International Traffic in Arms Regulations: U.S. Munitions List Targeted Revisions, 25488-25491 [2023-08825]
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Federal Register / Vol. 88, No. 81 / Thursday, April 27, 2023 / Rules and Regulations
conformity with GAAP and regulatory
reporting requirements; and
Æ Evaluating the adequacy of the
documentation and the effectiveness of
the controls used to support the
measurement of the ACLs;
• Assess the effectiveness of board
oversight as well as management’s
effectiveness in identifying, measuring,
monitoring, and controlling credit risk.
This may include, but is not limited to,
a review of underwriting standards and
practices, portfolio composition and
trends, credit risk review functions, risk
rating systems, credit administration
practices, investment securities
management practices, and related
management information systems and
reports;
• Review the appropriateness and
reasonableness of the overall level of the
ACLs relative to the level of credit risk,
the complexity of the institution’s
financial asset portfolios, and available
information relevant to assessing
collectibility, including consideration of
current conditions and reasonable and
supportable forecasts. Examiners may
include a quantitative analysis (e.g.,
using management’s results comparing
expected write-offs to actual write-offs
as well as ratio analysis) to assess the
appropriateness of the ACLs. This
quantitative analysis may be used to
determine the reasonableness of
management’s assumptions, valuations,
and judgments and understand
variances between actual and estimated
credit losses. Loss estimates that are
consistently and materially over or
under predicting actual losses may
indicate a weakness in the loss
forecasting process;
• Review the ACLs reported in the
institution’s regulatory reports and in
any financial statements and other key
financial reports to determine whether
the reported amounts reconcile to the
institution’s estimate of the ACLs. The
consolidated loss estimates determined
by the institution’s loss estimation
method(s) should be consistent with the
final ACLs reported in its regulatory
reports and financial statements, if
applicable;
• Verify that models used in the loss
estimation process, if any, are subject to
initial and ongoing validation activities.
Validation activities include evaluating
and concluding on the conceptual
soundness of the model, including
developmental evidence, performing
ongoing monitoring activities, including
process verification and benchmarking,
and analyzing model output.30
Examiners may review model validation
findings, management’s response to
30 See
footnote 29.
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those findings, and applicable action
plans to remediate any concerns, if
applicable. Examiners may also assess
the adequacy of the institution’s
processes to implement changes in a
timely manner; and
• Review the effectiveness of the
institution’s third-party risk
management framework associated with
the estimation of ACLs, if applicable, to
assess whether the processes are
commensurate with the level of risk, the
complexity and nature of the
relationship, and the institution’s
organizational structure. Examiners may
determine whether management
monitors material risks and deficiencies
in third-party relationships, and takes
appropriate action as needed.31
When assessing the appropriateness
of ACLs, examiners should recognize
that the processes, loss estimation
methods, and underlying assumptions
an institution uses to calculate ACLs
require the exercise of a substantial
degree of management judgment. Even
when an institution maintains sound
procedures, controls, and monitoring
activities, an estimate of expected credit
losses is not a single precise amount and
may result in a range of acceptable
outcomes for these estimates. This is a
result of the flexibility FASB ASC Topic
326 provides institutions in selecting
loss estimation methods and the wide
range of qualitative and forecasting
factors that are considered.
Management’s ability to estimate
expected credit losses should improve
over the contractual term of financial
assets as substantive information
accumulates regarding the factors
affecting repayment prospects.
Examiners generally should accept an
institution’s ACL estimates and not seek
adjustments to the ACLs, when
management has provided adequate
support for the loss estimation process
employed, and the ACL balances and
the assumptions used in the ACL
estimates are in accordance with GAAP
and regulatory reporting requirements.
It is inappropriate for examiners to seek
adjustments to ACLs for the sole
purpose of achieving ACL levels that
correspond to a peer group median, a
target ratio, or a benchmark amount
when management has used an
appropriate expected credit loss
framework to estimate expected credit
losses.
If the examiner concludes that an
institution’s reported ACLs are not
appropriate or determines that its ACL
evaluation processes or loss estimation
method(s) are otherwise deficient, these
concerns should be noted in the report
31 See
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of examination and communicated to
the board of directors and senior
management.32 Additional supervisory
action may be taken based on the
magnitude of the shortcomings in ACLs,
including the materiality of any errors
in the reported amounts of ACLs.
Michael J. Hsu,
Acting Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System.
Ann E. Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on March 31,
2023.
James P. Sheesley,
Assistant Executive Secretary.
By the National Credit Union
Administration Board.
Melane Conyers-Ausbrooks,
Secretary of the Board.
