (EAR):
Control of Items the President
Determines No Longer Warrant Control
under the United States Munitions List
(USML),’’ 76 FR 41958), the
Administration’s proposed definition of
‘‘specially designed’’ that would be
common to the CCL and the USML. The
public provided more than 40
comments on that proposed definition
on or before the September 13, 2011,
submission deadline. The Departments
of State, Commerce, and Defense have
reviewed those comments and related
issues. The Department of State’s
Defense Trade Advisory Group and the
Department of Commerce’s Technical
Advisory Committees participated in
the review. The revised definition
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provided in this proposed rule is, but
for a few modifications, identical to the
definition published separately by the
Department of Commerce (see elsewhere
in this issue of the Federal Register).
The overall goal of the definition is to
differentiate between those articles
‘‘enumerated’’ on the USML and those
articles not enumerated but captured in
‘‘catch-all’’ paragraphs.
The July 15 rule referenced above
identified nine objectives for the revised
‘‘specially designed’’ definition. These
objectives have not changed and the
U.S. Government is committed to
adopting a ‘‘specially designed’’
definition under the ITAR and EAR that
would achieve these nine objectives.
The nine objectives are to:
(1) Preclude multiple or overlapping
controls of similar items within and
across the two control lists;
(2) Be easily understood and applied
by exporters, prosecutors, juries, and the
U.S. Government—e.g., by using
objective, knowable, and clear
requirements that do not rely upon a
need to investigate and divine the
intentions of the original designer of a
part or the predominant market
applications for such items;
(3) Be consistent with definitions
used by the international export control
regimes;
(4) Not include any item specifically
enumerated on either the USML or the
CCL and, in order to avoid a definitional
loop, do not use ‘‘specially designed’’ as
a control criterion;
(5) Be capable of excluding from
control simple or multi-use parts such
as springs, bolts, and rivets, and other
types of items the U.S. Government
determines do not warrant significant
export controls;
(6) Apply to both descriptions of end
items that are ‘‘specially designed’’ to
have particular characteristics and to
parts and components that were
‘‘specially designed’’ for particular end
items;
(7) Apply to materials and software
because they are ‘‘specially designed’’ to
have a particular characteristic or for a
particular type of end item;
(8) Not increase the current control
level to ‘‘600 series’’ control or other
higher end controls of items (i.e., not
moving items currently subject to a
lower control status to a higher level
control status), particularly current
EAR99 items, that are now controlled at
lower levels; and
(9) Not, merely as a result of the
definition, cause historically EAR
controlled items to become ITAR
controlled.
The revised ‘‘specially designed’’
definition provided in this notice
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proposes a simplified two paragraph
structure. Paragraph (a) is to identify
what commodities, as a result of
development, are ‘‘specially designed,’’
and paragraph (b) is to identify what
parts, components, accessories, and
attachments are excluded from
‘‘specially designed.’’
Paragraph (a) begins with the phrase,
‘‘Except for commodities described in
(b), a commodity is ‘specially designed’
if, as a result of development, it [is
within the scope of any one of three
subparagraphs discussed below].’’ It is
the beginning of the ‘‘catch’’ in the
‘‘catch and release’’ structure of the
definition. For U.S. Munitions List
paragraphs containing the term
‘‘specially designed,’’ a defense article is
‘‘caught’’—it is ‘‘specially designed’’—if
any of the three elements of paragraph
(a) apply and none of the elements of
paragraph (b) apply.
Paragraph (a) is limited by the phrase,
‘‘if, as a result of development.’’ The
definition would also include a note to
paragraph (b)(3) that contains the
following definition of development for
purposes of the proposed ‘‘specially
designed’’ definition: ‘‘‘Development’ is
related to all stages prior to serial
production, such as: design, design
research, design analyses, design
concepts, assembly and testing of
prototypes, pilot production schemes,
design data, process of transforming
design data into a product,
configuration design, integration design,
layouts.’’ Thus, a defense article is
caught by the threshold requirement of
paragraph (a) only if someone is
engaged in any of these ‘‘development’’
activities with respect to the article at
issue. Three questions one may ask to
determine if a defense article is within
the scope of paragraph (a) are as follows:
(1) Does the commodity, as a result of
development, have properties peculiarly
responsible for achieving or exceeding
the controlled performance levels,
characteristics, or functions described in
the relevant USML paragraph?; (2) Is the
part or component, as a result of
development, necessary for an
enumerated defense article to function
as designed?; and (3) Is the accessory or
attachment, as a result of development,
used with an enumerated defense article
to enhance its usefulness or
effectiveness? If the answer to all three
questions is ‘‘no,’’ then the commodity
is not ‘‘specially designed’’ and further
analysis pursuant to paragraph (b) is not
necessary. If the answer to any one of
the questions is ‘‘yes,’’ then the exporter
or reexporter must determine whether
any one of the five parts of paragraph (b)
of the definition applies. If any one of
the five paragraph (b) exclusions apply,
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then the commodity is not ‘‘specially
designed.’’ If none do, then the
commodity is ‘‘specially designed.’’
Paragraph (a)(1) would capture a
commodity if it, as a result of
‘‘development,’’ ‘‘has properties
peculiarly responsible for achieving or
exceeding the controlled performance
levels, characteristics, or functions
described in the relevant U.S. Munitions
List paragraph.’’ This criterion is
essentially the same as was proposed in
the July 15 proposed definition. Based
on the comments, the public found this
part of the definition clear. As an
example, even if a commodity is capable
of use with a controlled defense article,
it is not captured by this part of
paragraph (a) unless someone did
something during the commodity’s
development so that it would achieve or
exceed the performance levels,
characteristics, or functions described in
a referenced USML paragraph.
Paragraph (a)(2) would capture a part
or component if it, as a result of
‘‘development,’’ ‘‘is necessary for an
enumerated defense article to function
as designed.’’ The Department realizes
that this element is similar to paragraph
(a)(1), but believes that it needs to be
listed separately because not all
descriptions of parts and components
on the USML include performance
levels, characteristics, or functions as a
basis for control. Paragraph (a)(2) thus
will capture parts and components that
are necessary for another article on the
USML to function ‘‘as designed.’’ If an
article will function ‘‘as designed’’
without the part or component at issue,
then that part or component is not
captured by paragraph (a)(2).
Paragraph (a)(3) would capture an
accessory or attachment if it, as a result
of ‘‘development,’’ ‘‘is used with an
enumerated defense article to enhance
its usefulness or effectiveness.’’ This
phrase is from the ITAR’s current and
the EAR’s proposed definitions of
‘‘accessory,’’ ‘‘attachment,’’ and
‘‘equipment.’’
