Amendment to the International Traffic in Arms Regulations: Registration and Licensing of U.S. Persons Employed by Foreign Persons, and Other Changes, 30001-30004 [2015-12643]
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Federal Register / Vol. 80, No. 100 / Tuesday, May 26, 2015 / Proposed Rules
76. Commenters that are not able to
file comments electronically must send
an original of their comments to:
Federal Energy Regulatory Commission,
Secretary of the Commission, 888 First
Street NE., Washington, DC 20426.
77. All comments will be placed in
the Commission’s public files and may
be viewed, printed, or downloaded
remotely as described in the Document
Availability section below. Commenters
on this proposal are not required to
serve copies of their comments on other
commenters.
DEPARTMENT OF STATE
VII. Document Availability
ACTION:
78. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the Internet through the
Commission’s Home Page (https://
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Eastern time) at 888 First Street NE.,
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79. From the Commission’s Home
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SUMMARY:
By direction of the Commission.
Issued: May 14, 2015.
Kimberly D. Bose,
Secretary.
[FR Doc. 2015–12466 Filed 5–22–15; 8:45 am]
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22 CFR Parts 120, 122, 124, 125, and
126
[Public Notice 9136]
RIN 1400–AD79
Amendment to the International Traffic
in Arms Regulations: Registration and
Licensing of U.S. Persons Employed
by Foreign Persons, and Other
Changes
Department of State.
Proposed rule.
AGENCY:
The Department of State
proposes to amend the International
Traffic in Arms Regulations (ITAR) to
clarify requirements for the licensing
and registration of U.S. persons
providing defense services while in the
employ of foreign persons. This
amendment is pursuant to the
President’s Export Control Reform
effort, as part of the Department of
State’s retrospective plan under
Executive Order 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 July 27, 2015.
ADDRESSES: Interested parties may
submit comments within 60 days of the
date of publication by one of the
following methods:
• Email: DDTCPublicComments@
state.gov with the subject line, ‘‘ITAR
Amendment—U.S. Persons Employed
by Foreign Persons.’’
• Internet: At www.regulations.gov,
search for this proposed rule by using
its RIN (1400–AD79).
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 any information for
which a claim of confidentiality is
asserted. All comments and 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 (DDTC) 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
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www.regulations.gov are immediately
available for public inspection.
FOR FURTHER INFORMATION CONTACT: Mr.
C. Edward Peartree, Director, Office of
Defense Trade Controls Policy,
Department of State, telephone (202)
663–1282; email DDTCResponseTeam@
state.gov. ATTN: Regulatory Change,
U.S. Persons Employed by Foreign
Persons.
SUPPLEMENTARY INFORMATION:
Changes in This Rule Related to
Registration and Licensing of U.S.
Persons Employed by Foreign Persons
DDTC seeks to clarify the registration
and licensing requirements for U.S.
persons located in the United States or
abroad who are engaged in the business
of furnishing defense services to their
foreign person employers. Similarly,
DDTC seeks to clarify when these same
persons may be covered under existing
DDTC authorizations previously issued
to their employers and affiliates, and
when they are instead obligated to apply
for their own license or agreement prior
to engaging in the provisions of defense
services.
The Department proposes to modify
22 CFR 120.40 Affiliate, add a definition
for ‘‘natural persons’’ in 22 CFR 120.43,
effect changes to 22 CFR 122.1
Registration Requirements and 22 CFR
122.4 Notification of Changes in
Information Furnished by Registrants,
and add an exemption for natural U.S.
persons employed by foreign persons in
22 CFR 124.17, to better account for
these persons and their services to their
foreign person employers.
Scenarios impacted by these changes
include but are not limited to the
following:
(1) U.S. persons employed as regular
employees of a U.S. company but
working at a foreign branch of that
company; (2) U.S. persons employed as
regular employees of a U.S. company’s
foreign subsidiary or affiliate where the
U.S. company is actively participating
in the provision of services to the
foreign subsidiary or affiliate; (3) U.S.
persons employed as regular employees
of a U.S. company’s foreign subsidiary
or affiliate where the U.S. company is
not actively participating in the
provision of services to the foreign
subsidiary or affiliate; (4) U.S. persons
employed outside the United States as
independent contractors who do not
meet the definition of a regular
employee; and (5) U.S. persons
employed as regular employees of a
foreign company with no U.S.
affiliation.