[FR Doc. 2023–08876 Filed 4–26–23; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P;
7535–01–P
DEPARTMENT OF STATE
22 CFR Part 121
[Public Notice: 11986]
RIN 1400–AF27
International Traffic in Arms
Regulations: U.S. Munitions List
Targeted Revisions
Department of State.
Interim final rule; request for
comments.
AGENCY:
ACTION:
The Department of State (the
Department) amends the International
Traffic in Arms Regulations (ITAR) to
remove from U.S. Munitions List
(USML) Category XI certain high-energy
storage capacitors and to clearly identify
the high-energy storage capacitors that
remain in USML Category XI.
DATES: Effective date May 21, 2023.
Send comments by May 30, 2023.
ADDRESSES: Interested parties may
submit comments to the Department of
State by any of the following methods:
• Visit the Regulations.gov website at:
https://www.regulations.gov and search
for the docket number DOS–2023–0003.
SUMMARY:
32 Each agency has formal and informal
communication channels for sharing supervisory
information with the board of directors and
management depending on agency practices and the
nature of the information being shared. These
channels may include, but are not limited to,
institution specific supervisory letters, letters to the
industry, transmittal letters, visitation findings
summary letters, targeted review conclusion letters,
or official examination or inspection reports.
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Federal Register / Vol. 88, No. 81 / Thursday, April 27, 2023 / Rules and Regulations
• Email: DDTCPublicComments@
state.gov. Commenting parties must
include RIN 1400–AF27 in the subject
line of the email message.
• All comments should include the
commenter’s name, the organization the
commenter represents, if applicable,
and the commenter’s address. If the
Department of State is unable to read a
comment for any reason, and cannot
contact the commenting party for
clarification, the Department of State
may not be able to consider your
comment. After the conclusion of the
comment period, the Department of
State will publish a Final Rule (in
which it will address relevant
comments) as expeditiously as possible.
FOR FURTHER INFORMATION CONTACT: Mr.
Chris Weil, Office of Defense Trade
Controls Policy, Department of State,
telephone (202) 571–7051; email
DDTCCustomerService@state.gov
SUBJECT: ITAR Amendment—USML
Targeted Revisions (RIN 1400–AF27).
SUPPLEMENTARY INFORMATION: The
Department of State’s Directorate of
Defense Trade Controls (DDTC)
administers the ITAR (22 CFR parts 120
through 130) to regulate the export,
reexport, retransfer, and temporary
import of, and brokering activities
related to certain items and services.
The articles, services, and information
subject to the jurisdiction of the
Department of State under the ITAR
(e.g., ‘‘defense articles’’ and ‘‘defense
services’’) are identified on the USML at
ITAR § 121.1. Items not subject to the
ITAR or to the exclusive licensing
jurisdiction of any other Department or
Agency of the U.S. Government are
subject to the Export Administration
Regulations (EAR, 15 CFR parts 730
through 774, which includes the
Commerce Control List (CCL) in
Supplement No. 1 to part 774),
administered by the Bureau of Industry
and Security (BIS), U.S. Department of
Commerce. This rule does not modify
the list of defense articles subject to
permanent import control by the
Attorney General, as enumerated on the
U.S. Munitions Import List at 27 CFR
part 447.
The Department seeks to control on
the USML those articles and services
that provide a critical military or
intelligence advantage. The Department
undertakes these revisions pursuant to
the discretionary statutory authority
afforded the President in section
38(a)(1) of the AECA and delegated to
the Department of State in Executive
Order 13637, to control the export and
temporary import of defense articles and
defense services in furtherance of world
peace and the security and foreign
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policy of the United States and to
designate those items which constitute
the USML. The Department, informed
by consultations with its interagency
partners, determined the articles
removed from the USML under this
rulemaking no longer warrant control
pursuant to the ITAR.
Targeted USML Revisions
With this rulemaking, the Department
is removing from USML Category XI
certain high-energy storage capacitors
that it assesses have broad commercial
application, are available
internationally, and do not provide a
critical military or intelligence
advantage. The Department assesses that
adding a 125-volt (125 V) voltage
criterion for the high-energy capacitors
described on the USML ensures the
capacitors that remain warrant control
on the USML. While adding the 125 V
criterion to paragraph (c)(5), the
Department is simultaneously
reorganizing the paragraph to delineate
each element of the control criteria more
clearly and adding a note to explain
those criteria.