The July 15 proposed ‘‘specially
designed’’ definition included two
exclusion paragraphs (paragraphs (c)
and (d)) that identified what items
would not be ‘‘specially designed.’’
Many commenting parties requested the
July 15 definition be simplified and
shortened, including the exclusion
paragraphs. The Department has
addressed these concerns by adopting a
simplified structure for the exclusion
paragraph (b) included in this proposed
rule. Specifically, any part, component,
accessory, or attachment that is
described in an exclusion paragraph
under (b)(1), (b)(2), (b)(3), (b)(4), or
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(b)(5), would not be controlled by a
USML ‘‘catch-all’’ paragraph.
These five exclusions under
paragraph (b) would play an important
role in this proposed ‘‘specially
designed’’ definition. Paragraphs (a)(2)
and (a)(3) are broad enough to capture
all the defense articles that would be
potentially ‘‘specially designed,’’ but in
practice would capture a larger set of
parts, components, accessories, and
attachments than is intended. Paragraph
(b) would work to release from
inclusion under ‘‘specially designed’’
specific and non-specific parts,
components, accessories, and
attachments, consistent with existing
U.S. export control and international
commitments. The exclusions under
paragraph (b) as proposed in this rule
would refine the set of parts,
components, accessories, and
attachments that would be subject to the
‘‘catch-all’’ controls on the USML. In
this way, paragraphs (a) and (b) are
inextricably linked and are intended to
work together to identify the parts,
components, accessories, and
attachments that need to be treated as
‘‘specially designed’’ for purposes of the
‘‘catch-all’’ provisions on the USML.
Paragraph (b) codifies the principle in
ITAR § 120.3 that, in general, a
commodity should not be ITAR
controlled if has a predominant civil
application or has performance
equivalent (defined by form, fit, and
function) to a commodity used for civil
applications. If such a commodity
warrants control under the ITAR
because it provides the United States
with a critical military or intelligence
advantage or for another reason, then it
is or should be enumerated on the
USML, as described in the ‘‘bright line,’’
‘‘positive list’’ objectives in the
December 2010 ANPRM (75 FR 76935).
An example of an article that would
not be ‘‘specially designed’’ as a result
of proposed paragraph (b)(4) is one that
was or is being developed to be
interchangeable between an aircraft
enumerated in USML Category VIII and
also an aircraft controlled by ECCN
9A610.a. Such a conclusion for a
particular article does not necessarily
mean that the article is not subject to
export controls. The article may, for
example, be enumerated on the USML
and, thus, ITAR controlled. In addition,
if it is not enumerated on the USML, it
might fall with the scope of the controls
at ECCN 9A610.x. The jurisdiction of an
article must be determined on a case-bycase basis. Proposed paragraph (b)(4)
merely states that such an article would
not be within the scope of a ‘‘catch-all’’
paragraph of the USML in light of its
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commonality with non-ITAR controlled
articles.
Paragraph (a) would create more
objective tests for what defense articles,
as a result of development, would be
‘‘specially designed’’ based on the
criteria identified in (a)(1), (a)(2), or
(a)(3). Paragraph (b) would create more
objective tests for what parts,
components, accessories, and
attachments are excluded from
‘‘specially designed’’ under the
exclusion criteria identified in (b)(1),
(b)(2), (b)(3), (b)(4) or (b)(5). The
objective criteria identified in paragraph
(a) working with the objective exclusion
criteria identified in paragraph (b)
would allow this proposed ‘‘specially
designed’’ definition to achieve the nine
stated objectives identified above for the
definition.
provision for public comment and
without prejudice to its determination
that controlling the import and export of
defense services is a foreign affairs
function. As noted above, and also
without prejudice to the Department
position that this proposed rulemaking
is not subject to the APA, the
Department previously published a
related Advance Notice of Proposed
Rulemaking (RIN 1400–AC78) on
December 10, 2010 (75 FR 76935), and
accepted comments for 60 days.
Request for Comments
Unfunded Mandates Reform Act of 1995
This proposed 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.
As the U.S. Government works
through the proposed revisions to the
USML, some solutions have been
adopted that were determined to be the
best of available options. With the
thought that multiple perspectives
would be beneficial to the USML
revision process, the Department
welcomes the assistance of users of the
lists and requests input on the
following:
(1) The key goal of this rulemaking is
to establish a definition of ‘‘specially
designed’’ that provides a ‘‘bright line’’
between the commodities controlled by
the USML and the CCL. The public is
asked to provide comment on the clarity
and understanding of the proposed
definition.
(2) The key goal of this rulemaking is
to establish a definition of ‘‘specially
designed’’ that is applicable to all USML
categories. The public is asked to
provide comments on the use of
‘‘specially designed’’ in proposed rules
for USML revision where the comment
period has already closed, as well those
proposed rules with open comment
periods.
Regulatory Analysis and Notices
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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 (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
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Regulatory Flexibility Act
Since the Department is of the
opinion that this proposed rule is
exempt from the rulemaking provisions
of 5 U.S.C. 553, it does not require
analysis under the Regulatory
Flexibility Act.
Small Business Regulatory Enforcement
Fairness Act of 1996
This proposed 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 proposed 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 proposed
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 proposed
amendment.
Executive Orders 12866 and 13563
Executive Orders 13563 and 12866
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
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36431
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributed impacts, and equity).
Executive Order 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This rule has been
designated a ‘‘significant regulatory
action,’’ although not economically
significant, under section 3(f) of
Executive Order 12866. Accordingly,
the rule has been reviewed by the Office
of Management and Budget (OMB).
Executive Order 12988
The Department of State has reviewed
the proposed 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.
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
Notwithstanding any other provision
of law, no person is required to respond
to, nor is subject to a penalty for failure
to comply with, a collection of
information, subject to the requirements
of the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) (PRA), unless
that collection of information displays a
currently valid OMB control number.
This proposed rule would affect the
following approved collections: (1)
Statement of Registration, DS–2032,
OMB No. 1405–0002; (2) Application/
License for Permanent Export of
Unclassified Defense Articles and
Related Unclassified Technical Data,
DSP–5, OMB No. 1405–0003; (3)
Application/License for Temporary
Import of Unclassified Defense Articles,
DSP–61, OMB No. 1405–0013; (4)
Nontransfer and Use Certificate, DSP–
83, OMB No. 1405–0021; (5)
Application/License for Permanent/
Temporary Export or Temporary Import
of Classified Defense Articles and
Classified Technical Data, DSP–85,
OMB No. 1405–0022; (6) Application/
License for Temporary Export of
Unclassified Defense Articles, DSP–73,
OMB No. 1405–0023; (7) Statement of
Political Contributions, Fees, or
Commissions in Connection with the
Sale of Defense Articles or Services,
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OMB No. 1405–0025; (8) Authority to
Export Defense Articles and Services
Sold Under the Foreign Military Sales
(FMS) Program, DSP–94, OMB No.