The following are the proposed
changes:
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Federal Register / Vol. 80, No. 100 / Tuesday, May 26, 2015 / Proposed Rules
(1) The note to 22 CFR 120.40 is
redesignated as note 1;
(2) A second note is added to 22 CFR
120.40 to clarify that under specified
circumstances, minority owners of a
firm may list that company on their
registration;
(3) 22 CFR 120.43 is added to provide
a definition of ‘‘natural person’’;
(4) 22 CFR 122.1 is revised to clarify
the existing requirement that U.S.
persons performing defense services
abroad are required to be registered
pursuant to 22 CFR 122.2;
(5) A note is added to 22 CFR 122.1
to clarify that natural persons employed
by affiliates or subsidiaries of and listed
on a U.S. person’s registration are
deemed to be registered as well;
(6) A minor revision is made to 22
CFR 122.2 to clarify that subsidiaries
and affiliates controlled by a registrant
pursuant to 22 CFR 120.40 may be
included on the registrant’s Statement of
Registration;
(7) 22 CFR 124.1(a) is revised to
clarify that defense services performed
by natural U.S. persons may be
authorized via a DSP–5;
(8) 22 CFR 124.1(b) is revised to
clarify that applicants will forward
copies of approved agreements
involving classified defense articles to
the Department of Defense;
(9) An exemption for natural U.S.
persons employed by foreign persons
located in NATO countries and other
specified nations is added in 22 CFR
124.17; and
(10) An exemption for natural U.S.
persons employed by foreign persons
engaged in FMS-related activities is
added in 22 CFR 126.6(c)(7).
Regarding the addition of 22 CFR
124.17, the Department reiterates that
the use of exemptions to authorize
exports and/or temporary imports of
defense articles and defense services to
countries listed in 22 CFR 126.1 is not
allowed, as noted in paragraph (a) of the
latter section.
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Other Changes in This Rule
The following are the proposed
changes:
(1) 22 CFR 120.39 is revised to clarify
that the phrase ‘‘long term’’ denotes a
period of at least 1 year;
(2) 22 CFR 125.4(b)(2) and (b)(12) are
removed to reserve status due to their
redundancy with the exemptions in 22
CFR 124.3 and 22 CFR part 126;
(3) 22 CFR 126.6(c) is amended to
clarify that the exemption extends to
classified as well as unclassified Foreign
Military Sales (FMS) defense articles
permanently or temporarily imported or
exported, provided their transfer is
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made pursuant to a Letter of Offer and
Acceptance; and
(4) Administrative corrections are
made to 22 CFR 126.6(c).
Request for Comments
The Department welcomes public
comment on any of the proposed
changes set forth in this rule. In
particular, we invite comments from
foreign persons who currently employ
or are contemplating engaging U.S.
persons as regular employees or
independent contractors, as well as from
current or future employees and
contractors themselves.
In the context of Export Control
Reform, as well as to accommodate the
changes proposed in this rule, DDTC is
considering modifying its registration
fee structure. Of the many options being
explored, one alternative involves
providing a reduced base fee for
individuals or natural U.S. persons, as
defined in the proposed 22 CFR 120.43.
The Department encourages the public
to consider these proposed changes
when reviewing this rule.
Small Business Regulatory Enforcement
Fairness Act of 1996
These proposed amendments have
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
These proposed amendments 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 these proposed
amendments do 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 these proposed
amendments.
Regulatory Analysis and Notices
Executive Orders 12866 and 13563
Administrative Procedure Act
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 not been
designated a ‘‘significant regulatory
action,’’ under section 3(f) of Executive
Order 12866. Accordingly, the rule has
not been reviewed by the Office of
Management and Budget (OMB).
Controlling the import and export of
defense articles and services is a foreign
affairs function of the United States
government and rules implementing
this function are exempt from sections
553 (rulemaking) and 554
(adjudications) of the Administrative
Procedure Act (APA). Although this rule
is exempt from the rulemaking
provisions of the APA, the Department
is publishing 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 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
These proposed amendments do 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 they 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.
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Executive Order 12988
The Department of State has reviewed
the proposed amendments in light of
sections 3(a) and 3(b)(2) of Executive
Order 12988 to eliminate ambiguity,
minimize litigation, establish clear legal
standards, and reduce burden.
Executive Order 13175
The Department of State has
determined that this rulemaking will
not have tribal implications, will not
impose substantial direct compliance
costs on Indian tribal governments, and
will not preempt tribal law.
Accordingly, Executive Order 13175
does not apply to this rulemaking.
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Federal Register / Vol. 80, No. 100 / Tuesday, May 26, 2015 / Proposed Rules
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)
Nontransfer and Use Certificate, DSP–
83, OMB No. 1405–0021; (4)
Application/License for Permanent/
Temporary Export or Temporary Import
of Classified Defense Articles and
Classified Technical Data, DSP–85,
OMB No. 1405–0022; (5) Authority to
Export Defense Articles and Services
Sold Under the Foreign Military Sales
(FMS) Program, DSP–94, OMB No.
1405–0051; (6) 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; (7) Request for Approval of
Manufacturing License Agreements,
Technical Assistance Agreements, and
Other Agreements, DSP–5, OMB No.