These changes are warranted because
the Department found that certain lowvoltage high-energy storage capacitor
technology has progressed such that
many models that exceed the existing
USML control criteria no longer provide
a critical military or intelligence
advantage. Although these lower-voltage
capacitors meet the energy density and
full energy life criteria, the technology
for these lower-voltage capacitors is
well understood, and the capacitors
have been extensively integrated into
commercial applications, such as Wi-Fi
routers and civil aviation aircraft
transponders. Further, comparable
capacitors manufactured in other
countries are widely available
internationally without multilateral
export restrictions placed on them.
The Department considered two
methods of implementation for
specifying this voltage criterion. First,
the Department considered applying a
voltage rating criterion, assessing it to be
an industry-standard term used to
describe a value for existing capacitors
that is readily accessible to exporters
and customers through the
specifications typically provided by
Original Equipment Manufacturers
(OEMs). The Department assessed that
this criterion would facilitate
compliance and implementation. This
approach also would be in keeping with
the Department’s intent to establish
threshold criteria in language readily
understood by practitioners. However, it
is possible different OEMs determine
voltage ratings using differing
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methodologies or underlying
assumptions, which could produce
significantly different ratings for
equivalent products. The Department
assesses this drawback could be
mitigated by clearly defining the term
‘‘voltage rating’’ in the regulation but
would require more information to do
so appropriately.
Second, the Department considered
identifying the voltage performance
capability of the capacitors, as
performance capability can be
empirically tested and is potentially less
prone to misinterpretation. However, it
is not clear to the Department how
much additional testing would be
required to confirm a given capacitor
model’s capability or whether customers
have ready access to that information to
facilitate compliance.
In this interim final rule, the
Department implements the 125 V
criterion based on the voltage at which
the capacitor is capable of operating, in
order to allow for public comment on
advantages or disadvantages of each
approach and on potential definitions
for ‘‘voltage rating’’ and ‘‘capable of.’’
The Department further reaffirms a
core concept for compliance programs:
When a commodity is described by a
single criterion within a USML entry, it
is imperative to evaluate the remaining
criteria of the control to verify whether
the commodity is described—even when
the commodity was not intentionally
designed to meet or exceed the control
criteria.
Request for Comments
Consistent with its ongoing USML
review process, the Department is
requesting public comments on the
revisions described in this rulemaking.
The Department encourages the public
to provide comments directly related to
this rule and responsive to the questions
described below. To facilitate timely
review and assessment, comments
should be provided in a concise
sentence or paragraph, followed by
supporting explanatory paragraphs and
examples, with each distinct comment
treated separately (as opposed to
multiple comments in one paragraph or
section). The Department requests
comments focused on the following
questions:
1. Please provide specific examples of
any high-energy storage capacitors that
exceed the 125 V threshold but fall
under a 500 V threshold that you
believe do not provide a critical military
advantage.
2. What implementation challenges
are presented by the use of either
‘‘capable of operating’’ or ‘‘voltage
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rating’’ to describe the voltage
threshold?
3. Is there additional guidance that
would be useful in parsing ‘‘capable of
operating,’’ as used in this rule?
a. Is it sufficiently clear in the
‘‘capable of operating’’ implementation
that the voltage capability is for steadystate, versus transient or surge,
operating conditions?
b. Is it sufficiently clear in the
‘capable of operating’ implementation
that the voltage capability does not vary
based on circuit design margins?
4. Could a ‘‘voltage rating’’ criterion
be implemented more easily and
consistently? If so,
a. Do you assess that a sufficient
definition of ‘‘voltage rating’’ would be
‘‘the value, based on the capacitor’s
design, testing, and evaluation, that
describes the maximum amount of
continuous voltage that will not damage
the capacitor’’?
b. Is it sufficiently clear in the
alternative ‘voltage rating’
implementation that the voltage rating is
for steady-state, versus transient or
surge, operating conditions?
c. Is it sufficiently clear in the
alternative ‘voltage rating’
implementation that the voltage rating
does not vary based on circuit design
margins?
d. What would be the effect of adding
a temperature criterion (e.g., ‘‘measured
at or below 85 °C’’) and is it accurate
that the voltage rating of a capacitor
only declines with an increase in
temperature?
e. Would a criterion such as ‘‘will not
reduce the capacitor’s full energy life
below 10,000 discharges’’ address the
fact that each charge and discharge
cycle likely inflicts some damage on a
capacitor?
5. Are these revisions unclear in any
way, or can they be more concisely
stated? For example, please identify
any:
—Terms that you find ambiguous in
definition or context
—Constructions or language that vary
from existing USML entries
6. Are there other technical issues
directly related to this entry which the
Department should address in a future
rulemaking?
Comment Submissions
lotter on DSK11XQN23PROD with RULES1
Instructions
Include the agency name and docket
number or Regulatory Information
Number (RIN) (1400–AF27) for all
submissions related to this rulemaking.