1405–0051; (9) Application for
Amendment to License for Export or
Import of Classified or Unclassified
Defense Articles and Related Technical
Data, DSP–6, –62, –74, –119, OMB No.
1405–0092; (10) Request for Approval of
Manufacturing License Agreements,
Technical Assistance Agreements, and
Other Agreements, DSP–5, OMB No.
1405–0093; (11) Maintenance of Records
by Registrants, OMB No. 1405–0111;
(12) Annual Brokering Report, DS–4142,
OMB No. 1405–0141; (13) Brokering
Prior Approval (License), DS–4143,
OMB No. 1405–0142; (14) Projected Sale
of Major Weapons in Support of Section
25(a)(1) of the Arms Export Control Act,
DS–4048, OMB No. 1405–0156; (15)
Export Declaration of Defense Technical
Data or Services, DS–4071, OMB No.
1405–0157; (16) Request for Commodity
Jurisdiction Determination, DS–4076,
OMB No. 1405–0163; (17) Request to
Change End-User, End-Use, and/or
Destination of Hardware, DS–6004,
OMB No. 1405–0173; (18) Request for
Advisory Opinion, DS–6001, OMB No.
1405–0174; (19) Voluntary Disclosure,
OMB No. 1405–0179; and (20)
Technology Security/Clearance Plans,
Screening Records, and Non-Disclosure
Agreements Pursuant to 22 CFR 126.18,
OMB No. 1405–0195. The Department
of State believes there will be minimal
changes to these collections. The
Department of State believes the
combined effect of all rules to be
published moving commodities from
the USML to the EAR as part of the
Administration’s Export Control Reform
would decrease the number of license
applications by approximately 30,000
annually. The Department of State is
looking for comments on the potential
reduction in burden.
List of Subjects in 22 CFR Part 120
Arms and munitions, Exports.
Accordingly, for the reasons set forth
above, Title 22, Chapter I, Subchapter
M, part 120 is proposed to be amended
as follows:
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PART 120—PURPOSE AND
DEFINITIONS
1. The authority citation for part 120
continues to read as follows:
Authority: Sections 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 CFR 4075, 3 CFR, 1977
Comp. p. 79; 22 U.S.C. 2658; Pub. L. 105–
261, 112 Stat. 1920.
2. Add § 120.41 to read as follows:
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§ 120.41
Specially designed.
When applying this definition, follow
this sequential analysis: Begin with
paragraph (a)(1) of this section and
proceed through each subsequent
paragraph. If a commodity would not be
controlled as a result of the application
of the standards in paragraph (a) of this
section, then it is not necessary to work
through paragraph (b) of this section. If
a commodity would be controlled as a
result of paragraph (a), then it is
necessary to work through each of the
elements of paragraph (b). Commodities
described in any of paragraphs (b)(1)
through (5) of this section are not
‘‘specially designed’’ commodities
controlled on the U.S. Munitions List
but may be subject to the jurisdiction of
another U.S. Government regulatory
agency (see § 120.5 of this subchapter).
(a) Except for commodities described
in (b) of this section, a commodity is
‘‘specially designed’’ if, as a result of
development, it:
(1) Has properties peculiarly
responsible for achieving or exceeding
the controlled performance levels,
characteristics, or functions described in
the relevant U.S. Munitions List
paragraph;
(2) Is a part (see § 121.8(d) of this
subchapter) or component (see
§ 121.8(b) of this subchapter) necessary
for an enumerated defense article to
function as designed; or
(3) Is an accessory or attachment (see
§ 121.8(c) of this subchapter) used with
an enumerated defense article to
enhance its usefulness or effectiveness.
(b) A part, component, accessory, or
attachment is not controlled by a U.S.
Munitions List ‘‘catch-all’’ paragraph if
it:
(1) Is enumerated in a U.S. Munitions
List paragraph;
(2) Is a single unassembled part that
is of a type commonly used in multiple
types of commodities not enumerated
on the U.S. Munitions List or the
Commerce Control List, such as
threaded fasteners (e.g., screws, bolts,
nuts, nut plates, studs, inserts), other
fasteners (e.g., clips, rivets, pins), basic
hardware (e.g., washers, spacers,
insulators, grommets, bushings,
springs), wire, and solder;
(3) Has the same form, fit, and
performance capabilities as a part,
component, accessory, or attachment
used in or with a commodity that:
(i) Is or was in production (i.e., not in
development); and
(ii) Is not enumerated on the U.S.
Munitions List;
(4) Was or is being developed with a
reasonable expectation of use in or with
defense articles enumerated on the U.S.
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Fmt 4702
Sfmt 4702
Munitions List and commodities not on
the U.S. Munitions List; or
(5) Was or is being developed with no
reasonable expectation of use for a
particular application.
Note 1: The term ‘‘enumerated’’ refers to
any article which is identified on the U.S.
Munitions List or the Commerce Control List.
Note 2: The term ‘‘commodity’’ refers to
any article, material, or supply, except
technology/technical data or software.
Note to paragraph (a)(1): An example of a
commodity that, as a result of development
has properties peculiarly responsible for
achieving or exceeding the controlled
performance levels, functions, or
characteristics in a U.S. Munitions List
category would be a swimmer delivery
vehicle ‘‘specially designed’’ to dock with a
submarine to provide submerged transport
for swimmers or divers from submarines.
Note to paragraph (b): A ‘‘catch-all’’
paragraph is one that does not refer to
specific types of parts, components,
accessories, or attachments, but rather
controls parts, components, accessories, or
attachments if they were ‘‘specially
designed’’ for an enumerated item. For the
purposes of the U.S. Munitions List, a ‘‘catchall’’ paragraph is delineated by the phrases
‘‘and ‘specially designed’ parts and
components therefor,’’ or ‘‘parts,
components, accessories, attachments, and
associated equipment ‘specially designed’
for.’’
Note 1 to paragraph (b)(3): For the
purposes of this definition, ‘‘production’’
means all production stages, such as product
engineering, manufacture, integration,
assembly (mounting), inspection, testing, and
quality assurance. This includes ‘‘serial
production’’ where commodities have passed
production readiness testing (i.e., an
approved, standardized design ready for large
scale production) and have been or are
capable of being produced on an assembly
line using the approved, standardized design.