1405–0093; (8) Maintenance of Records
by Registrants, OMB No. 1405–0111; (9)
Voluntary Disclosure, OMB No. 1405–
0179; and (10) 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.
List of Subjects
22 CFR Part 120
Arms and munitions, Exports.
22 CFR Part 122
Arms and munitions, Exports.
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Arms and munitions, Exports,
Technical assistance.
22 CFR Part 125
Arms and munitions, Classified
information, Exports.
22 CFR Part 126
Arms and munitions, Exports.
For the reasons set forth above, Title
22, Chapter I, Subchapter M, parts 120,
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PART 120—PURPOSE AND
DEFINITIONS
1. The authority citation for part 120
continues to read as follows:
■
Authority: Secs. 2, 38, and 71, Pub. L. 90–
629, 90 Stat. 744 (22 U.S.C. 2752, 2778,
2797); 22 U.S.C. 2794; 22 U.S.C. 2651a; Pub.
L. 105–261, 112 Stat. 1920; Pub. L. 111–266;
Section 1261, Pub. L. 112–239; E.O. 13637,
78 FR 16129.
2. Section 120.39 is amended by
revising paragraph (a)(2) to read as
follows:
■
§ 120.39
Regular employee.
(a) * * *
(2) An individual in a long term (i.e.,
1 year or longer) contractual
relationship with the company where
the individual:
(i) Works at the company’s facilities;
(ii) Works under the company’s
direction and control;
(iii) Works full time and exclusively
for the company;
(iv) Executes nondisclosure
certifications for the company; and
(v) Where the staffing agency that has
seconded the individual (if applicable)
has no role in the work the individual
performs (other than providing that
individual for that work) and does not
have access to any controlled
technology (other than where
specifically authorized by a license).
*
*
*
*
*
■ 3. Section 120.40 is amended by
removing the Note and adding Note 1
and Note 2 to read as follows:
§ 120.40
*
*
Affiliate.
*
*
*
Note 1 to § 120.40: For purposes of this
section, ‘‘control’’ means having the
authority or ability to establish or direct the
policies or operations of the firm with respect
to compliance with this subchapter. Control
is rebuttably presumed to exist where there
is ownership of 25 percent or more of the
outstanding voting securities if no other
person controls an equal or larger percentage.
Note 2 to § 120.40: A registrant may
establish a control relationship with another
entity via written agreement such that the
entity then becomes an affiliate in
accordance with section. The registrant may
include such an affiliate on its registration,
in accordance with this subchapter and
subject to DDTC’s disallowance. If an affiliate
listed on a registration ceases to meet the
requirements of this section, the registrant
must immediately remove the affiliate from
its registration and notify DDTC pursuant to
§ 122.4(a) of this subchapter.
22 CFR Part 124
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122, 124, 125 and 126 are proposed to
be amended as follows:
4. Section 120.43 is added to read as
follows:
■
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§ 120.43
Natural person.
Natural person means an individual
human being, as distinguished from a
corporation, business association,
partnership, society, trust, or any other
entity, organization or group.
PART 122—REGISTRATION OF
MANUFACTURERS AND EXPORTERS
5. The authority citation for part 122
continues to read as follows:
■
Authority: Sections 2 and 38, Pub. L. 90–
629, 90 Stat. 744 (22 U.S.C. 2752, 2778); 22
U.S.C. 2651a; E.O. 13637, 78 FR 16129.
6. Section 122.1 is amended by
revising paragraph (a) and adding a note
to paragraph (a) to read as follows:
■
§ 122.1
Registration requirements.
(a) Any person who engages in the
United States in the business of
manufacturing, exporting, or
temporarily importing defense articles
or furnishing defense services; and any
U.S. person who engages in the business
of furnishing defense services wherever
located, is required to register with the
Directorate of Defense Trade Controls
under § 122.2. For the purpose of this
subchapter, engaging in such a business
requires only one occasion of
manufacturing or exporting or
temporarily importing a defense article
or furnishing a defense service. A
manufacturer who does not engage in
exporting must nevertheless register.
(See part 129 of this subchapter for
requirements for registration of persons
who engage in brokering activities.)
Note to paragraph (a): Any natural person
directly employed by a DDTC-registered
person, or by a person listed on the
registration as a subsidiary or affiliate of a
DDTC-registered U.S. person, is deemed to be
registered.
*
*
§ 122.2
*
*
*
[Amended]
7. Section 122.2(a) is amended by
adding a comma between the words
‘‘registrant’’ and ‘‘or’’ in the third
sentence.
■ 8. Section 122.4 is amended by
revising paragraph (a)(2)(v) to read as
follows:
■
§ 122.4 Notification of changes in
information furnished by registrants.