Relevant comments may be posted
without substantive change to the DDTC
website (www.pmddtc.state.gov). Please
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remove any personal information,
because the Department will not edit
comments. 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.
Commenters are cautioned not to
include proprietary, export-controlled,
or other sensitive information that they
are not comfortable making public in
their comments. If such information
would provide useful insight to the
comment: (1) assemble that information
in a separate document with proprietary
markings; (2) include ‘‘Proprietary
supplement on file with: [provide
POC]’’ as the first line in the body of the
email submission; (3) submit the public
portion of the comment via email; and
(4) call DDTC at (202) 663–1282 to
coordinate submission of the
proprietary supplement.
Regulatory Analysis and Notices
Administrative Procedure Act
This rulemaking is exempt from
section 553 (Rulemaking) and section
554 (Adjudications) of the
Administrative Procedure Act (APA)
pursuant to 5 U.S.C. 553(a)(1) as a
military or foreign affairs function of the
United States Government. Although
the Department is of the opinion that
this rule is exempt from the rulemaking
provisions of the APA, the Department
is publishing this rule with a 30-day
provision for public comment and a
delayed effective date, without
prejudice to its determination that
controlling the import and export of
defense articles and defense services is
a military or foreign affairs function.
Regulatory Flexibility Act
Since the Department is of the
opinion that this 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.
Congressional Review Act
The Department assesses that this
rulemaking is not a major rule under the
PO 00000
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criteria of 5 U.S.C. 804. Moving the
subject commodities to the jurisdiction
of the EAR will reduce regulatory
restrictions and compliance costs,
particularly for U.S. exporters as well as
some importers who source the subject
commodities from abroad. This will not
increase costs or prices and should have
no adverse effects on competition,
employment, investment, productivity,
innovation, or the ability of U.S.-based
enterprises to compete with foreignbased enterprises in domestic and
export markets. To the contrary, the rule
is expected to reduce regulatory
compliance costs in the long term and
facilitate U.S. manufacturers’
competitiveness with foreign
manufacturers of similar commodities.
The Department does not, however,
expect this change to have an annual
effect on the economy of $100 million
or more.
Executive Orders 12372 and 13132
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
rulemaking.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributed impacts, and equity).
Executive Order 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This rule has been deemed a
‘‘significant regulatory action’’ by the
Office and Information and Regulatory
Affairs under Executive Order 12866.
This rule moves the export regulation
of certain capacitors from the ITAR to
the EAR. This action reduces the
regulatory burden on those who export,
temporarily import, retransfer, reexport,
or perform brokering activities involving
the subject capacitors. In particular, this
action averts substantial regulatory
burdens that would otherwise apply to
supply chains that rely on the subject
capacitors and commercial items into
which the subject capacitors have been
integrated or incorporated. As discussed
in ITAR § 120.11(c), defense articles
remain subject to the ITAR after
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Federal Register / Vol. 88, No. 81 / Thursday, April 27, 2023 / Rules and Regulations
incorporation or integration into an item
not described on the USML, unless
otherwise provided in the ITAR. The
Department assesses that continuing to
subject these capacitors (which are used
in a wide swath of everyday commercial
items, including commercial aircraft
and Wi-Fi equipment) to the ITAR is
unnecessary and would have significant
negative consequences for global
commerce, including the grounding of
civil aircraft and the disruption of
supply chains.
In implementing this rule, the
Department is also revising USML
Category XI(c)(5) to clarify its structure
and explain certain terms used therein
to minimize the potential for
uncertainty.
The Department assesses that the
benefits of this rulemaking outweigh
any costs, that modifying the USML in
this manner is the most cost-effective
method to achieve the Department’s
regulatory objectives on this matter, and
that doing so will result in a net
reduction of the burden on the regulated
community.
Executive Order 12988
The Department of State has reviewed
this rulemaking 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, the requirements of
Executive Order 13175 do not apply to
this rulemaking.
Paperwork Reduction Act
This rulemaking does not impose or
revise any information collections
subject to 44 U.S.C. Chapter 35.
2. In § 121.1, under Category XI, revise
paragraph (c)(5) as follows:
■
§ 121.1
The United States Munitions List.
*
*
*
*
*
Category XI—Military Electronics
*
*
*
*
*
(c) * * *
(5) High-energy storage capacitors
that:
(i) Are capable of operating at greater
than one hundred twenty-five volts (125
V);
(ii) Have a repetition rate greater than
or equal to six (6) discharges per
minute;
(iii) Have a full energy life greater
than or equal to 10,000 discharges at
greater than 0.2 Amps per Joule peak
current; and
(iv) Have any of the following:
(A) Volumetric energy density greater
than or equal to 1.5 J/cc; or
(B) Mass energy density greater than
or equal to 1.3 kJ/kg;
Note to paragraph (c)(5): Volumetric
energy density is Energy per unit Volume.
