Rule2023-03828
International Traffic in Arms Regulations: Consolidation and Restructuring of Purposes and Definitions-Final
Primary source
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Published
February 27, 2023
Effective
February 27, 2023
Issuing agencies
State Department
Abstract
The Department of State published an interim final rule on March 23, 2022, effective September 6, 2022, amending the International Traffic in Arms Regulations (ITAR) to better organize the purposes and definitions of the regulations. After reviewing the comments received in response to that interim final rule, the Department is now responding to public comments and finalizing the interim final rule, including making minor amendments.
Full Text
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<title>Federal Register, Volume 88 Issue 38 (Monday, February 27, 2023)</title>
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[Federal Register Volume 88, Number 38 (Monday, February 27, 2023)]
[Rules and Regulations]
[Pages 12210-12213]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-03828]
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DEPARTMENT OF STATE
22 CFR Parts 120 and 121
[Public Notice: 11918]
RIN 1400-AE27
International Traffic in Arms Regulations: Consolidation and
Restructuring of Purposes and Definitions--Final
AGENCY: Department of State.
ACTION: Final rule.
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SUMMARY: The Department of State published an interim final rule on
March 23, 2022, effective September 6, 2022, amending the International
Traffic in Arms Regulations (ITAR) to better organize the purposes and
definitions of the regulations. After reviewing the comments received
in response to that interim final rule, the Department is now
responding to public comments and finalizing the interim final rule,
including making minor amendments.
DATES: This rule is effective February 27, 2023.
FOR FURTHER INFORMATION CONTACT: Sarah Heidema, Director, Office of
Defense Trade Controls Policy, Department of State, telephone (202)
663-1282; email <a href="/cdn-cgi/l/email-protection#6125253522221412150e0c0413320413170802042112150015044f060e17"><span class="__cf_email__" data-cfemail="3377776770704640475c5e5641605641455a50567340475247561d545c45">[email protected]</span></a>. ATTN: Regulatory Change,
Consolidation of Definitions and Restructuring of Part 120--Final.
SUPPLEMENTARY INFORMATION: The Directorate of Defense Trade Controls
(DDTC), U.S. Department of State, administers the International Traffic
in Arms Regulations (ITAR) (22 CFR parts 120-130). The regulations,
codified as subchapter M of chapter I, title 22 of the Code of Federal
Regulations (``the subchapter'') implement those authorities of the
Arms Export Control Act (AECA) (22 U.S.C. 2751 et seq.) delegated to
the Secretary of State pursuant to Executive Order 13637. On March 23,
2022, the Department published an interim final rule at 87 FR 16396,
with an effective date of September 6, 2022 (the interim final rule),
to restructure part 120 of the ITAR to better organize the definitions
previously found in that part and other locations throughout the ITAR
and to consolidate provisions that provide background information or
otherwise apply throughout the regulations. In addition, the interim
final rule added text not previously found in the ITAR and made
clarifying revisions to existing text. In that interim final rule, the
Department requested comments from the interested community. The
Department now provides responses to those comments and amends the ITAR
through this final rulemaking.
Before the Department addresses comments received in response to
the interim final rule, it notes that beginning with 85 FR 25287, May
1, 2020, as warranted by ``the exceptional and undue hardships and
risks to safety caused by the public health emergency related to the
SARS-COV2 pandemic,'' DDTC provided, via a series of notices in the
Federal Register, for certain temporary suspensions, modifications, and
exceptions to facilitate telework. The final document in that series,
86 FR 30778, June 10, 2021, provided, pursuant to ITAR Sec. Sec. 126.2
and 126.3, ``a temporary suspension, modification, and exception to the
requirement that a regular employee, for purposes of ITAR Sec.
120.39(a)(2), work at the company's facilities, to allow the individual
to work at a remote work location, so long as the individual is not
located in a country listed in ITAR Sec. 126.1'' and ``a temporary
suspension, modification, and exception to authorize regular employees
of licensed entities who are working remotely in a country not
currently authorized by a technical assistance agreement, manufacturing
license agreement, or exemption to send, receive, or access any
technical data authorized for export, reexport, or retransfer to their
employer via a technical assistance agreement, manufacturing license
agreement, or exemption so long as the regular employee is not located
in a country listed in ITAR Sec. 126.1.'' DDTC confirms that the
temporary suspensions, modifications, and exceptions provided in 86 FR
30778, June 10, 2021, remain in effect until such time as a document is
published in the Federal Register explicitly terminating each,
notwithstanding the movement of former ITAR Sec. 120.39 to new Sec.
120.64 by republication of ITAR part 120 in the interim final rule.
Response to Comments
One commenter expressed appreciation for the Department's efforts
and anticipates a positive impact on compliance and the security and
foreign policy interests of the Department. Another commenter noted the
changes make the regulations noticeably more accessible to readers.