(a) * * *
(2) * * *
(v) The establishment, acquisition, or
divestment of a U.S. or foreign
subsidiary or other affiliate who is
engaged in manufacturing defense
articles, exporting defense articles or
defense services, or the inability of an
affiliate listed on the registration to
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continue meeting the requirements in
§ 120.40 of this subchapter; or
*
*
*
*
*
PART 124—AGREEMENTS, OFFSHORE PROCUREMENT, AND OTHER
DEFENSE SERVICES
9. The authority citation for part 124
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. 2651a; 22 U.S.C. 2776; Pub.
L. 105–261; Section 1261, Pub. L. 112–239;
E.O. 13637, 78 FR 16129.
10. Section 124.1 is amended as
follows:
■ a. Add two sentences at the end of
paragraph (a).
■ b. Revise paragraph (b).
The addition and revision read as
follows:
■
12. The authority citation for part 125
continues to read as follows:
Authority: Secs. 2 and 38, Pub. L. 90–629,
90 Stat. 744 (22 U.S.C. 2752, 2778); 22 U.S.C.
2651a; E.O. 13637, 78 FR 16129.
(a) * * * The provision of defense
services by a natural U.S. person may be
authorized on a Form DSP–5. Natural
U.S. persons employed as regular
employees of a foreign subsidiary or
affiliate listed on the registration of a
U.S. person may receive authorization
to provide defense services via an
agreement between the registered U.S.
person and the foreign subsidiary or
affiliate, provided the registered U.S.
person accepts responsibility for, and
demonstrates ability to ensure, the
natural U.S. person’s compliance with
the provisions of this subchapter.
(b) Classified Articles. Copies of
approved agreements involving the
release of classified defense articles will
be forwarded by the applicant to the
Defense Security Service of the
Department of Defense.
*
*
*
*
*
■ 11. Section 124.17 is added to read as
follows:
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§ 124.17 Exemption for natural U.S.
persons employed by foreign persons.
(a) A natural U.S. person employed by
a foreign person may furnish defense
services to and on behalf of the foreign
person employer without a license if all
of the following conditions are met:
(1) The employer is located within a
NATO or EU country, Australia, Japan,
New Zealand, and/or Switzerland, and
the defense services are provided only
in these countries;
(2) The end user(s) of the associated
defense article(s) are located within
NATO, EU, Australia, Japan, New
Zealand, and/or Switzerland;
(3) No U.S.-origin defense articles, to
include technical data, are transferred
from the U.S. persons to the employer
without separate authorization;
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PART 125—LICENSES FOR THE
EXPORT OF TECHNICAL DATA AND
CLASSIFIED DEFENSE ARTICLES
■
§ 124.1 Manufacturing license agreements
and technical assistance agreements.
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(4) No classified, SME, or MT
technical data is transferred (even if
separately authorized) in connection
with the furnishing of defense services;
and
(5) The U.S. person furnishing the
defense services maintains records of
such activities and complies with
registration requirements in accordance
with part 122 of this subchapter.
(b) [Reserved]
§ 125.4
[Amended]
PART 126—GENERAL POLICIES AND
PROVISIONS
14. The authority citation for part 126
continues to read as follows:
■
Authority: Secs. 2, 38, 40, 42, and 71, Pub.
L. 90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778,
2780, 2791, and 2797); 22 U.S.C. 2651a; 22
U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR,
1994 Comp., p. 899; Sec. 1225, Pub. L. 108–
375; Sec. 7089, Pub. L. 111–117; Pub. L. 111–
266; Sections 7045 and 7046, Pub. L. 112–74;
E.O. 13637, 78 FR 16129.
15. Section 126.6 is amended by
revising paragraph (c) introductory text
and adding paragraph (c)(7) to read as
follows:
§ 126.6 Foreign-owned military aircraft and
naval vessels, and the Foreign Military
Sales program.
*
*
*
*
*
(c) Foreign Military Sales Program. A
license from the Directorate of Defense
Trade Controls is not required if the
classified or unclassified defense article
or defense service to be transferred was
sold, leased, or loaned by the
Department of Defense to a foreign
country or international organization
under the Foreign Military Sales (FMS)
Program of the Arms Export Control Act
pursuant to a Letter of Offer and
Acceptance (LOA) authorizing such
transfer (permanent or temporary),
which meets the criteria stated below:
*
*
*
*
*
(7) Natural U.S. persons employed by
foreign persons may provide defense
services to and on behalf of their
employers without a license if all of the
following conditions are met:
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Rose E. Gottemoeller,
Under Secretary, Arms Control and
International Security, Department of State.
[FR Doc. 2015–12643 Filed 5–22–15; 8:45 am]
13. Section 125.4 is amended by
removing and reserving paragraphs
(b)(2) and (b)(12).
