Amendment to the International Traffic in Arms Regulations: Procedures for Obtaining State Department Authorization To Export Items Subject to the Export Administration Regulations; Revision to the Destination Control Statement; and Other Changes, 54732-54737 [2016-19550]
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Federal Register / Vol. 81, No. 159 / Wednesday, August 17, 2016 / Rules and Regulations
Exception BAG or GFT (see part 740 of
the EAR) or the item is designated as
EAR99:
(1) The following statement: ‘‘These
items are controlled by the U.S.
Government and authorized for export
only to the country of ultimate
destination for use by the ultimate
consignee or end-user(s) herein
identified. They may not be resold,
transferred, or otherwise disposed of, to
any other country or to any person other
than the authorized ultimate consignee
or end-user(s), either in their original
form or after being incorporated into
other items, without first obtaining
approval from the U.S. government or as
otherwise authorized by U.S. law and
regulations’’ and
(2) The ECCN(s) for any 9x515 or ‘‘600
series’’ ‘‘items’’ being shipped (i.e.,
exported in tangible form).
Note 1 to paragraph (a). In paragraph
(a)(1), the term ‘authorized’ includes exports,
reexports and transfers (in-country)
designated under No License Required
(NLR).
Note 2 to paragraph (a). The phrase
‘country of ultimate destination’ means the
country specified on the commercial invoice
where the ultimate consignee or end user
will receive the items as an ‘‘export.’’
Note 3 to paragraph (a). The phrase ‘or as
otherwise authorized by U.S. law and
regulations’ is included because the EAR
contain specific exemptions from licensing
(e.g., EAR license exceptions and NLR
designations) and do not control the reexport
of foreign-made items containing less than a
de minimis amount of controlled content.
See § 734.4 and Supplement No. 2 to part
748.
(b) [Reserved]
Dated: August 8, 2016.
Kevin J. Wolf,
Assistant Secretary of Commerce for Export
Administration.
[FR Doc. 2016–19551 Filed 8–16–16; 8:45 am]
BILLING CODE 3510–33–P
DEPARTMENT OF STATE
22 CFR Parts 120, 123, 124, 125, and
126
[Public Notice: 9606]
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RIN 1400–AC88
Amendment to the International Traffic
in Arms Regulations: Procedures for
Obtaining State Department
Authorization To Export Items Subject
to the Export Administration
Regulations; Revision to the
Destination Control Statement; and
Other Changes
AGENCY:
Department of State.
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ACTION:
Final rule.
As part of the President’s
Export Control Reform (ECR) initiative,
the Department of State is amending the
International Traffic in Arms
Regulations (ITAR) to clarify rules
pertaining to the export of items subject
to the Export Administration
Regulations (EAR), revise the
destination control statement in ITAR
§ 123.9 to harmonize the language with
the EAR, make conforming changes to
ITAR §§ 124.9 and 124.14, and make
several minor edits for clarity.
DATES: This rule is effective November
15, 2016.
FOR FURTHER INFORMATION CONTACT: Mr.
C. Edward Peartree, Director, Office of
Defense Trade Controls Policy,
Department of State, telephone (202)
663–2792; email DDTCResponseTeam@
state.gov. ATTN: Regulatory Change,
Destination Control Statement.
SUPPLEMENTARY INFORMATION: The
Department published a proposed rule
on May 22, 2015 (80 FR 29565) and
received 17 public comments on the
proposed changes to the ITAR. The
Department makes the following
revisions in this final rule:
SUMMARY:
Items Subject to the EAR
This final rule adds clarifying
language to various provisions of the
ITAR pertaining to the use of
exemptions to the license requirements
and the export of items subject to the
EAR, when the EAR items are shipped
with items subject to the ITAR. These
revisions include guidance on the use of
license exemptions for the export of
such items, as well as clarification that
items subject to the EAR are not defense
articles, even when exported under a
license or other approval, such as an
exemption, issued by the Department of
State. The Department received the
following comments on the proposed
changes, which are summarized here,
along with the Department’s responses:
One commenter raised a concern that
the proposed revised language restricts
industry’s exemption options for items
subject to the EAR to situations only
when related USG authorization exists
for the end item. The Department
accepts the comment and has revised
§ 120.5(b) to state that items subject to
the EAR may be exported pursuant to an
ITAR exemption if exported with
defense articles. ITAR exemptions may
not be used for the independent export
of items subject to the EAR, i.e., a single
physical shipment of EAR item(s) that
does not include any USML item with
which the EAR item may be used. If the
items subject to the EAR will be
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transferred separately from a defense
article, license exceptions available
under the EAR may be used to authorize
the transfer.
One commenter noted that, the
proposed § 120.5(b) inadvertently
excluded the exemptions at Part 123 of
the ITAR from the parenthetical list of
applicable ITAR parts. The Department
concurs with this comment and adds a
reference to part 123 into the
parenthetical phrase.
One commenter noted that the
Department should provide clarification
and guidance on the proper
classification to be entered into the
Automated Export System (AES) for
items subject to the EAR shipped under
an ITAR exemption. The commenter
noted that proposed edits to
§ 123.9(b)(2) did not address AES
filings. The Department notes that the
Department of Commerce (U.S. Census
Bureau and Bureau of Industry and
Security) has already clarified this. The
EAR classification needs to be provided
in the export control information on the
Electronic Export Information (EEI)
filing in AES for all items subject to the
EAR, including EAR99 designated items
that are authorized for export under a
State Department authorization.
One commenter noted that the
changes in this rule require that if a
shipment includes both ITAR and EAR
controlled items then the Export Control
Classification Number (ECCN) of items
in the shipments must be listed,
including any EAR99 designation (if the
authorization for the export was through
an approved State Department license),
and requires the country of ultimate
destination, end-user, licensee
information to be provided on the
export documents. The flexibility of
exporting items subject to the EAR
under a State Department authorization
does warrant this additional level of
identification for all of the items subject
to the EAR that the Department
authorizes for export. Therefore,
although the Department understands
the comment, given the hybrid nature of
the ITAR authorization under the
§ 120.5(b) process, the Department has
determined the requirements are
warranted.
One commenter noted that the text
under § 120.5(b) does not specify that
‘‘items subject to the EAR’’ exported
under an exemption must be exported
with the specific defense article. They
recommend clarifying that this is the
intent of the modification or if not, to
change the text, so it comports with the
requirements for ‘‘items subject to the
EAR’’ exported under a license or other
approval. The Department concurs with
this comment. This final rule adds
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clarifying text to § 120.5(b) to specify
that in order to use a Department of
State license exemption the item subject
to the EAR must be exported with a
defense article.
Items Exported To or On Behalf of an
Agency of the U.S. Government
This final rule does not revise the
licensing exemption language in § 126.4.
This section will be addressed in a
separate rulemaking and comments
submitted in response to the proposed
rule on that topic will be addressed in
that rulemaking.
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Revision to the Destination Control
Statement
This final rule revises the Destination
Control Statement (DCS) in ITAR
§ 123.9 to harmonize the text with the
text of the DCS in EAR § 758.6, which
is the subject of a companion rule to be
published by the Department of
Commerce. The DCS revision is also
reflected in § 124.9 and 124.14. This
change is being made to facilitate the
President’s Export Control Reform
initiative, which has transferred
thousands of formerly ITAR-controlled
defense article parts and components,
along with other items, to the Commerce
Control List in the EAR, which is under
the jurisdiction of the Department of
Commerce. This change in jurisdiction
for many parts and components of
military systems has increased the
incidence of exporters shipping articles
subject to both the ITAR and the EAR
in the same shipment. Both regulations
have a mandatory Destination Control
Statement that must be on the export
control documents for shipments that
include items subject to both sets of
regulations. This had previously caused
confusion to exporters as to which
statement to include on mixed
shipments, or whether to include both.
Harmonizing these statements will ease
the regulatory burden on exporters.