One commenter requested that the policy statement regarding
registration requirements at new Sec. 120.13 be amended to include in
paragraph (b) specific reference to available exemptions to
registration at Sec. Sec. 129.2 and 129.3. The commenter further
suggested such inclusion would better harmonize the language of Sec.
120.13(b) with Sec. 120.14(c). The Department believes that it would
enhance the clarity of Sec. 120.13 to include reference to available
exemptions to the registration requirement in part 129, as per the
commenter's suggestion, as well as in part 122, and includes a new
paragraph (c) to Sec. 120.13 noting the availability of exemptions to
the registration requirements.
One commenter recommended the Department include definitions of
end-use and end-user in Subpart C to part 120 and stated that
``[u]nderstanding how DOS defines the terms used in the ITAR is
imperative to complying with the ITAR's requirements.'' The Department
will take the recommendation under consideration. Because the
Department's stated aim in the interim final rule was focused on
movement and consolidation, it is not adding the proposed definitions
at this time.
One commenter noted that new Sec. 120.12, describing the procedure
by which a requestor can obtain a commodity jurisdiction (CJ)
determination as to whether a particular article or service is covered
by the USML, consistently uses the term ``determination''. The
commenter further noted the distinction between determination in the CJ
process and designation as used regarding identification of defense
articles and services on the USML. The commenter recommended additional
revisions, including to Sec. Sec. 120.2 and 120.3, to similarly
distinguish between designations and determinations. The Department
notes that it is working to increase clarity regarding terms
designation and determination, and did so where possible in the interim
final rule. The preamble discussion to new Sec. 120.12 in the interim
final rule refers to that effort. The Department notes its expressed
intent to limit substantive amendments and to focus on
[[Page 12211]]
restructuring and consolidation of existing text in this rulemaking.
DDTC will make note of the recommendation for consideration in future
rulemaking.
One commenter requested that the second use of the term Arms Export
Control Act in Sec. 120.5 be replaced with the initialism AECA. The
Department notes that the preamble to the interim final rule states the
policy that acronyms (or initialisms) and parentheticals will be used
where a single term capable of shortening appears ``on more than two
occasions within any one section.'' In this case, the term only appears
twice, so the policy was not applied.
One commenter suggested the Department replace the word ``you''
where used in Sec. 120.11 with the term ``reviewer'' and make other
minor conforming revisions. The Department notes that while Sec.
120.11 is the only section of the ITAR where the word ``you'' appears,
the word is regularly used in regulation, see e.g., the Export
Administration Regulations (EAR) (15 CFR parts 730-774) and Bureau of
Alcohol, Tobacco, Firearms and Explosives (ATFE) regulations, (27 CFR
parts 447, 478, 479, 555, and 771), and that the text of new Sec.
120.11(a)(2) was moved directly from prior Sec. 121.1(b). In light of
the Department's stated aims to keep revisions to existing text to a
minimum and because it is not aware of any confusion caused by the term
since adoption, no change is being made at this time.
One commenter recommended revision to the statement of policy
regarding incorporation or integration of controlled items into any
non-controlled item. The commenter recommended: (1) stating
specifically that such items are subject to ITAR authorization
requirements; and (2) where multiple controlled items are incorporated
or integrated into a non-controlled item, that the item must be
licensed under each applicable category. The Department notes that
Sec. 120.11(c) is a general statement of policy and not intended to
provide guidance on how to structure licenses in specific scenarios.
The statement of policy is that such items do not lose controlled
status because of incorporation or integration and that the items are
subject to the subchapter, and all the requirements therein, including
the requirement to obtain a license or other approval prior to
transfer.
One commenter recommended the Department either define the term
``unfavorable finding'' when used in relation to Blue Lantern end-use
monitoring in new Sec. 120.18(a)(9), or otherwise remove the
paragraph. The commenter stated that the significant action of denial,
revocation, etc. of an authorization should not be predicated on the
use of an undefined term and that the previous list of reasons for
denial, revocation, etc. at former Sec. 120.27 are sufficient to
address determinations based on end-use monitoring. The Department
notes that in the supporting information to the interim final rule and
posted on the DDTC website there is the statement that new Sec.
120.18(a)(9) is a ``[g]eneral statement of existing policy not
previously explicit.'' The Department confirms here that paragraph
(a)(9) is an accurate statement of existing practice and is
memorializing the policy as one of the factors the Department may
consider when implementing its broad discretionary authority to
disapprove, deny, revoke, suspend, or amend without prior notice
licenses or approvals, as described in paragraphs (a)(1) and (a)(2).
The term ``unfavorable finding'' is adequate to express the finding of
an end-use monitoring check in which the Department lacks the
assurances necessary to issue a license or other approval or to
otherwise modify or halt controlled transactions under such an
authorization. The Department's annual ``Report to Congress on End-Use
Monitoring of Defense Articles and Defense Services'' is publicly
available on the DDTC website at <a href="http://pmddtc.state.gov">pmddtc.state.gov</a> and provides
additional information regarding unfavorable Blue Lantern findings.