■
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(i) The defense services are provided
in support of an active FMS contract
and are identified in an executed LOA;
(ii) No U.S.-origin defense articles are
transferred from the U.S. person to the
employer, without separate
authorization;
(iii) The provision of defense services
is not to a country identified in § 126.1;
(iv) No classified or SME technical
data is disclosed (even if separately
authorized) in connection with the
furnishing of defense services; and
(v) The U.S. person furnishing the
defense services maintains records of
such activities and complies with
registration requirements in accordance
with part 122 of this subchapter.
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BILLING CODE 4710–25–P
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
24 CFR Chapter IX
[Docket No. FR–5650–N–09]
Native American Housing Assistance
and Self-Determination Act of 1996:
Negotiated Rulemaking Committee;
Notice of Seventh Meeting
Office of Assistant Secretary for
Public and Indian Housing, HUD.
ACTION: Notice of meetings of negotiated
rulemaking committee.
AGENCY:
This notice announces the
seventh meeting of the Indian Housing
Block Grant (IHBG) program negotiated
rulemaking committee.
DATES: The seventh meeting will be held
on Tuesday, August 11, 2015,
Wednesday, August 12, 2015, and
Thursday, August 13, 2015. On each
day, the session will begin at
approximately 8:30 a.m., and adjourn at
approximately 5:30 p.m.
ADDRESSES: The meeting will take place
at the Double-Tree-Scottsdale, 6333
North Scottsdale Road, Scottsdale,
Arizona 85250–7090.
FOR FURTHER INFORMATION CONTACT:
Rodger J. Boyd, Deputy Assistant
Secretary for Native American
Programs, Office of Public and Indian
Housing, Department of Housing and
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SUMMARY:
E:\FR\FM\26MYP1.SGM
26MYP1
]]>Agencies
[Federal Register Volume 80, Number 100 (Tuesday, May 26, 2015)]
[Proposed Rules]
[Pages 30001-30004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12643]
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DEPARTMENT OF STATE
22 CFR Parts 120, 122, 124, 125, and 126
[Public Notice 9136]
RIN 1400-AD79
Amendment to the International Traffic in Arms Regulations:
Registration and Licensing of U.S. Persons Employed by Foreign Persons,
and Other Changes
AGENCY: Department of State.
ACTION: Proposed rule.
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SUMMARY: The Department of State proposes to amend the International
Traffic in Arms Regulations (ITAR) to clarify requirements for the
licensing and registration of U.S. persons providing defense services
while in the employ of foreign persons. This amendment is pursuant to
the President's Export Control Reform effort, as part of the Department
of State's retrospective plan under Executive Order 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 July 27, 2015.
ADDRESSES: Interested parties may submit comments within 60 days of the
date of publication by one of the following methods:
Email: DDTCPublicComments@state.gov with the subject line,
``ITAR Amendment--U.S. Persons Employed by Foreign Persons.''
Internet: At www.regulations.gov, search for this proposed
rule by using its RIN (1400-AD79).
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 any information for which a claim of
confidentiality is asserted. All comments and 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 (DDTC)
Web site at www.pmddtc.state.gov. Parties who wish to comment
anonymously may do so by submitting their comments via
www.regulations.gov, leaving the fields that would identify the
commenter blank and including no identifying information in the comment
itself. Comments submitted via www.regulations.gov are immediately
available for public inspection.
FOR FURTHER INFORMATION CONTACT: Mr. C. Edward Peartree, Director,
Office of Defense Trade Controls Policy, Department of State, telephone
(202) 663-1282; email DDTCResponseTeam@state.gov. ATTN: Regulatory
Change, U.S. Persons Employed by Foreign Persons.
SUPPLEMENTARY INFORMATION:
Changes in This Rule Related to Registration and Licensing of U.S.
Persons Employed by Foreign Persons
DDTC seeks to clarify the registration and licensing requirements
for U.S. persons located in the United States or abroad who are engaged
in the business of furnishing defense services to their foreign person
employers. Similarly, DDTC seeks to clarify when these same persons may
be covered under existing DDTC authorizations previously issued to
their employers and affiliates, and when they are instead obligated to
apply for their own license or agreement prior to engaging in the
provisions of defense services.
The Department proposes to modify 22 CFR 120.40 Affiliate, add a
definition for ``natural persons'' in 22 CFR 120.43, effect changes to
22 CFR 122.1 Registration Requirements and 22 CFR 122.4 Notification of
Changes in Information Furnished by Registrants, and add an exemption
for natural U.S. persons employed by foreign persons in 22 CFR 124.17,
to better account for these persons and their services to their foreign
person employers.