Summary of Public Comments on the
Destination Control Statement
Most of the public comments fell into
one of four areas: (1) Harmonization of
DCS language between the ITAR and the
EAR; (2) harmonization of
documentation between the ITAR and
EAR; (3) providing exporters a sufficient
implementation period to adjust to the
new DCS requirements; and (4)
consideration of the different
documents required for shipping, with
the commercial invoice being the clear
favorite and most appropriate for the
DCS to be included on.
This final rule includes an effective
date 90 days after publication in the
Federal Register for the DCS provisions.
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It also specifies that the exporter is
responsible for including the DCS on
the commercial invoice. Additionally,
the DCS text adopted in this final rule
is identical to the DCS text adopted in
a companion rule by Commerce.
The Department received a small
number of comments on the proposed
rule which were specific to the
Commerce proposed rule, and
Commerce is addressing these
comments in its final rule.
Public Comments and the Department’s
Responses
Several commenters noted that
harmonization represents a step in the
right direction and will minimize
confusion as to which DCS must be
used depending on the jurisdiction of
the item. The Department concurs with
this comment.
Several commenters objected that the
Department’s requirements for
placement of the DCS were out of step
with Commerce and not harmonized in
the proposed rule. The Department
agrees, and the requirement for
placement of the DCS is being
harmonized by the Departments of State
and Commerce.
Several commenters stated that the
government should not specify the
documents that require the DCS, but
rather should impose a high level
requirement and leave it to parties to
choose which document(s) to include.
The Department disagrees. Specifying
which documents the DCS will be
placed on will create greater
transparency, as well as make it easier
for various United States government
agencies, as well as exporters and other
consignees, to identify whether the DCS
has been properly included.
One commenter noted that this
appears to be a case of harmonization
for the sake of harmonization, and
would appear to have the potential to
create substantial confusion among
recipients, and impose significant
burdens without a correspondingly
significant benefit to the government.
The Department disagrees. Ensuring the
DCS reaches the parties that will receive
items exported and/or reexported is key
to the United States achieving its policy
objectives.
One commenter stated that it was
confusing that Commerce uses the term
‘‘commercial invoice’’ whereas the
Department uses ‘‘invoice.’’ For some
exporters, the term ‘‘invoice’’ refers to
the final billing document that moves
electronically, whereas the commercial
invoice moves with the freight. The
Department agrees that the terms should
be harmonized. Based on other
comments received, the term
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‘‘commercial invoice’’ is well
understood by industry, so this final
rule adopts the term ‘‘commercial
invoice’’ to reference the document that
moves with the freight.
One commenter objected to the DCS,
as it imposed additional burdens and
costs on the public and trade. Further,
the commenter noted that to add this
information separately to the bill of
lading, air waybill and other
transportation documentation could
have the unintended effect of signaling
the package contents to third parties.
The Department disagrees with the
commenter’s characterization as these
statements are already required and the
harmonization of the DCS will lower the
administrative burden on exporters and
re-exporters. In addition, and as noted
elsewhere in this final rule, the
Department is removing the requirement
to include the DCS on transportation
documents.
One commenter stated that the air
waybill imposed a severe space
limitation with regard to including the
DCS. According to the commenter,
including information regarding a
country of ultimate destination, enduser, and license or other approval
number or exemption citation
information could be unduly
burdensome. The Department concurs,
as noted elsewhere in this final rule,
and the requirement to include the DCS
on transportation documents has been
removed.
One commenter noted that the State
Department should consider a shorter
DCS, such as: ‘‘This shipment contains
goods under the jurisdiction of the
ITAR.’’ This statement could more
easily be converted to an electronic
format than the complete DCS. The
Department disagrees, as an ITAR
specific DCS would defeat the purpose
of harmonization between the
Departments of State and Commerce
and would not address mixed
shipments.
One commenter suggested that the
DCS and other export control related
information (e.g., USML category) be
placed on a separate document that
serves multiple purposes, and can be
sent with the items being shipped or
separately in order to convey to the
consignees that the items are U.S. export
regulated and are intended only for the
designated end user and the destination
identified. The Department
acknowledges there would be some
benefits to such an approach, but it is
preferable to require the DCS on an
existing document (the commercial
invoice) that is created in the normal
course of business. Other public
comments support this conclusion.
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Numerous commenters requested a
delay in the implementation date of
between 180–240 days after publication
of the final rule to allow sufficient time
for affected parties to make the required
changes to system programming,
document revision and related
procedural tasks. Other commenters
requested a 180 day delayed effective
date, along with a delayed compliance
date. The Department agrees that
industry will need time to update their
systems and has included a delayed
effective date of 90 days after
publication of this final rule.
One commenter requested public
meetings in order to comment on the
proposed changes, and that State and
Commerce also conduct outreach prior
to new changes being implemented. The
Department values public participation
in the rulemaking process and has
provided an opportunity for public
review and comment on the proposed
rules. For those commenters that raised
concerns, the Department was generally
able to refine what was proposed to
address those comments and better
achieve the stated objectives. Therefore,
the Department does not see a need to
conduct public meetings prior to
publishing this final rule. In regards to
outreach, the Department agrees that
this is a good idea and intends to add
updated DCS information to our already
robust ECR related outreach activities.
Overview of Regulatory Changes To
Address Public Comments
The Department of State has revised
the proposed changes to § 123.9 to
address the public comments and to
better achieve its stated objectives in
this final rule. The public comment
process was helpful in identifying areas
where changes needed to be made to
fully achieve the intended objectives for
the DCS for use under the ITAR and the
EAR.
Placement of Destination Control
Statement. This final rule removes the
requirement to place the Destination
Control State on the bill of lading, air
waybill, or other shipping documents
and retains the requirement for the
invoice, which will now be more clearly
described as the commercial invoice. As
stated elsewhere in this final rule, the
commercial invoice is the document
that is most likely to achieve the
purpose of this section and therefore the
Department is limiting the requirement
to this one document, which also will
reduce the burden on exporters.
Clarifying the scope of paragraph
123.9(a) applies to items shipped
(exported in tangible form),
retransferred (in tangible form), or
reexported (in tangible form). This final
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rule clarifies that the requirement
applies to tangible defense articles when
exported, reexported, or retransferred.
Addition of Note to paragraph
123.9(b)(1)(iv). This final rule also adds
a Note to proposed paragraph (b)(1)(iv)
to clarify what is meant in the DCS by
the phrase ‘‘or as otherwise authorized
by U.S. law and regulations.’’ The note
clarifies that the phrase ‘‘or as otherwise
authorized by U.S. law and regulations’’
is included to advise that U.S.
regulations contain specific license
exemptions, provisions that allow
shipments to be made ‘‘no license
required,’’ as well as reexports of foreign
made items containing less than de
minimis U.S. origin controlled content
(see 15 CFR 734). This note reflects that
an individual license is not required in
all cases.
Procedures for Obtaining State
Department Authorization To Export
Items Subject to the EAR
This final rule adds a new paragraph
(d) to § 123.9 to clarify the requirements
for retransferring items subject to the
EAR pursuant to a request for written
approval from DDTC.
Other changes in this rule. The
Department makes a number of minor
edits to the ITAR that address reporting
requirements. This final rule removes
the requirement to provide seven paper
copies for various requests in §§ 124.7,
124.12, 124.14, 125.2, 125.7 and 126.9.
The Department did not receive any
comments on the proposed changes,
except for one commenter that
expressed support for the removal of
unnecessary submission requirements
(e.g., seven paper copies). Therefore,
this final rule revises §§ 124.7, 124.12,
124.14, 125.2, 125.7 and 126.9 as
proposed.
This final rule imposes the Code of
Federal Regulations paragraph structure
on § 124.8. The Department received no
comments on § 124.8, and the provision
is adopted as proposed.