Mass energy density is Energy per unit Mass,
sometimes referred to as Gravimetric energy
density or Specific energy. Energy (E = 1⁄2CV2,
where C is Capacitance and V is the Voltage
rating) in these calculations must not be
confused with useful energy or extractable
energy.
*
*
*
*
*
The Under Secretary of State for Arms
Control and International Security,
Bonnie Jenkins, having reviewed and
approved this document, is delegating
the authority to electronically sign this
document to Jae E. Shin, who is the
Director of the Office of Defense Trade
Controls Compliance within the
Directorate of Defense Trade Controls,
for purposes of publication in the
Federal Register.
Jae E. Shin,
Director, Office of Defense Trade Controls
Compliance, Department of State.
[FR Doc. 2023–08825 Filed 4–26–23; 8:45 am]
BILLING CODE 4710–25–P
List of Subjects in 22 CFR Part 121
Arms and munitions, Classified
information, Exports.
Accordingly, for the reasons set forth
above, Title 22, Chapter I, Subchapter
M, part 121 is amended as follows:
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PART 121—THE UNITED STATES
MUNITIONS LIST
1. The authority citation for part 121
continues to read as follows:
Authority: 22 U.S.C. 2752, 2778, 2797; 22
U.S.C. 2651a; Sec. 1514, Pub. L. 105–261, 112
Stat. 2175; E.O. 13637, 78 FR 16129, 3 CFR,
2013 Comp., p. 223.
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The Department of the
Treasury’s Office of Foreign Assets
Control (OFAC) is adopting a final rule
to correct a typographical error in the
Iranian Transactions and Sanctions
Regulations and to correct two
typographical errors and incorporate
one general license in the Western
Balkans Stabilization Regulations.
SUMMARY:
DATES:
This rule is effective April 27,
2023.
FOR FURTHER INFORMATION CONTACT:
OFAC: Assistant Director for Licensing,
202–622–2480; Assistant Director for
Regulatory Affairs, 202–622–4855; or
Assistant Director for Sanctions
Compliance & Evaluation, 202–622–
2490.
SUPPLEMENTARY INFORMATION:
Electronic Availability
This document and additional
information concerning OFAC are
available on OFAC’s website:
www.treas.gov/ofac.
Background
OFAC is amending the Iranian
Transactions and Sanctions Regulations,
31 CFR part 560 (ITSR), to replace the
word ‘‘insure’’ with the word ‘‘ensure’’
in § 560.528.
OFAC is amending the Western
Balkans Stabilization Regulations, 31
CFR part 588 (WBSR), to correct cross
references in §§ 588.307 and 588.405.
On December 21, 2022, OFAC issued an
amendment to the WBSR (87 FR 78484).
This amendment added a general
license for activities of
nongovernmental organizations to the
WBSR, but because the amendment
contained an error in the amendatory
instructions, the general license could
not be incorporated. OFAC is now
amending the WBSR to redesignate a
second general license currently in
§ 588.512 as § 588.513, and to properly
add the nongovernmental organizations
general license in § 588.512.
Public Participation
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Parts 560 and 588
Corrections in the Iranian Transactions
and Sanctions Regulations and
Western Balkans Stabilization
Regulations
■
25491
Office of Foreign Assets
Control, Treasury.
ACTION: Final rule.
AGENCY:
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Because the amendment of the ITSR
and the WBSR involves a foreign affairs
function, the provisions of E.O. 12866 of
September 30, 1993, ‘‘Regulatory
Planning and Review’’ (58 FR 51735,
October 4, 1993), and the
Administrative Procedure Act (5 U.S.C.
553) requiring notice of proposed
rulemaking, opportunity for public
participation, and delay in effective date
are inapplicable. Because no notice of
proposed rulemaking is required for this
rule, the Regulatory Flexibility Act (5
U.S.C. 601–612) does not apply.
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]]>Agencies
[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Unknown Section]
[Pages 25488-25491]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08825]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF STATE
22 CFR Part 121
[Public Notice: 11986]
RIN 1400-AF27
International Traffic in Arms Regulations: U.S. Munitions List
Targeted Revisions
AGENCY: Department of State.
ACTION: Interim final rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: The Department of State (the Department) amends the
International Traffic in Arms Regulations (ITAR) to remove from U.S.