Scenarios impacted by these changes include but are not limited to
the following:
(1) U.S. persons employed as regular employees of a U.S. company
but working at a foreign branch of that company; (2) U.S. persons
employed as regular employees of a U.S. company's foreign subsidiary or
affiliate where the U.S. company is actively participating in the
provision of services to the foreign subsidiary or affiliate; (3) U.S.
persons employed as regular employees of a U.S. company's foreign
subsidiary or affiliate where the U.S. company is not actively
participating in the provision of services to the foreign subsidiary or
affiliate; (4) U.S. persons employed outside the United States as
independent contractors who do not meet the definition of a regular
employee; and (5) U.S. persons employed as regular employees of a
foreign company with no U.S. affiliation.
The following are the proposed changes:
[[Page 30002]]
(1) The note to 22 CFR 120.40 is redesignated as note 1;
(2) A second note is added to 22 CFR 120.40 to clarify that under
specified circumstances, minority owners of a firm may list that
company on their registration;
(3) 22 CFR 120.43 is added to provide a definition of ``natural
person'';
(4) 22 CFR 122.1 is revised to clarify the existing requirement
that U.S. persons performing defense services abroad are required to be
registered pursuant to 22 CFR 122.2;
(5) A note is added to 22 CFR 122.1 to clarify that natural persons
employed by affiliates or subsidiaries of and listed on a U.S. person's
registration are deemed to be registered as well;
(6) A minor revision is made to 22 CFR 122.2 to clarify that
subsidiaries and affiliates controlled by a registrant pursuant to 22
CFR 120.40 may be included on the registrant's Statement of
Registration;
(7) 22 CFR 124.1(a) is revised to clarify that defense services
performed by natural U.S. persons may be authorized via a DSP-5;
(8) 22 CFR 124.1(b) is revised to clarify that applicants will
forward copies of approved agreements involving classified defense
articles to the Department of Defense;
(9) An exemption for natural U.S. persons employed by foreign
persons located in NATO countries and other specified nations is added
in 22 CFR 124.17; and
(10) An exemption for natural U.S. persons employed by foreign
persons engaged in FMS-related activities is added in 22 CFR
126.6(c)(7).
Regarding the addition of 22 CFR 124.17, the Department reiterates
that the use of exemptions to authorize exports and/or temporary
imports of defense articles and defense services to countries listed in
22 CFR 126.1 is not allowed, as noted in paragraph (a) of the latter
section.
Other Changes in This Rule
The following are the proposed changes:
(1) 22 CFR 120.39 is revised to clarify that the phrase ``long
term'' denotes a period of at least 1 year;
(2) 22 CFR 125.4(b)(2) and (b)(12) are removed to reserve status
due to their redundancy with the exemptions in 22 CFR 124.3 and 22 CFR
part 126;
(3) 22 CFR 126.6(c) is amended to clarify that the exemption
extends to classified as well as unclassified Foreign Military Sales
(FMS) defense articles permanently or temporarily imported or exported,
provided their transfer is made pursuant to a Letter of Offer and
Acceptance; and
(4) Administrative corrections are made to 22 CFR 126.6(c).
Request for Comments
The Department welcomes public comment on any of the proposed
changes set forth in this rule. In particular, we invite comments from
foreign persons who currently employ or are contemplating engaging U.S.
persons as regular employees or independent contractors, as well as
from current or future employees and contractors themselves.
In the context of Export Control Reform, as well as to accommodate
the changes proposed in this rule, DDTC is considering modifying its
registration fee structure. Of the many options being explored, one
alternative involves providing a reduced base fee for individuals or
natural U.S. persons, as defined in the proposed 22 CFR 120.43. The
Department encourages the public to consider these proposed changes
when reviewing this rule.
Regulatory Analysis and Notices
Administrative Procedure Act
Controlling the import and export of defense articles and services
is a foreign affairs function of the United States government and rules
implementing this function are exempt from sections 553 (rulemaking)
and 554 (adjudications) of the Administrative Procedure Act (APA).
Although this rule is exempt from the rulemaking provisions of the APA,
the Department is publishing 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 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
These proposed amendments do 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 they 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
These proposed amendments have 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
These proposed amendments 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 these proposed amendments
do 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 these proposed amendments.
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 not been designated a ``significant
regulatory action,'' under section 3(f) of Executive Order 12866.
Accordingly, the rule has not been reviewed by the Office of Management
and Budget (OMB).
Executive Order 12988
The Department of State has reviewed the proposed amendments in
light of sections 3(a) and 3(b)(2) of Executive Order 12988 to
eliminate ambiguity, minimize litigation, establish clear legal
standards, and reduce burden.
Executive Order 13175
The Department of State has determined that this rulemaking will
not have tribal implications, will not impose substantial direct
compliance costs on Indian tribal governments, and will not preempt
tribal law. Accordingly, Executive Order 13175 does not apply to this
rulemaking.