This final rule replaces the previous
Destination Control Statement in
§ 124.9(a)(6) with the new language
found at § 123.9(b)(1)(iv). The
Department received only one comment
on this issue, which did not propose
substantive changes, but advised that
§ 124.9(a)(6) needed to reflect the new
Destination Control Statement language.
The Department notes that the proposed
rule did not revise the Destination
Control Statement language of
§ 124.14(c)(7). Therefore, this final rule
revises §§ 124.9 and 124.14 accordingly.
This final rule also changes the
identification of the agency responsible
for permanent import authorizations in
§ 123.4 from the Department of the
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Treasury to Department of Justice. The
Department did not receive any
comments on the proposed changes.
Therefore, this final rule revises § 123.4
as proposed.
This final rule removes the pilot filing
requirement found in § 123.13, given
that, as noted in the proposed rule, it
did not take into account the practices
of modern airport operations and is no
longer necessary. The Department did
not receive any comments on the
proposed change. Therefore, this final
rule revises § 123.13 as proposed.
This final rule revises § 124.12(b) to
correct the citations contained in the
parenthetical from §§ 124.9 and 124.10
to §§ 124.8 and 124.9. This revision was
not included in the proposed rule.
Additionally, the Department amends
§ 126.9, Advisory Opinions and Related
Authorizations, to add a new paragraph
(c) for requests to interpret ITAR
requirements. This revision was not
included in the proposed rule but is
added to clarify the Department’s
practice. The Department is undertaking
a review of the advisory opinion process
which will be addressed in a future rule.
Finally, the Department notes that
this final rule does not revise the NATO
special retransfer authorizations
language in § 124.16, which was
contained in the proposed rule. By
separate Federal Register notice (81 FR
35611, June 3, 2016) effective September
1, 2016, the provisions of § 124.16 will
be incorporated into § 126.18 and the
section will be removed and reserved.
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 §§ 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
published 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. The Department has made
additional refinements to what was
proposed based on the public comments
received, which helps to further the
objectives described in the proposed
rule that is published as a final rule
today. The Department is also adopting
a delayed effective date of 90 days.
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Regulatory Flexibility Act
Since this final rule is exempt from
the provisions of 5 U.S.C. 553, there is
no requirement for an analysis under
the Regulatory Flexibility Act.
Unfunded Mandates Reform Act of 1995
This rulemaking does not involve a
mandate that will result in the
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
in any year and it will not significantly
or uniquely affect small governments.
Therefore, no actions were deemed
necessary under the provisions of the
Unfunded Mandates Reform Act of
1995.
Small Business Regulatory Enforcement
Fairness Act of 1996
The Department does not believe this
rulemaking is a major rule as defined in
5 U.S.C. 804.
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Executive Orders 12372 and 13132
This rulemaking will not have
substantial direct effects on the States,
on the relationship between the national
government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. Therefore, in
accordance with Executive Order 13132,
it is determined that this rulemaking
does not have sufficient federalism
implications to require consultations or
warrant the preparation of a federalism
summary impact statement. The
regulations implementing Executive
Order 12372 regarding
intergovernmental consultation on
Federal programs and activities do not
apply to this proposed rulemaking.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563
direct agencies to assess costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributed impacts, and equity).
These executive orders stress the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This rule has been
designated a ‘‘significant regulatory
action’’ under Executive Order 12866.
Accordingly, this final rule has been
reviewed by the Office of Management
and Budget (OMB).
Executive Order 12988
The Department of State has reviewed
this rulemaking in light of Executive
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Order 12988 to eliminate ambiguity,
minimize litigation, establish clear legal
standards, and reduce burden.
■
Executive Order 13175
120.5 Relation to regulations of other
agencies; export of items subject to the
EAR.
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, the provisions of
Executive Order 13175 do not apply to
this rulemaking.
Paperwork Reduction Act
This rule does not impose any new
reporting or recordkeeping requirements
subject to the Paperwork Reduction Act,
44 U.S.C. Chapter 35. This rule removes
provisions that previously required the
applicant to provide seven additional
copies for various export license
requests. As noted in the proposed rule,
the Department believes that there
would be little or no practical burden
reduction since the use of electronic
methods of filing has made the
requirement for ‘‘seven copies’’
obsolete. The Department requested
public comment on its estimate that
there will be little or no change in the
burdens associated with effected
information collections as a result of
this rulemaking. The Department
received no public comments with
respect to the information collections.
List of Subjects
22 CFR Parts 120 and 125
Arms and munitions, Classified
information, Exports.
2. Section 120.5 is amended by
revising the section heading and
paragraph (b) to read as follows:
*
*
*
*
*
(b) A license or other approval (see
§ 120.20) from the Department of State
granted in accordance with this
subchapter may also authorize the
export of items subject to the EAR (see
§ 120.42). An exemption (see parts 123,
124, 125, and 126 of this subchapter)
may only be used to export an item
subject to the EAR that is for use in or
with a defense article and is included in
the same shipment as any defense
article. No exemption under this
subchapter may be utilized to export an
item subject to the EAR if not
accompanied by a defense article.
Separate approval from the Department
of Commerce is not required for these
items. Those items subject to the EAR
exported pursuant to a Department of
State license or other approval would
remain under the jurisdiction of the
Department of Commerce for any
subsequent transactions. The inclusion
of items subject to the EAR on a
Department of State license or other
approval does not change the licensing
jurisdiction of the items. (See § 123.1(b)
of this subchapter for guidance on
identifying items subject to the EAR in
a license application to the Department
of State.)
PART 123—LICENSES FOR THE
EXPORT AND TEMPORARY IMPORT
OF DEFENSE ARTICLES
22 CFR Part 123
Arms and munitions, Exports,
Reporting and recordkeeping
requirements.
22 CFR Part 124
Arms and munitions, Exports,
Technical assistance.
22 CFR Part 126
Arms and munitions, Exports.
Accordingly, for the reasons set forth
above, title 22, chapter I, subchapter M,
is amended as follows:
PART 120—PURPOSE AND
DEFINITIONS
1. The authority citation for part 120
continues to read as follows:
■
Authority: Secs. 2, 38, and 71, 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.
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3. The authority citation for part 123
continues to read as follows:
■
Authority: Secs. 2, 38, and 71, Pub. L. 90–
629, 90 Stat. 744 (22 U.S.C. 2752, 2778,
2797); 22 U.S.C. 2753; 22 U.S.C. 2651a; 22
U.S.C. 2776; Pub. L. 105–261, 112 Stat. 1920;
Sec. 1205(a), Pub. L. 107–228; Section 1261,
Pub. L. 112–239; E.O. 13637, 78 FR 16129.
4. Section 123.4 is amended by
revising paragraph (a)(4) to read as
follows:
■
§ 123.4 Temporary import license
exemptions.
(a) * * *
(4) Has been rejected for permanent
import by the Department of Justice and
is being returned to the country from
which it was shipped; or
*
*
*
*
*
5. Section 123.9 is amended by
revising paragraphs (b)(1) and (2) and
adding paragraph (d) to read as follows:
■
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§ 123.9 Country of ultimate destination
and approval of reexports or retransfers.
■
*
§ 123.13 Domestic aircraft shipments via a
foreign country.
*
*
*
*
(b) * * *
(1) The exporter must incorporate the
following information as an integral part
of the commercial invoice, whenever
defense articles are to be shipped
(exported in tangible form),
retransferred (in tangible form), or
reexported (in tangible form) pursuant
to a license or other approval under this
subchapter:
(i) The country of ultimate
destination;
(ii) The end-user;
(iii) The license or other approval
number or exemption citation; and
(iv) The following statement: ‘‘These
items are controlled by the U.S.
government and authorized for export
only to the country of ultimate
destination for use by the ultimate
consignee or end-user(s) herein
identified. They may not be resold,
transferred, or otherwise disposed of, to
any other country or to any person other
than the authorized ultimate consignee
or end-user(s), either in their original
form or after being incorporated into
other items, without first obtaining
approval from the U.S. government or as
otherwise authorized by U.S. law and
regulations.’’
mstockstill on DSK3G9T082PROD with RULES
Note to paragraph (b)(1)(iv): The phrase
‘‘or as otherwise authorized by U.S. law and
regulations’’ is included because U.S.
regulations contain specific exemptions from
licensing requirements (e.g., ITAR
exemptions, and EAR license exceptions and
No License Required designations) and allow
for certain amounts of U.S. origin content in
foreign made items (see 15 CFR 734).