Munitions List (USML) Category XI certain high-energy storage
capacitors and to clearly identify the high-energy storage capacitors
that remain in USML Category XI.
DATES: Effective date May 21, 2023.
Send comments by May 30, 2023.
ADDRESSES: Interested parties may submit comments to the Department of
State by any of the following methods:
Visit the Regulations.gov website at: https://www.regulations.gov and search for the docket number DOS-2023-0003.
[[Page 25489]]
Email: [email protected]. Commenting parties
must include RIN 1400-AF27 in the subject line of the email message.
All comments should include the commenter's name, the
organization the commenter represents, if applicable, and the
commenter's address. If the Department of State is unable to read a
comment for any reason, and cannot contact the commenting party for
clarification, the Department of State may not be able to consider your
comment. After the conclusion of the comment period, the Department of
State will publish a Final Rule (in which it will address relevant
comments) as expeditiously as possible.
FOR FURTHER INFORMATION CONTACT: Mr. Chris Weil, Office of Defense
Trade Controls Policy, Department of State, telephone (202) 571-7051;
email [email protected] SUBJECT: ITAR Amendment--USML
Targeted Revisions (RIN 1400-AF27).
SUPPLEMENTARY INFORMATION: The Department of State's Directorate of
Defense Trade Controls (DDTC) administers the ITAR (22 CFR parts 120
through 130) to regulate the export, reexport, retransfer, and
temporary import of, and brokering activities related to certain items
and services. The articles, services, and information subject to the
jurisdiction of the Department of State under the ITAR (e.g., ``defense
articles'' and ``defense services'') are identified on the USML at ITAR
Sec. 121.1. Items not subject to the ITAR or to the exclusive
licensing jurisdiction of any other Department or Agency of the U.S.
Government are subject to the Export Administration Regulations (EAR,
15 CFR parts 730 through 774, which includes the Commerce Control List
(CCL) in Supplement No. 1 to part 774), administered by the Bureau of
Industry and Security (BIS), U.S. Department of Commerce. This rule
does not modify the list of defense articles subject to permanent
import control by the Attorney General, as enumerated on the U.S.
Munitions Import List at 27 CFR part 447.
The Department seeks to control on the USML those articles and
services that provide a critical military or intelligence advantage.
The Department undertakes these revisions pursuant to the discretionary
statutory authority afforded the President in section 38(a)(1) of the
AECA and delegated to the Department of State in Executive Order 13637,
to control the export and temporary import of defense articles and
defense services in furtherance of world peace and the security and
foreign policy of the United States and to designate those items which
constitute the USML. The Department, informed by consultations with its
interagency partners, determined the articles removed from the USML
under this rulemaking no longer warrant control pursuant to the ITAR.
Targeted USML Revisions
With this rulemaking, the Department is removing from USML Category
XI certain high-energy storage capacitors that it assesses have broad
commercial application, are available internationally, and do not
provide a critical military or intelligence advantage. The Department
assesses that adding a 125-volt (125 V) voltage criterion for the high-
energy capacitors described on the USML ensures the capacitors that
remain warrant control on the USML. While adding the 125 V criterion to
paragraph (c)(5), the Department is simultaneously reorganizing the
paragraph to delineate each element of the control criteria more
clearly and adding a note to explain those criteria.
These changes are warranted because the Department found that
certain low-voltage high-energy storage capacitor technology has
progressed such that many models that exceed the existing USML control
criteria no longer provide a critical military or intelligence
advantage. Although these lower-voltage capacitors meet the energy
density and full energy life criteria, the technology for these lower-
voltage capacitors is well understood, and the capacitors have been
extensively integrated into commercial applications, such as Wi-Fi
routers and civil aviation aircraft transponders. Further, comparable
capacitors manufactured in other countries are widely available
internationally without multilateral export restrictions placed on
them.
The Department considered two methods of implementation for
specifying this voltage criterion. First, the Department considered
applying a voltage rating criterion, assessing it to be an industry-
standard term used to describe a value for existing capacitors that is
readily accessible to exporters and customers through the
specifications typically provided by Original Equipment Manufacturers
(OEMs). The Department assessed that this criterion would facilitate
compliance and implementation. This approach also would be in keeping
with the Department's intent to establish threshold criteria in
language readily understood by practitioners. However, it is possible
different OEMs determine voltage ratings using differing methodologies
or underlying assumptions, which could produce significantly different
ratings for equivalent products. The Department assesses this drawback
could be mitigated by clearly defining the term ``voltage rating'' in
the regulation but would require more information to do so
appropriately.