[[Page 30003]]
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) Nontransfer and Use Certificate, DSP-83, OMB No. 1405-0021;
(4) Application/License for Permanent/Temporary Export or Temporary
Import of Classified Defense Articles and Classified Technical Data,
DSP-85, OMB No. 1405-0022; (5) Authority to Export Defense Articles and
Services Sold Under the Foreign Military Sales (FMS) Program, DSP-94,
OMB No. 1405-0051; (6) 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; (7) Request
for Approval of Manufacturing License Agreements, Technical Assistance
Agreements, and Other Agreements, DSP-5, OMB No. 1405-0093; (8)
Maintenance of Records by Registrants, OMB No. 1405-0111; (9) Voluntary
Disclosure, OMB No. 1405-0179; and (10) 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.
List of Subjects
22 CFR Part 120
Arms and munitions, Exports.
22 CFR Part 122
Arms and munitions, Exports.
22 CFR Part 124
Arms and munitions, Exports, Technical assistance.
22 CFR Part 125
Arms and munitions, Classified information, Exports.
22 CFR Part 126
Arms and munitions, Exports.
For the reasons set forth above, Title 22, Chapter I, Subchapter M,
parts 120, 122, 124, 125 and 126 are proposed to be 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; 22 U.S.C. 2651a; Pub. L.
105-261, 112 Stat. 1920; Pub. L. 111-266; Section 1261, Pub. L. 112-
239; E.O. 13637, 78 FR 16129.
0
2. Section 120.39 is amended by revising paragraph (a)(2) to read as
follows:
Sec. 120.39 Regular employee.
(a) * * *
(2) An individual in a long term (i.e., 1 year or longer)
contractual relationship with the company where the individual:
(i) Works at the company's facilities;
(ii) Works under the company's direction and control;
(iii) Works full time and exclusively for the company;
(iv) Executes nondisclosure certifications for the company; and
(v) Where the staffing agency that has seconded the individual (if
applicable) has no role in the work the individual performs (other than
providing that individual for that work) and does not have access to
any controlled technology (other than where specifically authorized by
a license).
* * * * *
0
3. Section 120.40 is amended by removing the Note and adding Note 1 and
Note 2 to read as follows:
Sec. 120.40 Affiliate.
* * * * *
Note 1 to Sec. 120.40: For purposes of this section,
``control'' means having the authority or ability to establish or
direct the policies or operations of the firm with respect to
compliance with this subchapter. Control is rebuttably presumed to
exist where there is ownership of 25 percent or more of the
outstanding voting securities if no other person controls an equal
or larger percentage.
Note 2 to Sec. 120.40: A registrant may establish a control
relationship with another entity via written agreement such that the
entity then becomes an affiliate in accordance with section. The
registrant may include such an affiliate on its registration, in
accordance with this subchapter and subject to DDTC's disallowance.
If an affiliate listed on a registration ceases to meet the
requirements of this section, the registrant must immediately remove
the affiliate from its registration and notify DDTC pursuant to
Sec. 122.4(a) of this subchapter.
0
4. Section 120.43 is added to read as follows:
Sec. 120.43 Natural person.
Natural person means an individual human being, as distinguished
from a corporation, business association, partnership, society, trust,
or any other entity, organization or group.
PART 122--REGISTRATION OF MANUFACTURERS AND EXPORTERS
0
5. The authority citation for part 122 continues to read as follows:
Authority: Sections 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778); 22 U.S.C. 2651a; E.O. 13637, 78 FR 16129.
0
6. Section 122.1 is amended by revising paragraph (a) and adding a note
to paragraph (a) to read as follows:
Sec. 122.1 Registration requirements.
(a) Any person who engages in the United States in the business of
manufacturing, exporting, or temporarily importing defense articles or
furnishing defense services; and any U.S. person who engages in the
business of furnishing defense services wherever located, is required
to register with the Directorate of Defense Trade Controls under Sec.
122.2. For the purpose of this subchapter, engaging in such a business
requires only one occasion of manufacturing or exporting or temporarily
importing a defense article or furnishing a defense service. A
manufacturer who does not engage in exporting must nevertheless
register. (See part 129 of this subchapter for requirements for
registration of persons who engage in brokering activities.)
Note to paragraph (a): Any natural person directly employed by a
DDTC-registered person, or by a person listed on the registration as
a subsidiary or affiliate of a DDTC-registered U.S. person, is
deemed to be registered.
* * * * *
Sec. 122.2 [Amended]
0
7. Section 122.2(a) is amended by adding a comma between the words
``registrant'' and ``or'' in the third sentence.
0
8. Section 122.4 is amended by revising paragraph (a)(2)(v) to read as
follows:
Sec. 122.4 Notification of changes in information furnished by
registrants.