(2) When exporting items subject to
the EAR (see §§ 120.5, 120.42 and
123.1(b) of this subchapter) pursuant to
a Department of State license or other
approval, the U.S. exporter must also
provide the end-user and consignees
with the appropriate EAR classification
information for each item. This includes
the Export Control Classification
Number (ECCN) or EAR99 designation.
*
*
*
*
*
(d) The Directorate of Defense Trade
Controls may authorize reexport or
retransfer of an item subject to the EAR
provided that:
(1) The item was initially exported,
reexported or transferred pursuant to a
Department of State license or other
approval;
(2) The item is for end-use in or with
a defense article; and
(3) All requirements of paragraph (c)
of this section are satisfied for the item
subject to the EAR, as well as for the
associated defense article.
*
*
*
*
*
VerDate Sep<11>2014
16:08 Aug 16, 2016
Jkt 238001
6. Revise § 123.13 to read as follows:
A license is not required for the
shipment by air of a defense article from
one location in the United States to
another location in the United States via
a foreign country.
PART 124—AGREEMENTS, OFF
SHORE PROCUREMENT, AND OTHER
DEFENSE SERVICES
7. The authority citation for part 124
continues to read as follows:
■
Authority: Sec. 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.
8. Section 124.7 is amended by
redesignating the introductory text as
paragraph (a) introductory text, revising
newly designated paragraph (a)(1), and
adding reserved paragraph (b).
The revision reads as follows:
■
§ 124.7 Information required in all
manufacturing license agreements and
technical assistance agreements.
(a) * * *
(1) The agreement must describe the
defense article to be manufactured and
all defense articles to be exported,
including any test and support
equipment or advanced materials. They
should be described by military
nomenclature, contract number,
National Stock Number, nameplate data,
or other specific information. Only
defense articles listed in the agreement
will be eligible for export under the
exemption in § 123.16(b)(1) of this
subchapter.
*
*
*
*
*
§ 124.8
[Amended]
9. Section 124.8 is amended by
redesignating the introductory text as
paragraph (a) introductory text and
adding reserved paragraph (b).
■ 10. Section 124.9 is amended by
revising paragraph (a)(6) to read as
follows:
■
§ 124.9 Additional clauses required only in
manufacturing license agreements.
(a) * * *
(6) (Licensee) agrees to incorporate
the following statement as an integral
provision of a contract, commercial
invoice or other appropriate document
whenever the licensed articles are sold
or otherwise transferred:
These items are controlled by the U.S.
government and authorized for export
only to the country of ultimate
destination for use by the ultimate
PO 00000
Frm 00018
Fmt 4700
Sfmt 4700
consignee or end-user(s) herein
identified. They may not be resold,
transferred, or otherwise disposed of, to
any other country or to any person other
than the authorized ultimate consignee
or end-user(s), either in their original
form or after being incorporated into
other items, without first obtaining
approval from the U.S. government or as
otherwise authorized by U.S. law and
regulations.
■ 11. Section 124.12 is amended by
revising paragraph (a) introductory text
and paragraph (b)(4) to read as follows:
§ 124.12 Required information in letters of
transmittal.
(a) An application for the approval of
a manufacturing license or technical
assistance agreement with a foreign
person must be accompanied by an
explanatory letter. The explanatory
letter shall contain:
*
*
*
*
*
(b) * * *
(4) ‘‘If this agreement grants any rights
to sub-license, it will be amended to
require that all sub-licensing
arrangements incorporate all the
provisions of the basic agreement that
refer to the U.S. Government and the
Department of State (i.e., 22 CFR 124.8
and 124.9).’’
■ 12. Section 124.14 is amended by
revising paragraphs (c)(7) and (e)
introductory text to read as follows:
§ 124.14 Exports to warehouses or
distribution points outside the United
States.
*
*
*
*
*
(c) * * *
(7) ‘‘(Licensee) agrees to incorporate
the following statement as an integral
provision of a contract, invoice or other
appropriate document whenever the
articles covered by this agreement are
sold or otherwise transferred: ‘These
items are controlled by the U.S.
government and authorized for export
only to the country of ultimate
destination for use by the ultimate
consignee or end-user(s) herein
identified. They may not be resold,
transferred, or otherwise disposed of, to
any other country or to any person other
than the authorized ultimate consignee
or end-user(s), either in their original
form or after being incorporated into
other items, without first obtaining
approval from the U.S. government or as
otherwise authorized by U.S. law and
regulations.’ ’’
*
*
*
*
*
(e) Transmittal letters. Requests for
approval of warehousing and
distribution agreements with foreign
E:\FR\FM\17AUR1.SGM
17AUR1
Federal Register / Vol. 81, No. 159 / Wednesday, August 17, 2016 / Rules and Regulations
§ 126.9 Advisory opinions and related
authorizations.
persons must be made by letter. The
letter shall contain:
*
*
*
*
*
PART 125—LICENSES FOR THE
EXPORT OF TECHNICAL DATA AND
CLASSIFIED DEFENSE ARTICLES
13. 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.
14. Section 125.2 is amended by
revising paragraph (a) to read as follows:
■
§ 125.2
data.
Exports of unclassified technical
(a) License. A license (DSP–5) is
required for the export of unclassified
technical data unless the export is
exempt from the licensing requirements
of this subchapter. In the case of a plant
visit, details of the proposed discussions
must be transmitted to the Directorate of
Defense Trade Controls for an appraisal
of the technical data.
*
*
*
*
*
■ 15. Section 125.7 is amended by
revising paragraph (b) to read as follows:
(a) Preliminary authorization
determinations. A person may request
information from the Directorate of
Defense Trade Controls on whether it
would likely grant a license or other
approval for a particular defense article
or defense service to a particular
country. * * *
*
*
*
*
*
(c) Interpretations of the ITAR. Any
person may request an interpretation of
the requirements set forth in this
subchapter in the form of an advisory
opinion. A request for an advisory
opinion must be made in writing. Any
response to an advisory opinion
provided by the Directorate of Defense
Trade Controls pursuant to this
paragraph shall not be an authorization
to export and shall not bind the
Department to grant or deny any such
authorization.
Rose E. Gottemoeller,
Under Secretary, Arms Control and
International Security, Department of State.
[FR Doc. 2016–19550 Filed 8–16–16; 8:45 am]
BILLING CODE 4710–25–P
§ 125.7 Procedures for the export of
classified technical data and other
classified defense articles.
DEPARTMENT OF DEFENSE
*
Department of the Navy
*
*
*
*
(b) An application for the export of
classified technical data or other
classified defense articles must be
accompanied by a completed form DSP–
83 (see § 123.10 of this subchapter). All
classified materials accompanying an
application must be transmitted to the
Directorate of Defense Trade Controls in
accordance with the procedures
contained in the Department of Defense
National Industrial Security Program
Operating Manual (unless such
requirements are inconsistent with
guidance provided by the Directorate of
Defense Trade Controls, in which case
the latter guidance must be followed).
PART 126—GENERAL POLICIES AND
PROVISIONS
16. The authority citation for part 126
continues to read as follows:
mstockstill on DSK3G9T082PROD with RULES
■
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; Section 7045, Pub. L. 112–74; Section
7046, Pub. L. 112–74; E.O. 13637, 78 FR
16129.