Second, the Department considered identifying the voltage
performance capability of the capacitors, as performance capability can
be empirically tested and is potentially less prone to
misinterpretation. However, it is not clear to the Department how much
additional testing would be required to confirm a given capacitor
model's capability or whether customers have ready access to that
information to facilitate compliance.
In this interim final rule, the Department implements the 125 V
criterion based on the voltage at which the capacitor is capable of
operating, in order to allow for public comment on advantages or
disadvantages of each approach and on potential definitions for
``voltage rating'' and ``capable of.''
The Department further reaffirms a core concept for compliance
programs:
When a commodity is described by a single criterion within a USML
entry, it is imperative to evaluate the remaining criteria of the
control to verify whether the commodity is described--even when the
commodity was not intentionally designed to meet or exceed the control
criteria.
Request for Comments
Consistent with its ongoing USML review process, the Department is
requesting public comments on the revisions described in this
rulemaking. The Department encourages the public to provide comments
directly related to this rule and responsive to the questions described
below. To facilitate timely review and assessment, comments should be
provided in a concise sentence or paragraph, followed by supporting
explanatory paragraphs and examples, with each distinct comment treated
separately (as opposed to multiple comments in one paragraph or
section). The Department requests comments focused on the following
questions:
1. Please provide specific examples of any high-energy storage
capacitors that exceed the 125 V threshold but fall under a 500 V
threshold that you believe do not provide a critical military
advantage.
2. What implementation challenges are presented by the use of
either ``capable of operating'' or ``voltage
[[Page 25490]]
rating'' to describe the voltage threshold?
3. Is there additional guidance that would be useful in parsing
``capable of operating,'' as used in this rule?
a. Is it sufficiently clear in the ``capable of operating''
implementation that the voltage capability is for steady-state, versus
transient or surge, operating conditions?
b. Is it sufficiently clear in the `capable of operating'
implementation that the voltage capability does not vary based on
circuit design margins?
4. Could a ``voltage rating'' criterion be implemented more easily
and consistently? If so,
a. Do you assess that a sufficient definition of ``voltage rating''
would be ``the value, based on the capacitor's design, testing, and
evaluation, that describes the maximum amount of continuous voltage
that will not damage the capacitor''?
b. Is it sufficiently clear in the alternative `voltage rating'
implementation that the voltage rating is for steady-state, versus
transient or surge, operating conditions?
c. Is it sufficiently clear in the alternative `voltage rating'
implementation that the voltage rating does not vary based on circuit
design margins?
d. What would be the effect of adding a temperature criterion
(e.g., ``measured at or below 85 [deg]C'') and is it accurate that the
voltage rating of a capacitor only declines with an increase in
temperature?
e. Would a criterion such as ``will not reduce the capacitor's full
energy life below 10,000 discharges'' address the fact that each charge
and discharge cycle likely inflicts some damage on a capacitor?
5. Are these revisions unclear in any way, or can they be more
concisely stated? For example, please identify any:
--Terms that you find ambiguous in definition or context
--Constructions or language that vary from existing USML entries
6. Are there other technical issues directly related to this entry
which the Department should address in a future rulemaking?
Comment Submissions
Instructions
Include the agency name and docket number or Regulatory Information
Number (RIN) (1400-AF27) for all submissions related to this
rulemaking. Relevant comments may be posted without substantive change
to the DDTC website (www.pmddtc.state.gov). Please remove any personal
information, because the Department will not edit comments. 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. Commenters are cautioned not to include proprietary, export-
controlled, or other sensitive information that they are not
comfortable making public in their comments. If such information would
provide useful insight to the comment: (1) assemble that information in
a separate document with proprietary markings; (2) include
``Proprietary supplement on file with: [provide POC]'' as the first
line in the body of the email submission; (3) submit the public portion
of the comment via email; and (4) call DDTC at (202) 663-1282 to
coordinate submission of the proprietary supplement.
Regulatory Analysis and Notices
Administrative Procedure Act
This rulemaking is exempt from section 553 (Rulemaking) and section
554 (Adjudications) of the Administrative Procedure Act (APA) pursuant
to 5 U.S.C. 553(a)(1) as a military or foreign affairs function of the
United States Government. Although the Department is of the opinion
that this rule is exempt from the rulemaking provisions of the APA, the
Department is publishing this rule with a 30-day provision for public
comment and a delayed effective date, without prejudice to its
determination that controlling the import and export of defense
articles and defense services is a military or foreign affairs
function.
Regulatory Flexibility Act
Since the Department is of the opinion that this 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.