Note 2 to paragraph (b)(3): For the
purposes of this definition, ‘‘development’’ is
related to all stages prior to serial production,
such as: Design, design research, design
analyses, design concepts, assembly and
testing of prototypes, pilot production
schemes, design data, process of transforming
design data into a product, configuration
design, integration design, layouts.
Note 3 to paragraph (b)(3): Commodities in
‘‘production’’ that are subsequently subject to
‘‘development’’ activities, such as those
pertaining to quality improvements, cost
reductions, or feature enhancements, remain
in ‘‘production.’’ However, any new models
or versions of such commodities developed
from such efforts that change the basic
performance or capability of the commodity
are in ‘‘development’’ until and unless they
enter into ‘‘production.’’
Note to paragraphs (b)(4) and (b)(5): For a
defense article not to be ‘‘specially designed’’
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Federal Register / Vol. 77, No. 118 / Tuesday, June 19, 2012 / Proposed Rules
on the basis of (b)(4) or (b)(5), documents
contemporaneous with its development, in
their totality, must establish the elements of
paragraph (b)(4) or (b)(5). Such documents
may include concept design information,
marketing plans, declarations in patent
applications, or contracts. Absent such
documents, the commodity may not to be
excluded from being ‘‘specially designed’’ by
either paragraph (b)(4) or (b)(5).
Note to paragraph (b)(5): If you have
knowledge that the commodity was or is
being developed for a particular application,
you may not rely on paragraph (b)(5) to
conclude that the commodity was or is not
‘‘specially designed.’’
Dated: June 7, 2012.
Rose E. Gottemoeller,
Acting Under Secretary, Arms Control and
International Security, Department of State.
[FR Doc. 2012–14471 Filed 6–15–12; 11:15 am]
BILLING CODE 4710–25–P
DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade
Bureau
27 CFR Part 9
[Docket No. TTB–2012–0005; Notice No.
130]
RIN 1513–AB88
Proposed Establishment of the Elkton
Oregon Viticultural Area
Alcohol and Tobacco Tax and
Trade Bureau, Treasury.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Alcohol and Tobacco Tax
and Trade Bureau (TTB) proposes to
establish the approximately 74,900-acre
‘‘Elkton Oregon’’ viticultural area in
Douglas County, Oregon. The proposed
viticultural area lies totally within the
Umpqua Valley viticultural area and the
multi-county Southern Oregon
viticultural area. TTB designates
viticultural areas to allow vintners to
better describe the origin of their wines
and to allow consumers to better
identify wines they may purchase. TTB
invites comments on this proposed
addition to its regulations.
DATES: Comments must be received on
or before August 20, 2012.
ADDRESSES: Please send your comments
on this notice to one of the following
addresses:
• https://www.regulations.gov (via the
online comment form for this notice as
posted within Docket No. TTB–2012–
0005 at ‘‘Regulations.gov,’’ the Federal
e-rulemaking portal);
• U.S. mail: Director, Regulations and
Rulings Division, Alcohol and Tobacco
erowe on DSK2VPTVN1PROD with PROPOSALS-1
SUMMARY:
VerDate Mar<15>2010
14:50 Jun 18, 2012
Jkt 226001
Tax and Trade Bureau, P.O. Box 14412,
Washington, DC 20044–4412; or
• Hand delivery/courier in lieu of
mail: Alcohol and Tobacco Tax and
Trade Bureau, 1310 G Street NW., Suite
200–E, Washington, DC 20005.
See the Public Participation section of
this notice for specific instructions and
requirements for submitting comments,
and for information on how to request
a public hearing.
You may view copies of this notice,
selected supporting materials, and any
comments TTB receives about this
proposal at https://www.regulations.gov
within Docket No. TTB–2012–0005. A
link to that docket is posted on the TTB
Web site at https://www.ttb.gov/wine/
wine_rulemaking.shtml under Notice
No. 130. You also may view copies of
this notice, all related petitions, maps or
other supporting materials, and any
comments TTB receives about this
proposal by appointment at the TTB
Information Resource Center, 1310 G
Street NW., Washington, DC 20220.
Please call 202–453–2270 to make an
appointment.
FOR FURTHER INFORMATION CONTACT:
Karen A. Thornton, Regulations and
Rulings Division, Alcohol and Tobacco
Tax and Trade Bureau, 1310 G Street
NW., Box 12, Washington, DC 20005;
telephone 202–453–1039, ext. 175.
SUPPLEMENTARY INFORMATION:
Background on Viticultural Areas
TTB Authority
Section 105(e) of the Federal Alcohol
Administration Act (FAA Act), 27
U.S.C. 205(e), authorizes the Secretary
of the Treasury to prescribe regulations
for the labeling of wine, distilled spirits,
and malt beverages. The FAA Act
provides that these regulations should,
among other things, prohibit consumer
deception and the use of misleading
statements on labels, and ensure that
labels provide the consumer with
adequate information as to the identity
and quality of the product. The Alcohol
and Tobacco Tax and Trade Bureau
(TTB) administers the FAA Act
pursuant to section 1111(d) of the
Homeland Security Act of 2002,
codified at 6 U.S.C. 531(d). The
Secretary has delegated various
authorities through Treasury
Department Order 120–01 (Revised),
dated January 21, 2003, to the TTB
Administrator to perform the functions
and duties in the administration and
enforcement of this law.
Part 4 of the TTB regulations (27 CFR
part 4) allows the establishment of
definitive viticultural areas and the use
of their names as appellations of origin
on wine labels and in wine
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Sfmt 4702
36433
advertisements. Part 9 of the TTB
regulations (27 CFR part 9) contains the
list of approved American viticultural
areas.
Definition
Section 4.25(e)(1)(i) of the TTB
regulations (27 CFR 4.25(e)(1)(i)) defines
a viticultural area for American wine as
a delimited grape-growing region having
distinguishing features as described in
part 9 of the regulations and a name and
a delineated boundary as established in
part 9 of the regulations. These
designations allow vintners and
consumers to attribute a given quality,
reputation, or other characteristic of a
wine made from grapes grown in an area
to its geographic origin. The
establishment of viticultural areas
allows vintners to describe more
accurately the origin of their wines to
consumers and helps consumers to
identify wines they may purchase.
Establishment of a viticultural area is
neither an approval nor an endorsement
by TTB of the wine produced in that
area.
Requirements
Section 4.25(e)(2) of the TTB
regulations outlines the procedure for
proposing an American viticultural area
and provides that any interested party
may petition TTB to establish a grapegrowing region as a viticultural area.