17. Section 126.9 is amended by
revising the heading and the first
sentence of paragraph (a) and adding
paragraph (c) to read as follows:
■
VerDate Sep<11>2014
16:08 Aug 16, 2016
Jkt 238001
32 CFR Part 706
Certifications and Exemptions Under
the International Regulations for
Preventing Collisions at Sea, 1972
Department of the Navy, DoD.
Final rule.
AGENCY:
ACTION:
The Department of the Navy
(DoN) is amending its certifications and
exemptions under the International
Regulations for Preventing Collisions at
Sea, 1972 (72 COLREGS), to reflect that
the Deputy Assistant Judge Advocate
General (DAJAG) (Admiralty and
Maritime Law) has determined that USS
GABRIELLE GIFFORDS (LCS 10) is a
vessel of the Navy which, due to its
special construction and purpose,
cannot fully comply with certain
provisions of the 72 COLREGS without
interfering with its special function as a
naval ship. The intended effect of this
rule is to warn mariners in waters where
72 COLREGS apply.
DATES: This rule is effective August 17,
2016 and is applicable beginning
August 9, 2016.
FOR FURTHER INFORMATION CONTACT:
Commander Theron R. Korsak, JAGC,
U.S. Navy, Admiralty Attorney,
(Admiralty and Maritime Law), Office of
SUMMARY:
PO 00000
Frm 00019
Fmt 4700
Sfmt 4700
54737
the Judge Advocate General, Department
of the Navy, 1322 Patterson Ave. SE.,
Suite 3000, Washington Navy Yard, DC
20374–5066, telephone number: 202–
685–5040.
SUPPLEMENTARY INFORMATION: Pursuant
to the authority granted in 33 U.S.C.
1605, the DoN amends 32 CFR part 706.
This amendment provides notice that
the DAJAG (Admiralty and Maritime
Law), under authority delegated by the
Secretary of the Navy, has certified that
USS GABRIELLE GIFFORDS (LCS 10) is
a vessel of the Navy which, due to its
special construction and purpose,
cannot fully comply with the following
specific provisions of 72 COLREGS
without interfering with its special
function as a naval ship: Annex I
paragraph 2(a)(i), pertaining to the
height of the forward masthead light
above the hull; Annex I, paragraph
2(f)(i), pertaining to the placement of the
masthead light or lights above and clear
of all other lights and obstructions;
Annex I, paragraph 3(a), pertaining to
the location of the forward masthead
light in the forward quarter of the ship,
and the horizontal distance between the
forward and after masthead light; Annex
I, paragraph 3(c), pertaining to the task
light’s horizontal distance from the fore
and aft centerline of the vessel in the
athwartship direction. The DAJAG
(Admiralty and Maritime Law) has also
certified that the lights involved are
located in closest possible compliance
with the applicable 72 COLREGS
requirements.
Moreover, it has been determined, in
accordance with 32 CFR parts 296 and
701, that publication of this amendment
for public comment prior to adoption is
impracticable, unnecessary, and
contrary to public interest since it is
based on technical findings that the
placement of lights on this vessel in a
manner differently from that prescribed
herein will adversely affect the vessel’s
ability to perform its military functions.
List of Subjects in 32 CFR Part 706
Marine safety, Navigation (water),
Vessels.
For the reasons set forth in the
preamble, the DoN amends part 706 of
title 32 of the Code of Federal
Regulations as follows:
PART 706—CERTIFICATIONS AND
EXEMPTIONS UNDER THE
INTERNATIONAL REGULATIONS FOR
PREVENTING COLLISIONS AT SEA,
1972
1. The authority citation for part 706
continues to read as follows:
■
Authority: 33 U.S.C. 1605.
E:\FR\FM\17AUR1.SGM
17AUR1
]]>Agencies
[Federal Register Volume 81, Number 159 (Wednesday, August 17, 2016)]
[Rules and Regulations]
[Pages 54732-54737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19550]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF STATE
22 CFR Parts 120, 123, 124, 125, and 126
[Public Notice: 9606]
RIN 1400-AC88
Amendment to the International Traffic in Arms Regulations:
Procedures for Obtaining State Department Authorization To Export Items
Subject to the Export Administration Regulations; Revision to the
Destination Control Statement; and Other Changes
AGENCY: Department of State.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: As part of the President's Export Control Reform (ECR)
initiative, the Department of State is amending the International
Traffic in Arms Regulations (ITAR) to clarify rules pertaining to the
export of items subject to the Export Administration Regulations (EAR),
revise the destination control statement in ITAR Sec. 123.9 to
harmonize the language with the EAR, make conforming changes to ITAR
Sec. Sec. 124.9 and 124.14, and make several minor edits for clarity.
DATES: This rule is effective November 15, 2016.
FOR FURTHER INFORMATION CONTACT: Mr. C. Edward Peartree, Director,
Office of Defense Trade Controls Policy, Department of State, telephone
(202) 663-2792; email DDTCResponseTeam@state.gov. ATTN: Regulatory
Change, Destination Control Statement.
SUPPLEMENTARY INFORMATION: The Department published a proposed rule on
May 22, 2015 (80 FR 29565) and received 17 public comments on the
proposed changes to the ITAR. The Department makes the following
revisions in this final rule:
Items Subject to the EAR
This final rule adds clarifying language to various provisions of
the ITAR pertaining to the use of exemptions to the license
requirements and the export of items subject to the EAR, when the EAR
items are shipped with items subject to the ITAR. These revisions
include guidance on the use of license exemptions for the export of
such items, as well as clarification that items subject to the EAR are
not defense articles, even when exported under a license or other
approval, such as an exemption, issued by the Department of State. The
Department received the following comments on the proposed changes,
which are summarized here, along with the Department's responses:
One commenter raised a concern that the proposed revised language
restricts industry's exemption options for items subject to the EAR to
situations only when related USG authorization exists for the end item.
The Department accepts the comment and has revised Sec. 120.5(b) to
state that items subject to the EAR may be exported pursuant to an ITAR
exemption if exported with defense articles. ITAR exemptions may not be
used for the independent export of items subject to the EAR, i.e., a
single physical shipment of EAR item(s) that does not include any USML
item with which the EAR item may be used. If the items subject to the
EAR will be transferred separately from a defense article, license
exceptions available under the EAR may be used to authorize the
transfer.
One commenter noted that, the proposed Sec. 120.5(b) inadvertently
excluded the exemptions at Part 123 of the ITAR from the parenthetical
list of applicable ITAR parts. The Department concurs with this comment
and adds a reference to part 123 into the parenthetical phrase.
One commenter noted that the Department should provide
clarification and guidance on the proper classification to be entered
into the Automated Export System (AES) for items subject to the EAR
shipped under an ITAR exemption. The commenter noted that proposed
edits to Sec. 123.9(b)(2) did not address AES filings. The Department
notes that the Department of Commerce (U.S. Census Bureau and Bureau of
Industry and Security) has already clarified this. The EAR
classification needs to be provided in the export control information
on the Electronic Export Information (EEI) filing in AES for all items
subject to the EAR, including EAR99 designated items that are
authorized for export under a State Department authorization.
One commenter noted that the changes in this rule require that if a
shipment includes both ITAR and EAR controlled items then the Export
Control Classification Number (ECCN) of items in the shipments must be
listed, including any EAR99 designation (if the authorization for the
export was through an approved State Department license), and requires
the country of ultimate destination, end-user, licensee information to
be provided on the export documents. The flexibility of exporting items
subject to the EAR under a State Department authorization does warrant
this additional level of identification for all of the items subject to
the EAR that the Department authorizes for export. Therefore, although
the Department understands the comment, given the hybrid nature of the
ITAR authorization under the Sec. 120.5(b) process, the Department has
determined the requirements are warranted.