Congressional Review Act
The Department assesses that this rulemaking is not a major rule
under the criteria of 5 U.S.C. 804. Moving the subject commodities to
the jurisdiction of the EAR will reduce regulatory restrictions and
compliance costs, particularly for U.S. exporters as well as some
importers who source the subject commodities from abroad. This will not
increase costs or prices and should have no adverse effects on
competition, employment, investment, productivity, innovation, or the
ability of U.S.-based enterprises to compete with foreign-based
enterprises in domestic and export markets. To the contrary, the rule
is expected to reduce regulatory compliance costs in the long term and
facilitate U.S. manufacturers' competitiveness with foreign
manufacturers of similar commodities. The Department does not, however,
expect this change to have an annual effect on the economy of $100
million or more.
Executive Orders 12372 and 13132
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 rulemaking.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributed impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been deemed a ``significant regulatory
action'' by the Office and Information and Regulatory Affairs under
Executive Order 12866.
This rule moves the export regulation of certain capacitors from
the ITAR to the EAR. This action reduces the regulatory burden on those
who export, temporarily import, retransfer, reexport, or perform
brokering activities involving the subject capacitors. In particular,
this action averts substantial regulatory burdens that would otherwise
apply to supply chains that rely on the subject capacitors and
commercial items into which the subject capacitors have been integrated
or incorporated. As discussed in ITAR Sec. 120.11(c), defense articles
remain subject to the ITAR after
[[Page 25491]]
incorporation or integration into an item not described on the USML,
unless otherwise provided in the ITAR. The Department assesses that
continuing to subject these capacitors (which are used in a wide swath
of everyday commercial items, including commercial aircraft and Wi-Fi
equipment) to the ITAR is unnecessary and would have significant
negative consequences for global commerce, including the grounding of
civil aircraft and the disruption of supply chains.
In implementing this rule, the Department is also revising USML
Category XI(c)(5) to clarify its structure and explain certain terms
used therein to minimize the potential for uncertainty.
The Department assesses that the benefits of this rulemaking
outweigh any costs, that modifying the USML in this manner is the most
cost-effective method to achieve the Department's regulatory objectives
on this matter, and that doing so will result in a net reduction of the
burden on the regulated community.
Executive Order 12988
The Department of State has reviewed this rulemaking 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, the requirements of Executive Order 13175 do
not apply to this rulemaking.
Paperwork Reduction Act
This rulemaking does not impose or revise any information
collections subject to 44 U.S.C. Chapter 35.
List of Subjects in 22 CFR Part 121
Arms and munitions, Classified information, Exports.
Accordingly, for the reasons set forth above, Title 22, Chapter I,
Subchapter M, part 121 is amended as follows:
PART 121--THE UNITED STATES MUNITIONS LIST
0
1. The authority citation for part 121 continues to read as follows:
Authority: 22 U.S.C. 2752, 2778, 2797; 22 U.S.C. 2651a; Sec.
1514, Pub. L. 105-261, 112 Stat. 2175; E.O. 13637, 78 FR 16129, 3
CFR, 2013 Comp., p. 223.
0
2. In Sec. 121.1, under Category XI, revise paragraph (c)(5) as
follows:
Sec. 121.1 The United States Munitions List.
* * * * *
Category XI--Military Electronics
* * * * *
(c) * * *
(5) High-energy storage capacitors that:
(i) Are capable of operating at greater than one hundred twenty-
five volts (125 V);
(ii) Have a repetition rate greater than or equal to six (6)
discharges per minute;
(iii) Have a full energy life greater than or equal to 10,000
discharges at greater than 0.2 Amps per Joule peak current; and
(iv) Have any of the following:
(A) Volumetric energy density greater than or equal to 1.5 J/cc; or
(B) Mass energy density greater than or equal to 1.3 kJ/kg;
Note to paragraph (c)(5): Volumetric energy density is Energy
per unit Volume. Mass energy density is Energy per unit Mass,
sometimes referred to as Gravimetric energy density or Specific
energy. Energy (E = \1/2\CV\2\, where C is Capacitance and V is the
Voltage rating) in these calculations must not be confused with
useful energy or extractable energy.
* * * * *
The Under Secretary of State for Arms Control and International
Security, Bonnie Jenkins, having reviewed and approved this document,
is delegating the authority to electronically sign this document to Jae
E. Shin, who is the Director of the Office of Defense Trade Controls
Compliance within the Directorate of Defense Trade Controls, for
purposes of publication in the Federal Register.
Jae E. Shin,
Director, Office of Defense Trade Controls Compliance, Department of
State.
[FR Doc. 2023-08825 Filed 4-26-23; 8:45 am]
BILLING CODE 4710-25-P