Section 9.12 of the TTB regulations
(27 CFR 9.12) prescribes standards for
petitions for the establishment or
modification of American viticultural
areas. Such petitions must include the
following—
• Evidence that the area within the
proposed viticultural area boundary is
locally or nationally known by the
viticultural area name specified in the
petition;
• An explanation of the basis for
defining the boundary of the proposed
viticultural area;
• A narrative description of the
features of the proposed viticultural area
that affect viticulture, such as climate,
geology, soil, physical features, and
elevation, that make the proposed
viticultural area distinctive and
distinguish it from adjacent areas
outside the proposed viticultural area
boundary;
• A copy of the appropriate United
States Geological Survey (USGS) map(s)
showing the location of the proposed
viticultural area, with the boundary of
the proposed viticultural area clearly
drawn thereon; and
• A detailed narrative description of
the proposed viticultural area boundary
based on USGS map markings.
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]]>Agencies
[Federal Register Volume 77, Number 118 (Tuesday, June 19, 2012)]
[Proposed Rules]
[Pages 36428-36433]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14471]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF STATE
22 CFR Part 120
RIN 1400-AD22
[Public Notice 7921]
Amendment to the International Traffic in Arms Regulations:
Definition for ``Specially Designed''
AGENCY: Department of State.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: As part of the President's Export Control Reform (ECR)
Initiative, the Directorate of Defense Trade Controls (DDTC) seeks
public comment on the proposed definition of ``specially designed'' to
be adopted in the International Traffic in Arms Regulations (ITAR).
This proposed rule is published concurrently with the Department of
Commerce's proposed revision to the definition of ``specially
designed'' in the Export Administration Regulations (EAR). The
revisions contained in this rule are part of the Department of State's
retrospective plan under E.O. 13563 completed on August 17, 2011. The
Department of State's full plan can be accessed at https://www.state.gov/documents/organization/181028.pdf.
DATES: The Department of State will accept comments on this proposed
rule until August 3, 2012.
ADDRESSES: Interested parties may submit comments within 45 days of the
date of publication by one of the following methods:
Email: DDTCResponseTeam@state.gov with the subject line,
``Specially Designed Definition.''
Internet: At www.regulations.gov, search for this notice
by using this notice's RIN (1400-AD22).
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: Ms. Candace M. J. Goforth, Director,
Office of Defense Trade Controls Policy, U.S. Department of State,
telephone (202) 663-2792, or email DDTCResponseTeam@state.gov. ATTN:
Specially Designed Definition.
SUPPLEMENTARY INFORMATION: The Directorate of Defense Trade Controls
(DDTC), U.S. Department of State, administers the International Traffic
in Arms Regulations (ITAR) (22 CFR parts 120-130). The items subject to
the jurisdiction of the ITAR, i.e., ``defense articles,'' are
identified on the ITAR's U.S. Munitions List (USML) (22 CFR 121.1).
With few exceptions, items not subject to the export control
jurisdiction of the ITAR are subject to the jurisdiction of the Export
Administration Regulations (``EAR,'' 15 CFR parts 730-774, which
includes the
[[Page 36429]]
Commerce Control List (CCL) in Supplement No. 1 to Part 774),
administered by the Bureau of Industry and Security (BIS), U.S.
Department of Commerce. Both the ITAR and the EAR impose license
requirements on exports and reexports. Items not subject to the ITAR or
to the exclusive licensing jurisdiction of any other set of regulations
are subject to the EAR.
Export Control Reform Update
The Departments of State and Commerce described in their respective
Advanced Notices of Proposed Rulemaking (ANPRM) in December 2010 the
Administration's plan to make the USML and the CCL positive, tiered,
and aligned so that eventually they can be combined into a single
control list (see ``Commerce Control List: Revising Descriptions of
Items and Foreign Availability,'' 75 FR 76664 (December 9, 2010) and
``Revisions to the United States Munitions List,'' 75 FR 76935
(December 10, 2010)). The notices also called for the establishment of
a ``bright line'' between the USML and the CCL to reduce government and
industry uncertainty regarding export jurisdiction by clarifying
whether particular items are subject to the jurisdiction of the ITAR or
the EAR. While these remain the Administration's ultimate Export
Control Reform objectives, their concurrent implementation would be
problematic in the near term. In order to more quickly reach the
national security objectives of greater interoperability with U.S.
allies, enhancing the defense industrial base, and permitting the U.S.
Government to focus its resources on controlling and monitoring the
export and reexport of more significant items to destinations, end-
uses, and end-users of greater concern than NATO allies and other
multi-regime partners, the Administration has decided, as an interim
step, to propose and implement revisions to both the USML and the CCL
that are more positive, but not yet tiered.
Specifically, based in part on a review of the comments received in
response to the December 2010 notices, the Administration has
determined that fundamentally altering the structure of the USML by
tiering and aligning it on a category-by-category basis would
significantly disrupt the export control compliance systems and
procedures of exporters and reexporters. For example, until the entire
USML was revised and became final, some USML categories would follow
the legacy numbering and control structures while the newly revised
categories would follow a completely different numbering structure. In
order to allow for the national security benefits to flow from re-
aligning the jurisdictional status of defense articles that no longer
warrant control on the USML on a category-by-category basis while
minimizing the impact on exporters' internal control and jurisdictional
and classification marking systems, the Administration plans to proceed
with building positive lists now and afterward return to structural
changes.
Definition for ``Specially Designed''
Although one of the goals of the ECR Initiative is to describe USML
controls without using design intent criteria, a few of the controls in
the proposed revision nonetheless use the term ``specially designed.''
It is, therefore, necessary for the Department to define the term. Two
proposed definitions have been published to date.
The Department first provided a draft definition for ``specially
designed'' in the December 2010 ANPRM (75 FR 76935) and noted the term
would be used minimally in the USML, and then only to remain consistent
with the Wassenaar Arrangement or other multilateral regime obligations
or when no other reasonable option exists to describe the control
without using the term. The definition provided at that time is as
follows: ``For the purposes of this Subchapter, the term `specially
designed' means that the end-item, equipment, accessory, attachment,
system, component, or part (see ITAR Sec. 121.8) has properties that
(i) distinguish it for certain predetermined purposes, (ii) are
directly related to the functioning of a defense article, and (iii) are
used exclusively or predominantly in or with a defense article
identified on the USML.''
The Department of Commerce subsequently published on July 15, 2011,
for public comment, (see ``Proposed Revisions to the Export
Administration Regulations (EAR): Control of Items the President
Determines No Longer Warrant Control under the United States Munitions
List (USML),'' 76 FR 41958), the Administration's proposed definition
of ``specially designed'' that would be common to the CCL and the USML.