One commenter noted that the text under Sec. 120.5(b) does not
specify that ``items subject to the EAR'' exported under an exemption
must be exported with the specific defense article. They recommend
clarifying that this is the intent of the modification or if not, to
change the text, so it comports with the requirements for ``items
subject to the EAR'' exported under a license or other approval. The
Department concurs with this comment. This final rule adds
[[Page 54733]]
clarifying text to Sec. 120.5(b) to specify that in order to use a
Department of State license exemption the item subject to the EAR must
be exported with a defense article.
Items Exported To or On Behalf of an Agency of the U.S. Government
This final rule does not revise the licensing exemption language in
Sec. 126.4. This section will be addressed in a separate rulemaking
and comments submitted in response to the proposed rule on that topic
will be addressed in that rulemaking.
Revision to the Destination Control Statement
This final rule revises the Destination Control Statement (DCS) in
ITAR Sec. 123.9 to harmonize the text with the text of the DCS in EAR
Sec. 758.6, which is the subject of a companion rule to be published
by the Department of Commerce. The DCS revision is also reflected in
Sec. 124.9 and 124.14. This change is being made to facilitate the
President's Export Control Reform initiative, which has transferred
thousands of formerly ITAR-controlled defense article parts and
components, along with other items, to the Commerce Control List in the
EAR, which is under the jurisdiction of the Department of Commerce.
This change in jurisdiction for many parts and components of military
systems has increased the incidence of exporters shipping articles
subject to both the ITAR and the EAR in the same shipment. Both
regulations have a mandatory Destination Control Statement that must be
on the export control documents for shipments that include items
subject to both sets of regulations. This had previously caused
confusion to exporters as to which statement to include on mixed
shipments, or whether to include both. Harmonizing these statements
will ease the regulatory burden on exporters.
Summary of Public Comments on the Destination Control Statement
Most of the public comments fell into one of four areas: (1)
Harmonization of DCS language between the ITAR and the EAR; (2)
harmonization of documentation between the ITAR and EAR; (3) providing
exporters a sufficient implementation period to adjust to the new DCS
requirements; and (4) consideration of the different documents required
for shipping, with the commercial invoice being the clear favorite and
most appropriate for the DCS to be included on.
This final rule includes an effective date 90 days after
publication in the Federal Register for the DCS provisions. It also
specifies that the exporter is responsible for including the DCS on the
commercial invoice. Additionally, the DCS text adopted in this final
rule is identical to the DCS text adopted in a companion rule by
Commerce.
The Department received a small number of comments on the proposed
rule which were specific to the Commerce proposed rule, and Commerce is
addressing these comments in its final rule.
Public Comments and the Department's Responses
Several commenters noted that harmonization represents a step in
the right direction and will minimize confusion as to which DCS must be
used depending on the jurisdiction of the item. The Department concurs
with this comment.
Several commenters objected that the Department's requirements for
placement of the DCS were out of step with Commerce and not harmonized
in the proposed rule. The Department agrees, and the requirement for
placement of the DCS is being harmonized by the Departments of State
and Commerce.
Several commenters stated that the government should not specify
the documents that require the DCS, but rather should impose a high
level requirement and leave it to parties to choose which document(s)
to include. The Department disagrees. Specifying which documents the
DCS will be placed on will create greater transparency, as well as make
it easier for various United States government agencies, as well as
exporters and other consignees, to identify whether the DCS has been
properly included.
One commenter noted that this appears to be a case of harmonization
for the sake of harmonization, and would appear to have the potential
to create substantial confusion among recipients, and impose
significant burdens without a correspondingly significant benefit to
the government. The Department disagrees. Ensuring the DCS reaches the
parties that will receive items exported and/or reexported is key to
the United States achieving its policy objectives.
One commenter stated that it was confusing that Commerce uses the
term ``commercial invoice'' whereas the Department uses ``invoice.''
For some exporters, the term ``invoice'' refers to the final billing
document that moves electronically, whereas the commercial invoice
moves with the freight. The Department agrees that the terms should be
harmonized. Based on other comments received, the term ``commercial
invoice'' is well understood by industry, so this final rule adopts the
term ``commercial invoice'' to reference the document that moves with
the freight.
One commenter objected to the DCS, as it imposed additional burdens
and costs on the public and trade. Further, the commenter noted that to
add this information separately to the bill of lading, air waybill and
other transportation documentation could have the unintended effect of
signaling the package contents to third parties. The Department
disagrees with the commenter's characterization as these statements are
already required and the harmonization of the DCS will lower the
administrative burden on exporters and re-exporters. In addition, and
as noted elsewhere in this final rule, the Department is removing the
requirement to include the DCS on transportation documents.
One commenter stated that the air waybill imposed a severe space
limitation with regard to including the DCS. According to the
commenter, including information regarding a country of ultimate
destination, end-user, and license or other approval number or
exemption citation information could be unduly burdensome. The
Department concurs, as noted elsewhere in this final rule, and the
requirement to include the DCS on transportation documents has been
removed.
One commenter noted that the State Department should consider a
shorter DCS, such as: ``This shipment contains goods under the
jurisdiction of the ITAR.'' This statement could more easily be
converted to an electronic format than the complete DCS. The Department
disagrees, as an ITAR specific DCS would defeat the purpose of
harmonization between the Departments of State and Commerce and would
not address mixed shipments.
One commenter suggested that the DCS and other export control
related information (e.g., USML category) be placed on a separate
document that serves multiple purposes, and can be sent with the items
being shipped or separately in order to convey to the consignees that
the items are U.S. export regulated and are intended only for the
designated end user and the destination identified. The Department
acknowledges there would be some benefits to such an approach, but it
is preferable to require the DCS on an existing document (the
commercial invoice) that is created in the normal course of business.
Other public comments support this conclusion.
[[Page 54734]]
Numerous commenters requested a delay in the implementation date of
between 180-240 days after publication of the final rule to allow
sufficient time for affected parties to make the required changes to
system programming, document revision and related procedural tasks.
Other commenters requested a 180 day delayed effective date, along with
a delayed compliance date. The Department agrees that industry will
need time to update their systems and has included a delayed effective
date of 90 days after publication of this final rule.
One commenter requested public meetings in order to comment on the
proposed changes, and that State and Commerce also conduct outreach
prior to new changes being implemented. The Department values public
participation in the rulemaking process and has provided an opportunity
for public review and comment on the proposed rules. For those
commenters that raised concerns, the Department was generally able to
refine what was proposed to address those comments and better achieve
the stated objectives. Therefore, the Department does not see a need to
conduct public meetings prior to publishing this final rule. In regards
to outreach, the Department agrees that this is a good idea and intends
to add updated DCS information to our already robust ECR related
outreach activities.
Overview of Regulatory Changes To Address Public Comments
The Department of State has revised the proposed changes to Sec.
123.9 to address the public comments and to better achieve its stated
objectives in this final rule. The public comment process was helpful
in identifying areas where changes needed to be made to fully achieve
the intended objectives for the DCS for use under the ITAR and the EAR.
Placement of Destination Control Statement. This final rule removes
the requirement to place the Destination Control State on the bill of
lading, air waybill, or other shipping documents and retains the
requirement for the invoice, which will now be more clearly described
as the commercial invoice. As stated elsewhere in this final rule, the
commercial invoice is the document that is most likely to achieve the
purpose of this section and therefore the Department is limiting the
requirement to this one document, which also will reduce the burden on
exporters.
Clarifying the scope of paragraph 123.9(a) applies to items shipped
(exported in tangible form), retransferred (in tangible form), or
reexported (in tangible form). This final rule clarifies that the
requirement applies to tangible defense articles when exported,
reexported, or retransferred.
Addition of Note to paragraph 123.9(b)(1)(iv). This final rule also
adds a Note to proposed paragraph (b)(1)(iv) to clarify what is meant
in the DCS by the phrase ``or as otherwise authorized by U.S. law and
regulations.'' The note clarifies that the phrase ``or as otherwise
authorized by U.S. law and regulations'' is included to advise that
U.S. regulations contain specific license exemptions, provisions that
allow shipments to be made ``no license required,'' as well as
reexports of foreign made items containing less than de minimis U.S.
origin controlled content (see 15 CFR 734). This note reflects that an
individual license is not required in all cases.