(a) * * *
(2) * * *
(v) The establishment, acquisition, or divestment of a U.S. or
foreign subsidiary or other affiliate who is engaged in manufacturing
defense articles, exporting defense articles or defense services, or
the inability of an affiliate listed on the registration to
[[Page 30004]]
continue meeting the requirements in Sec. 120.40 of this subchapter;
or
* * * * *
PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT, AND OTHER DEFENSE
SERVICES
0
9. The authority citation for part 124 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. 2651a; 22 U.S.C. 2776; Pub. L.
105-261; Section 1261, Pub. L. 112-239; E.O. 13637, 78 FR 16129.
0
10. Section 124.1 is amended as follows:
0
a. Add two sentences at the end of paragraph (a).
0
b. Revise paragraph (b).
The addition and revision read as follows:
Sec. 124.1 Manufacturing license agreements and technical assistance
agreements.
(a) * * * The provision of defense services by a natural U.S.
person may be authorized on a Form DSP-5. Natural U.S. persons employed
as regular employees of a foreign subsidiary or affiliate listed on the
registration of a U.S. person may receive authorization to provide
defense services via an agreement between the registered U.S. person
and the foreign subsidiary or affiliate, provided the registered U.S.
person accepts responsibility for, and demonstrates ability to ensure,
the natural U.S. person's compliance with the provisions of this
subchapter.
(b) Classified Articles. Copies of approved agreements involving
the release of classified defense articles will be forwarded by the
applicant to the Defense Security Service of the Department of Defense.
* * * * *
0
11. Section 124.17 is added to read as follows:
Sec. 124.17 Exemption for natural U.S. persons employed by foreign
persons.
(a) A natural U.S. person employed by a foreign person may furnish
defense services to and on behalf of the foreign person employer
without a license if all of the following conditions are met:
(1) The employer is located within a NATO or EU country, Australia,
Japan, New Zealand, and/or Switzerland, and the defense services are
provided only in these countries;
(2) The end user(s) of the associated defense article(s) are
located within NATO, EU, Australia, Japan, New Zealand, and/or
Switzerland;
(3) No U.S.-origin defense articles, to include technical data, are
transferred from the U.S. persons to the employer without separate
authorization;
(4) No classified, SME, or MT technical data is transferred (even
if separately authorized) in connection with the furnishing of defense
services; and
(5) The U.S. person furnishing the defense services maintains
records of such activities and complies with registration requirements
in accordance with part 122 of this subchapter.
(b) [Reserved]
PART 125--LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED
DEFENSE ARTICLES
0
12. The authority citation for part 125 continues to read as follows:
Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778); 22 U.S.C. 2651a; E.O. 13637, 78 FR 16129.
Sec. 125.4 [Amended]
0
13. Section 125.4 is amended by removing and reserving paragraphs
(b)(2) and (b)(12).
PART 126--GENERAL POLICIES AND PROVISIONS
0
14. The authority citation for part 126 continues to read as follows:
Authority: Secs. 2, 38, 40, 42, and 71, Pub. L. 90-629, 90
Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C.
2651a; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR, 1994 Comp.,
p. 899; Sec. 1225, Pub. L. 108-375; Sec. 7089, Pub. L. 111-117; Pub.
L. 111-266; Sections 7045 and 7046, Pub. L. 112-74; E.O. 13637, 78
FR 16129.
15. Section 126.6 is amended by revising paragraph (c) introductory
text and adding paragraph (c)(7) to read as follows:
Sec. 126.6 Foreign-owned military aircraft and naval vessels, and the
Foreign Military Sales program.
* * * * *
(c) Foreign Military Sales Program. A license from the Directorate
of Defense Trade Controls is not required if the classified or
unclassified defense article or defense service to be transferred was
sold, leased, or loaned by the Department of Defense to a foreign
country or international organization under the Foreign Military Sales
(FMS) Program of the Arms Export Control Act pursuant to a Letter of
Offer and Acceptance (LOA) authorizing such transfer (permanent or
temporary), which meets the criteria stated below:
* * * * *
(7) Natural U.S. persons employed by foreign persons may provide
defense services to and on behalf of their employers without a license
if all of the following conditions are met:
(i) The defense services are provided in support of an active FMS
contract and are identified in an executed LOA;
(ii) No U.S.-origin defense articles are transferred from the U.S.
person to the employer, without separate authorization;
(iii) The provision of defense services is not to a country
identified in Sec. 126.1;
(iv) No classified or SME technical data is disclosed (even if
separately authorized) in connection with the furnishing of defense
services; and
(v) The U.S. person furnishing the defense services maintains
records of such activities and complies with registration requirements
in accordance with part 122 of this subchapter.
Rose E. Gottemoeller,
Under Secretary, Arms Control and International Security, Department of
State.
[FR Doc. 2015-12643 Filed 5-22-15; 8:45 am]
BILLING CODE 4710-25-P