The public provided more than 40 comments on that proposed definition
on or before the September 13, 2011, submission deadline. The
Departments of State, Commerce, and Defense have reviewed those
comments and related issues. The Department of State's Defense Trade
Advisory Group and the Department of Commerce's Technical Advisory
Committees participated in the review. The revised definition provided
in this proposed rule is, but for a few modifications, identical to the
definition published separately by the Department of Commerce (see
elsewhere in this issue of the Federal Register). The overall goal of
the definition is to differentiate between those articles
``enumerated'' on the USML and those articles not enumerated but
captured in ``catch-all'' paragraphs.
The July 15 rule referenced above identified nine objectives for
the revised ``specially designed'' definition. These objectives have
not changed and the U.S. Government is committed to adopting a
``specially designed'' definition under the ITAR and EAR that would
achieve these nine objectives. The nine objectives are to:
(1) Preclude multiple or overlapping controls of similar items
within and across the two control lists;
(2) Be easily understood and applied by exporters, prosecutors,
juries, and the U.S. Government--e.g., by using objective, knowable,
and clear requirements that do not rely upon a need to investigate and
divine the intentions of the original designer of a part or the
predominant market applications for such items;
(3) Be consistent with definitions used by the international export
control regimes;
(4) Not include any item specifically enumerated on either the USML
or the CCL and, in order to avoid a definitional loop, do not use
``specially designed'' as a control criterion;
(5) Be capable of excluding from control simple or multi-use parts
such as springs, bolts, and rivets, and other types of items the U.S.
Government determines do not warrant significant export controls;
(6) Apply to both descriptions of end items that are ``specially
designed'' to have particular characteristics and to parts and
components that were ``specially designed'' for particular end items;
(7) Apply to materials and software because they are ``specially
designed'' to have a particular characteristic or for a particular type
of end item;
(8) Not increase the current control level to ``600 series''
control or other higher end controls of items (i.e., not moving items
currently subject to a lower control status to a higher level control
status), particularly current EAR99 items, that are now controlled at
lower levels; and
(9) Not, merely as a result of the definition, cause historically
EAR controlled items to become ITAR controlled.
The revised ``specially designed'' definition provided in this
notice
[[Page 36430]]
proposes a simplified two paragraph structure. Paragraph (a) is to
identify what commodities, as a result of development, are ``specially
designed,'' and paragraph (b) is to identify what parts, components,
accessories, and attachments are excluded from ``specially designed.''
Paragraph (a) begins with the phrase, ``Except for commodities
described in (b), a commodity is `specially designed' if, as a result
of development, it [is within the scope of any one of three
subparagraphs discussed below].'' It is the beginning of the ``catch''
in the ``catch and release'' structure of the definition. For U.S.
Munitions List paragraphs containing the term ``specially designed,'' a
defense article is ``caught''--it is ``specially designed''--if any of
the three elements of paragraph (a) apply and none of the elements of
paragraph (b) apply.
Paragraph (a) is limited by the phrase, ``if, as a result of
development.'' The definition would also include a note to paragraph
(b)(3) that contains the following definition of development for
purposes of the proposed ``specially designed'' definition:
```Development' is related to all stages prior to serial production,
such as: design, design research, design analyses, design concepts,
assembly and testing of prototypes, pilot production schemes, design
data, process of transforming design data into a product, configuration
design, integration design, layouts.'' Thus, a defense article is
caught by the threshold requirement of paragraph (a) only if someone is
engaged in any of these ``development'' activities with respect to the
article at issue. Three questions one may ask to determine if a defense
article is within the scope of paragraph (a) are as follows: (1) Does
the commodity, as a result of development, have properties peculiarly
responsible for achieving or exceeding the controlled performance
levels, characteristics, or functions described in the relevant USML
paragraph?; (2) Is the part or component, as a result of development,
necessary for an enumerated defense article to function as designed?;
and (3) Is the accessory or attachment, as a result of development,
used with an enumerated defense article to enhance its usefulness or
effectiveness? If the answer to all three questions is ``no,'' then the
commodity is not ``specially designed'' and further analysis pursuant
to paragraph (b) is not necessary. If the answer to any one of the
questions is ``yes,'' then the exporter or reexporter must determine
whether any one of the five parts of paragraph (b) of the definition
applies. If any one of the five paragraph (b) exclusions apply, then
the commodity is not ``specially designed.'' If none do, then the
commodity is ``specially designed.''
Paragraph (a)(1) would capture a commodity if it, as a result of
``development,'' ``has properties peculiarly responsible for achieving
or exceeding the controlled performance levels, characteristics, or
functions described in the relevant U.S. Munitions List paragraph.''
This criterion is essentially the same as was proposed in the July 15
proposed definition. Based on the comments, the public found this part
of the definition clear. As an example, even if a commodity is capable
of use with a controlled defense article, it is not captured by this
part of paragraph (a) unless someone did something during the
commodity's development so that it would achieve or exceed the
performance levels, characteristics, or functions described in a
referenced USML paragraph.
Paragraph (a)(2) would capture a part or component if it, as a
result of ``development,'' ``is necessary for an enumerated defense
article to function as designed.'' The Department realizes that this
element is similar to paragraph (a)(1), but believes that it needs to
be listed separately because not all descriptions of parts and
components on the USML include performance levels, characteristics, or
functions as a basis for control. Paragraph (a)(2) thus will capture
parts and components that are necessary for another article on the USML
to function ``as designed.'' If an article will function ``as
designed'' without the part or component at issue, then that part or
component is not captured by paragraph (a)(2).
Paragraph (a)(3) would capture an accessory or attachment if it, as
a result of ``development,'' ``is used with an enumerated defense
article to enhance its usefulness or effectiveness.'' This phrase is
from the ITAR's current and the EAR's proposed definitions of
``accessory,'' ``attachment,'' and ``equipment.''
The July 15 proposed ``specially designed'' definition included two
exclusion paragraphs (paragraphs (c) and (d)) that identified what
items would not be ``specially designed.'' Many commenting parties
requested the July 15 definition be simplified and shortened, including
the exclusion paragraphs. The Department has addressed these concerns
by adopting a simplified structure for the exclusion paragraph (b)
included in this proposed rule. Specifically, any part, component,
accessory, or attachment that is described in an exclusion paragraph
under (b)(1), (b)(2), (b)(3), (b)(4), or (b)(5), would not be
controlled by a USML ``catch-all'' paragraph.