Procedures for Obtaining State Department Authorization To Export Items
Subject to the EAR
This final rule adds a new paragraph (d) to Sec. 123.9 to clarify
the requirements for retransferring items subject to the EAR pursuant
to a request for written approval from DDTC.
Other changes in this rule. The Department makes a number of minor
edits to the ITAR that address reporting requirements. This final rule
removes the requirement to provide seven paper copies for various
requests in Sec. Sec. 124.7, 124.12, 124.14, 125.2, 125.7 and 126.9.
The Department did not receive any comments on the proposed changes,
except for one commenter that expressed support for the removal of
unnecessary submission requirements (e.g., seven paper copies).
Therefore, this final rule revises Sec. Sec. 124.7, 124.12, 124.14,
125.2, 125.7 and 126.9 as proposed.
This final rule imposes the Code of Federal Regulations paragraph
structure on Sec. 124.8. The Department received no comments on Sec.
124.8, and the provision is adopted as proposed.
This final rule replaces the previous Destination Control Statement
in Sec. 124.9(a)(6) with the new language found at Sec.
123.9(b)(1)(iv). The Department received only one comment on this
issue, which did not propose substantive changes, but advised that
Sec. 124.9(a)(6) needed to reflect the new Destination Control
Statement language. The Department notes that the proposed rule did not
revise the Destination Control Statement language of Sec.
124.14(c)(7). Therefore, this final rule revises Sec. Sec. 124.9 and
124.14 accordingly.
This final rule also changes the identification of the agency
responsible for permanent import authorizations in Sec. 123.4 from the
Department of the Treasury to Department of Justice. The Department did
not receive any comments on the proposed changes. Therefore, this final
rule revises Sec. 123.4 as proposed.
This final rule removes the pilot filing requirement found in Sec.
123.13, given that, as noted in the proposed rule, it did not take into
account the practices of modern airport operations and is no longer
necessary. The Department did not receive any comments on the proposed
change. Therefore, this final rule revises Sec. 123.13 as proposed.
This final rule revises Sec. 124.12(b) to correct the citations
contained in the parenthetical from Sec. Sec. 124.9 and 124.10 to
Sec. Sec. 124.8 and 124.9. This revision was not included in the
proposed rule.
Additionally, the Department amends Sec. 126.9, Advisory Opinions
and Related Authorizations, to add a new paragraph (c) for requests to
interpret ITAR requirements. This revision was not included in the
proposed rule but is added to clarify the Department's practice. The
Department is undertaking a review of the advisory opinion process
which will be addressed in a future rule.
Finally, the Department notes that this final rule does not revise
the NATO special retransfer authorizations language in Sec. 124.16,
which was contained in the proposed rule. By separate Federal Register
notice (81 FR 35611, June 3, 2016) effective September 1, 2016, the
provisions of Sec. 124.16 will be incorporated into Sec. 126.18 and
the section will be removed and reserved.
Regulatory Analysis and Notices
Administrative Procedure Act
The Department of State is of the opinion that controlling the
import and export of defense articles and services is a foreign affairs
function of the United States government and that rules implementing
this function are exempt from Sec. Sec. 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 published 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. The Department has made
additional refinements to what was proposed based on the public
comments received, which helps to further the objectives described in
the proposed rule that is published as a final rule today. The
Department is also adopting a delayed effective date of 90 days.
[[Page 54735]]
Regulatory Flexibility Act
Since this final rule is exempt from the provisions of 5 U.S.C.
553, there is no requirement for an analysis under the Regulatory
Flexibility Act.
Unfunded Mandates Reform Act of 1995
This rulemaking does not involve a mandate that will result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any year and it
will not significantly or uniquely affect small governments. Therefore,
no actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
Small Business Regulatory Enforcement Fairness Act of 1996
The Department does not believe this rulemaking is a major rule as
defined in 5 U.S.C. 804.
Executive Orders 12372 and 13132
This rulemaking will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, it is determined that this rulemaking does not have
sufficient federalism implications to require consultations or warrant
the preparation of a federalism summary impact statement. The
regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this proposed rulemaking.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess costs
and benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributed impacts, and equity). These executive orders
stress the importance of quantifying both costs and benefits, of
reducing costs, of harmonizing rules, and of promoting flexibility.
This rule has been designated a ``significant regulatory action'' under
Executive Order 12866. Accordingly, this final rule has been reviewed
by the Office of Management and Budget (OMB).
Executive Order 12988
The Department of State has reviewed this rulemaking in light of
Executive Order 12988 to eliminate ambiguity, minimize litigation,
establish clear legal standards, and reduce burden.
Executive Order 13175
The Department of State has determined that this rulemaking will
not have tribal implications, will not impose substantial direct
compliance costs on Indian tribal governments, and will not preempt
tribal law. Accordingly, the provisions of Executive Order 13175 do not
apply to this rulemaking.
Paperwork Reduction Act
This rule does not impose any new reporting or recordkeeping
requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter
35. This rule removes provisions that previously required the applicant
to provide seven additional copies for various export license requests.
As noted in the proposed rule, the Department believes that there would
be little or no practical burden reduction since the use of electronic
methods of filing has made the requirement for ``seven copies''
obsolete. The Department requested public comment on its estimate that
there will be little or no change in the burdens associated with
effected information collections as a result of this rulemaking. The
Department received no public comments with respect to the information
collections.
List of Subjects
22 CFR Parts 120 and 125
Arms and munitions, Classified information, Exports.
22 CFR Part 123
Arms and munitions, Exports, Reporting and recordkeeping
requirements.
22 CFR Part 124
Arms and munitions, Exports, Technical assistance.
22 CFR Part 126
Arms and munitions, Exports.
Accordingly, for the reasons set forth above, title 22, chapter I,
subchapter M, is 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 120.5 is amended by revising the section heading and
paragraph (b) to read as follows:
120.5 Relation to regulations of other agencies; export of items
subject to the EAR.
* * * * *
(b) A license or other approval (see Sec. 120.20) from the
Department of State granted in accordance with this subchapter may also
authorize the export of items subject to the EAR (see Sec. 120.42). An
exemption (see parts 123, 124, 125, and 126 of this subchapter) may
only be used to export an item subject to the EAR that is for use in or
with a defense article and is included in the same shipment as any
defense article. No exemption under this subchapter may be utilized to
export an item subject to the EAR if not accompanied by a defense
article. Separate approval from the Department of Commerce is not
required for these items. Those items subject to the EAR exported
pursuant to a Department of State license or other approval would
remain under the jurisdiction of the Department of Commerce for any
subsequent transactions. The inclusion of items subject to the EAR on a
Department of State license or other approval does not change the
licensing jurisdiction of the items. (See Sec. 123.1(b) of this
subchapter for guidance on identifying items subject to the EAR in a
license application to the Department of State.)
PART 123--LICENSES FOR THE EXPORT AND TEMPORARY IMPORT OF DEFENSE
ARTICLES
0
3. The authority citation for part 123 continues to read as follows:
Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744
(22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2753; 22 U.S.C. 2651a; 22
U.S.C. 2776; Pub. L. 105-261, 112 Stat. 1920; Sec. 1205(a), Pub. L.
107-228; Section 1261, Pub. L. 112-239; E.O. 13637, 78 FR 16129.
0
4. Section 123.4 is amended by revising paragraph (a)(4) to read as
follows:
Sec. 123.4 Temporary import license exemptions.
(a) * * *
(4) Has been rejected for permanent import by the Department of
Justice and is being returned to the country from which it was shipped;
or
* * * * *
0
5. Section 123.9 is amended by revising paragraphs (b)(1) and (2) and
adding paragraph (d) to read as follows:
[[Page 54736]]
Sec. 123.9 Country of ultimate destination and approval of reexports
or retransfers.