These five exclusions under paragraph (b) would play an important
role in this proposed ``specially designed'' definition. Paragraphs
(a)(2) and (a)(3) are broad enough to capture all the defense articles
that would be potentially ``specially designed,'' but in practice would
capture a larger set of parts, components, accessories, and attachments
than is intended. Paragraph (b) would work to release from inclusion
under ``specially designed'' specific and non-specific parts,
components, accessories, and attachments, consistent with existing U.S.
export control and international commitments. The exclusions under
paragraph (b) as proposed in this rule would refine the set of parts,
components, accessories, and attachments that would be subject to the
``catch-all'' controls on the USML. In this way, paragraphs (a) and (b)
are inextricably linked and are intended to work together to identify
the parts, components, accessories, and attachments that need to be
treated as ``specially designed'' for purposes of the ``catch-all''
provisions on the USML.
Paragraph (b) codifies the principle in ITAR Sec. 120.3 that, in
general, a commodity should not be ITAR controlled if has a predominant
civil application or has performance equivalent (defined by form, fit,
and function) to a commodity used for civil applications. If such a
commodity warrants control under the ITAR because it provides the
United States with a critical military or intelligence advantage or for
another reason, then it is or should be enumerated on the USML, as
described in the ``bright line,'' ``positive list'' objectives in the
December 2010 ANPRM (75 FR 76935).
An example of an article that would not be ``specially designed''
as a result of proposed paragraph (b)(4) is one that was or is being
developed to be interchangeable between an aircraft enumerated in USML
Category VIII and also an aircraft controlled by ECCN 9A610.a. Such a
conclusion for a particular article does not necessarily mean that the
article is not subject to export controls. The article may, for
example, be enumerated on the USML and, thus, ITAR controlled. In
addition, if it is not enumerated on the USML, it might fall with the
scope of the controls at ECCN 9A610.x. The jurisdiction of an article
must be determined on a case-by-case basis. Proposed paragraph (b)(4)
merely states that such an article would not be within the scope of a
``catch-all'' paragraph of the USML in light of its
[[Page 36431]]
commonality with non-ITAR controlled articles.
Paragraph (a) would create more objective tests for what defense
articles, as a result of development, would be ``specially designed''
based on the criteria identified in (a)(1), (a)(2), or (a)(3).
Paragraph (b) would create more objective tests for what parts,
components, accessories, and attachments are excluded from ``specially
designed'' under the exclusion criteria identified in (b)(1), (b)(2),
(b)(3), (b)(4) or (b)(5). The objective criteria identified in
paragraph (a) working with the objective exclusion criteria identified
in paragraph (b) would allow this proposed ``specially designed''
definition to achieve the nine stated objectives identified above for
the definition.
Request for Comments
As the U.S. Government works through the proposed revisions to the
USML, some solutions have been adopted that were determined to be the
best of available options. With the thought that multiple perspectives
would be beneficial to the USML revision process, the Department
welcomes the assistance of users of the lists and requests input on the
following:
(1) The key goal of this rulemaking is to establish a definition of
``specially designed'' that provides a ``bright line'' between the
commodities controlled by the USML and the CCL. The public is asked to
provide comment on the clarity and understanding of the proposed
definition.
(2) The key goal of this rulemaking is to establish a definition of
``specially designed'' that is applicable to all USML categories. The
public is asked to provide comments on the use of ``specially
designed'' in proposed rules for USML revision where the comment period
has already closed, as well those proposed rules with open comment
periods.
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 sections 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. As noted above, and also
without prejudice to the Department position that this proposed
rulemaking is not subject to the APA, the Department previously
published a related Advance Notice of Proposed Rulemaking (RIN 1400-
AC78) on December 10, 2010 (75 FR 76935), and accepted comments for 60
days.
Regulatory Flexibility Act
Since the Department is of the opinion that this proposed rule is
exempt from the rulemaking provisions of 5 U.S.C. 553, it does not
require analysis under the Regulatory Flexibility Act.
Unfunded Mandates Reform Act of 1995
This proposed 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 proposed 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 proposed 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 proposed 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 proposed amendment.
Executive Orders 12866 and 13563
Executive Orders 13563 and 12866 direct agencies to assess all
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). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action,'' although not economically significant, under section 3(f) of
Executive Order 12866. Accordingly, the rule has been reviewed by the
Office of Management and Budget (OMB).
Executive Order 12988
The Department of State has reviewed the proposed 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.
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
Notwithstanding any other provision of law, no person is required
to respond to, nor is subject to a penalty for failure to comply with,
a collection of information, subject to the requirements of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless
that collection of information displays a currently valid OMB control
number. This proposed rule would affect the following approved
collections: (1) Statement of Registration, DS-2032, OMB No. 1405-0002;
(2) Application/License for Permanent Export of Unclassified Defense
Articles and Related Unclassified Technical Data, DSP-5, OMB No. 1405-
0003; (3) Application/License for Temporary Import of Unclassified
Defense Articles, DSP-61, OMB No. 1405-0013; (4) Nontransfer and Use
Certificate, DSP-83, OMB No. 1405-0021; (5) Application/License for
Permanent/Temporary Export or Temporary Import of Classified Defense
Articles and Classified Technical Data, DSP-85, OMB No. 1405-0022; (6)
Application/License for Temporary Export of Unclassified Defense
Articles, DSP-73, OMB No. 1405-0023; (7) Statement of Political
Contributions, Fees, or Commissions in Connection with the Sale of
Defense Articles or Services,
[[Page 36432]]
OMB No. 1405-0025; (8) Authority to Export Defense Articles and
Services Sold Under the Foreign Military Sales (FMS) Program, DSP-94,
OMB No. 1405-0051; (9) Application for Amendment to License for Export
or Import of Classified or Unclassified Defense Articles and Related
Technical Data, DSP-6, -62, -74, -119, OMB No. 1405-0092; (10) Request
for Approval of Manufacturing License Agreements, Technical Assistance
Agreements, and Other Agreements, DSP-5, OMB No. 1405-0093; (11)
Maintenance of Records by Registrants, OMB No. 1405-0111; (12) Annual
Brokering Report, DS-4142, OMB No. 1405-0141; (13) Brokering Prior
Approval (License), DS-4143, OMB No. 1405-0142; (14) Projected Sale of
Major Weapons in Support of Section 25(a)(1) of the Arms Export Control
Act, DS-4048, OMB No. 1405-0156; (15) Export Declaration of Defense
Technical Data or Services, DS-4071, OMB No. 1405-0157; (16) Request
for Commodity Jurisdiction Determination, DS-4076, OMB No. 1405-0163;
(17) Request to Change End-User, End-Use, and/or Destination of
Hardware, DS-6004, OMB No. 1405-0173; (18) Request for Advisory
Opinion, DS-6001, OMB No. 1405-0174; (19) Voluntary Disclosure, OMB No.