* * * * *
(b) * * *
(1) The exporter must incorporate the following information as an
integral part of the commercial invoice, whenever defense articles are
to be shipped (exported in tangible form), retransferred (in tangible
form), or reexported (in tangible form) pursuant to a license or other
approval under this subchapter:
(i) The country of ultimate destination;
(ii) The end-user;
(iii) The license or other approval number or exemption citation;
and
(iv) The following statement: ``These items are controlled by the
U.S. government and authorized for export only to the country of
ultimate destination for use by the ultimate consignee or end-user(s)
herein identified. They may not be resold, transferred, or otherwise
disposed of, to any other country or to any person other than the
authorized ultimate consignee or end-user(s), either in their original
form or after being incorporated into other items, without first
obtaining approval from the U.S. government or as otherwise authorized
by U.S. law and regulations.''
Note to paragraph (b)(1)(iv): The phrase ``or as otherwise
authorized by U.S. law and regulations'' is included because U.S.
regulations contain specific exemptions from licensing requirements
(e.g., ITAR exemptions, and EAR license exceptions and No License
Required designations) and allow for certain amounts of U.S. origin
content in foreign made items (see 15 CFR 734).
(2) When exporting items subject to the EAR (see Sec. Sec. 120.5,
120.42 and 123.1(b) of this subchapter) pursuant to a Department of
State license or other approval, the U.S. exporter must also provide
the end-user and consignees with the appropriate EAR classification
information for each item. This includes the Export Control
Classification Number (ECCN) or EAR99 designation.
* * * * *
(d) The Directorate of Defense Trade Controls may authorize
reexport or retransfer of an item subject to the EAR provided that:
(1) The item was initially exported, reexported or transferred
pursuant to a Department of State license or other approval;
(2) The item is for end-use in or with a defense article; and
(3) All requirements of paragraph (c) of this section are satisfied
for the item subject to the EAR, as well as for the associated defense
article.
* * * * *
0
6. Revise Sec. 123.13 to read as follows:
Sec. 123.13 Domestic aircraft shipments via a foreign country.
A license is not required for the shipment by air of a defense
article from one location in the United States to another location in
the United States via a foreign country.
PART 124--AGREEMENTS, OFF SHORE PROCUREMENT, AND OTHER DEFENSE
SERVICES
0
7. The authority citation for part 124 continues to read as follows:
Authority: Sec. 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
8. Section 124.7 is amended by redesignating the introductory text as
paragraph (a) introductory text, revising newly designated paragraph
(a)(1), and adding reserved paragraph (b).
The revision reads as follows:
Sec. 124.7 Information required in all manufacturing license
agreements and technical assistance agreements.
(a) * * *
(1) The agreement must describe the defense article to be
manufactured and all defense articles to be exported, including any
test and support equipment or advanced materials. They should be
described by military nomenclature, contract number, National Stock
Number, nameplate data, or other specific information. Only defense
articles listed in the agreement will be eligible for export under the
exemption in Sec. 123.16(b)(1) of this subchapter.
* * * * *
Sec. 124.8 [Amended]
0
9. Section 124.8 is amended by redesignating the introductory text as
paragraph (a) introductory text and adding reserved paragraph (b).
0
10. Section 124.9 is amended by revising paragraph (a)(6) to read as
follows:
Sec. 124.9 Additional clauses required only in manufacturing license
agreements.
(a) * * *
(6) (Licensee) agrees to incorporate the following statement as an
integral provision of a contract, commercial invoice or other
appropriate document whenever the licensed articles are sold or
otherwise transferred:
These items are controlled by the U.S. government and authorized
for export only to the country of ultimate destination for use by the
ultimate consignee or end-user(s) herein identified. They may not be
resold, transferred, or otherwise disposed of, to any other country or
to any person other than the authorized ultimate consignee or end-
user(s), either in their original form or after being incorporated into
other items, without first obtaining approval from the U.S. government
or as otherwise authorized by U.S. law and regulations.
0
11. Section 124.12 is amended by revising paragraph (a) introductory
text and paragraph (b)(4) to read as follows:
Sec. 124.12 Required information in letters of transmittal.
(a) An application for the approval of a manufacturing license or
technical assistance agreement with a foreign person must be
accompanied by an explanatory letter. The explanatory letter shall
contain:
* * * * *
(b) * * *
(4) ``If this agreement grants any rights to sub-license, it will
be amended to require that all sub-licensing arrangements incorporate
all the provisions of the basic agreement that refer to the U.S.
Government and the Department of State (i.e., 22 CFR 124.8 and
124.9).''
0
12. Section 124.14 is amended by revising paragraphs (c)(7) and (e)
introductory text to read as follows:
Sec. 124.14 Exports to warehouses or distribution points outside the
United States.
* * * * *
(c) * * *
(7) ``(Licensee) agrees to incorporate the following statement as
an integral provision of a contract, invoice or other appropriate
document whenever the articles covered by this agreement are sold or
otherwise transferred: `These items are controlled by the U.S.
government and authorized for export only to the country of ultimate
destination for use by the ultimate consignee or end-user(s) herein
identified. They may not be resold, transferred, or otherwise disposed
of, to any other country or to any person other than the authorized
ultimate consignee or end-user(s), either in their original form or
after being incorporated into other items, without first obtaining
approval from the U.S. government or as otherwise authorized by U.S.
law and regulations.' ''
* * * * *
(e) Transmittal letters. Requests for approval of warehousing and
distribution agreements with foreign
[[Page 54737]]
persons must be made by letter. The letter shall contain:
* * * * *
PART 125--LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED
DEFENSE ARTICLES
0
13. 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.
0
14. Section 125.2 is amended by revising paragraph (a) to read as
follows:
Sec. 125.2 Exports of unclassified technical data.
(a) License. A license (DSP-5) is required for the export of
unclassified technical data unless the export is exempt from the
licensing requirements of this subchapter. In the case of a plant
visit, details of the proposed discussions must be transmitted to the
Directorate of Defense Trade Controls for an appraisal of the technical
data.
* * * * *
0
15. Section 125.7 is amended by revising paragraph (b) to read as
follows:
Sec. 125.7 Procedures for the export of classified technical data and
other classified defense articles.
* * * * *
(b) An application for the export of classified technical data or
other classified defense articles must be accompanied by a completed
form DSP-83 (see Sec. 123.10 of this subchapter). All classified
materials accompanying an application must be transmitted to the
Directorate of Defense Trade Controls in accordance with the procedures
contained in the Department of Defense National Industrial Security
Program Operating Manual (unless such requirements are inconsistent
with guidance provided by the Directorate of Defense Trade Controls, in
which case the latter guidance must be followed).
PART 126--GENERAL POLICIES AND PROVISIONS
0
16. 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; Section 7045, Pub. L. 112-74; Section 7046, Pub. L. 112-
74; E.O. 13637, 78 FR 16129.
0
17. Section 126.9 is amended by revising the heading and the first
sentence of paragraph (a) and adding paragraph (c) to read as follows:
Sec. 126.9 Advisory opinions and related authorizations.
(a) Preliminary authorization determinations. A person may request
information from the Directorate of Defense Trade Controls on whether
it would likely grant a license or other approval for a particular
defense article or defense service to a particular country. * * *
* * * * *
(c) Interpretations of the ITAR. Any person may request an
interpretation of the requirements set forth in this subchapter in the
form of an advisory opinion. A request for an advisory opinion must be
made in writing. Any response to an advisory opinion provided by the
Directorate of Defense Trade Controls pursuant to this paragraph shall
not be an authorization to export and shall not bind the Department to
grant or deny any such authorization.
Rose E. Gottemoeller,
Under Secretary, Arms Control and International Security, Department of
State.
[FR Doc. 2016-19550 Filed 8-16-16; 8:45 am]
BILLING CODE 4710-25-P