1405-0179; and (20) Technology Security/Clearance Plans, Screening
Records, and Non-Disclosure Agreements Pursuant to 22 CFR 126.18, OMB
No. 1405-0195. The Department of State believes there will be minimal
changes to these collections. The Department of State believes the
combined effect of all rules to be published moving commodities from
the USML to the EAR as part of the Administration's Export Control
Reform would decrease the number of license applications by
approximately 30,000 annually. The Department of State is looking for
comments on the potential reduction in burden.
List of Subjects in 22 CFR Part 120
Arms and munitions, Exports.
Accordingly, for the reasons set forth above, Title 22, Chapter I,
Subchapter M, part 120 is proposed to be amended as follows:
PART 120--PURPOSE AND DEFINITIONS
1. The authority citation for part 120 continues to read as
follows:
Authority: Sections 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 CFR 4075, 3 CFR, 1977 Comp. p. 79; 22 U.S.C.
2658; Pub. L. 105-261, 112 Stat. 1920.
2. Add Sec. 120.41 to read as follows:
Sec. 120.41 Specially designed.
When applying this definition, follow this sequential analysis:
Begin with paragraph (a)(1) of this section and proceed through each
subsequent paragraph. If a commodity would not be controlled as a
result of the application of the standards in paragraph (a) of this
section, then it is not necessary to work through paragraph (b) of this
section. If a commodity would be controlled as a result of paragraph
(a), then it is necessary to work through each of the elements of
paragraph (b). Commodities described in any of paragraphs (b)(1)
through (5) of this section are not ``specially designed'' commodities
controlled on the U.S. Munitions List but may be subject to the
jurisdiction of another U.S. Government regulatory agency (see Sec.
120.5 of this subchapter).
(a) Except for commodities described in (b) of this section, a
commodity is ``specially designed'' if, as a result of development, it:
(1) Has properties peculiarly responsible for achieving or
exceeding the controlled performance levels, characteristics, or
functions described in the relevant U.S. Munitions List paragraph;
(2) Is a part (see Sec. 121.8(d) of this subchapter) or component
(see Sec. 121.8(b) of this subchapter) necessary for an enumerated
defense article to function as designed; or
(3) Is an accessory or attachment (see Sec. 121.8(c) of this
subchapter) used with an enumerated defense article to enhance its
usefulness or effectiveness.
(b) A part, component, accessory, or attachment is not controlled
by a U.S. Munitions List ``catch-all'' paragraph if it:
(1) Is enumerated in a U.S. Munitions List paragraph;
(2) Is a single unassembled part that is of a type commonly used in
multiple types of commodities not enumerated on the U.S. Munitions List
or the Commerce Control List, such as threaded fasteners (e.g., screws,
bolts, nuts, nut plates, studs, inserts), other fasteners (e.g., clips,
rivets, pins), basic hardware (e.g., washers, spacers, insulators,
grommets, bushings, springs), wire, and solder;
(3) Has the same form, fit, and performance capabilities as a part,
component, accessory, or attachment used in or with a commodity that:
(i) Is or was in production (i.e., not in development); and
(ii) Is not enumerated on the U.S. Munitions List;
(4) Was or is being developed with a reasonable expectation of use
in or with defense articles enumerated on the U.S. Munitions List and
commodities not on the U.S. Munitions List; or
(5) Was or is being developed with no reasonable expectation of use
for a particular application.
Note 1: The term ``enumerated'' refers to any article which is
identified on the U.S. Munitions List or the Commerce Control List.
Note 2: The term ``commodity'' refers to any article, material,
or supply, except technology/technical data or software.
Note to paragraph (a)(1): An example of a commodity that, as a
result of development has properties peculiarly responsible for
achieving or exceeding the controlled performance levels, functions,
or characteristics in a U.S. Munitions List category would be a
swimmer delivery vehicle ``specially designed'' to dock with a
submarine to provide submerged transport for swimmers or divers from
submarines.
Note to paragraph (b): A ``catch-all'' paragraph is one that
does not refer to specific types of parts, components, accessories,
or attachments, but rather controls parts, components, accessories,
or attachments if they were ``specially designed'' for an enumerated
item. For the purposes of the U.S. Munitions List, a ``catch-all''
paragraph is delineated by the phrases ``and `specially designed'
parts and components therefor,'' or ``parts, components,
accessories, attachments, and associated equipment `specially
designed' for.''
Note 1 to paragraph (b)(3): For the purposes of this
definition, ``production'' means all production stages, such as
product engineering, manufacture, integration, assembly (mounting),
inspection, testing, and quality assurance. This includes ``serial
production'' where commodities have passed production readiness
testing (i.e., an approved, standardized design ready for large
scale production) and have been or are capable of being produced on
an assembly line using the approved, standardized design.
Note 2 to paragraph (b)(3): For the purposes of this
definition, ``development'' is related to all stages prior to serial
production, such as: Design, design research, design analyses,
design concepts, assembly and testing of prototypes, pilot
production schemes, design data, process of transforming design data
into a product, configuration design, integration design, layouts.
Note 3 to paragraph (b)(3): Commodities in ``production'' that
are subsequently subject to ``development'' activities, such as
those pertaining to quality improvements, cost reductions, or
feature enhancements, remain in ``production.'' However, any new
models or versions of such commodities developed from such efforts
that change the basic performance or capability of the commodity are
in ``development'' until and unless they enter into ``production.''
Note to paragraphs (b)(4) and (b)(5): For a defense article not
to be ``specially designed''
[[Page 36433]]
on the basis of (b)(4) or (b)(5), documents contemporaneous with its
development, in their totality, must establish the elements of
paragraph (b)(4) or (b)(5). Such documents may include concept
design information, marketing plans, declarations in patent
applications, or contracts. Absent such documents, the commodity may
not to be excluded from being ``specially designed'' by either
paragraph (b)(4) or (b)(5).
Note to paragraph (b)(5): If you have knowledge that the
commodity was or is being developed for a particular application,
you may not rely on paragraph (b)(5) to conclude that the commodity
was or is not ``specially designed.''
Dated: June 7, 2012.
Rose E. Gottemoeller,
Acting Under Secretary, Arms Control and International Security,
Department of State.
[FR Doc. 2012-14471 Filed 6-15-12; 11:15 am]
BILLING CODE 4710-25-P