One commenter recommended the Department add the terms executables,
source code, and object code to the definition of software at Sec.
120.40(g). The Department notes its expressed intent to limit
substantive amendments and to focus on restructuring and consolidation
of existing text in this rulemaking. DDTC will make note of the
recommendation for consideration in future rulemaking.
One commenter recommended the Department revise the numbering of
notes to Sec. 120.41 from notes 2 and 3 to paragraph (b) to notes 1
and 2 to paragraph (b). The Department notes that it has revised the
numbering of notes in Sec. 120.41 in accordance with the Office of the
Federal Register publication requirement that all notes to a section be
numbered sequentially. Similar revisions to notes to other ITAR
sections can be expected in future rulemakings.
One commenter recommended the Department provide additional
commentary regarding the movement of definitions of development and
production from Sec. 120.41 (specially designed) to stand alone
definitions applicable to the ITAR entirely. The commenter suggested
there may be unintended consequences resulting from this transition.
The commenter raised two specific concerns. First, ``that a party
engaged only in the `assembly and testing of prototypes'
(`development') may not trigger the registration requirement in ITAR
Sec. 122.1, which requires `only one occasion of manufacturing' for
registration (`manufacture' is a subset of `production').'' DDTC
acknowledges that not all persons in the United States that may come
into contact with defense articles and technical data are required to
register with the Department. Persons who are not engaged in the
business of manufacturing, exporting, or temporarily importing defense
articles are not required by Sec. 122.1 to register. The Department,
however, believes that the clarity of the expanded definition outweighs
the risk that a person solely engaged in assembly of products in
development, and no other controlled activity, would no longer register
with the Department.
Second, the commenter suggested that there may be an unintended
reduction in the scope of technical data designated as Significant
Military Equipment (SME). The commenter was concerned that ``technical
data associated with `development' activities such as `assembly and
testing of prototypes' would not be treated as SME, even if virtually
indistinguishable from the data eventually used in `production'
activities, including manufacture.'' The Department notes that it
considered the impact of movement of definitions to universal
application and that the language of new Sec. 120.10(c) is not new or
revised. The same language appears in the former Sec. 121.1(a)(2) and
has been included in various sections of the ITAR since at least 1993.
The movement of the definition of development from Note 2 to paragraph
(b) of Sec. 120.41, where it was limited to ``specially designed'', to
a single instance definition applicable to the entire subchapter at
Sec. 120.43 does not alter the relationship between the language of
Sec. 120.10(c) (formerly Sec. 121.1(a)(2)) and the definition of
technical data at Sec. 120.33 (formerly Sec. 120.10). The Department
notes that the limitation to manufacture and production in Sec. 120.33
(formerly Sec. 120.10) is unchanged by this rulemaking. Technical data
that is not directly related to the manufacture or production of a
defense article designated as SME is not designated as SME. In this
respect, however, the Department notes that technical data
[[Page 12212]]
associated with development activities, such as assembly and testing of
prototypes, that is indistinguishable from technical data used in
manufacturing or production activities would be directly related to the
manufacture or production of a defense article and therefore would be
designated as SME if the defense article is SME. The Department further
notes that the definitions of development and production identify the
point at which a commodity transitions from development to production,
and the point at which it subsequently re-enters development, as those
terms are used in multiple locations within the regulation to reference
specific points in the manufacturing process. The Department is not
defining manufacture at this time. For these reasons, the Department is
not revising the text of the interim final rule.
One commenter requested the Department provide notice through
Federal Register document or an FAQ that existing authorizations do not
require an immediate update but can be updated at the next ``major
revision'' and that DDTC allow submissions with citations to outdated
sections where the intent of the reference is clear for at least six
months after the effective date of this rule. The Department notes that
it provided a six-month delayed effective date for this rule to allow
regulated entities time to accommodate the revisions. The Department
further notes that it is aware that existing agreements may have
citations to ITAR sections effective at time of approval and had DDTC
intended to require immediate amendments to revise outdated citations
in all existing agreements, it would have so instructed in the interim
final rule. Therefore, while the Department is not requiring existing
authorizations to be amended merely to effect citation revisions, it
expects submissions for licenses and other approvals received after the
effective date of the rule to reference the ITAR as effective at the
time of submission.
In addition to comments addressed above, the Department received
comments outside the scope of this rulemaking, including comments
proposing substantive revisions to existing text, including text not
otherwise moved or amended by this rule. As the rule ``moves and
reorganizes existing regulatory text without revision'' wherever
possible for the purpose of organizational clarity, the Department
takes note of these comments, but is not entertaining substantive
revisions to existing text in this rulemaking.
Amendments
In Sec. 120.13, for the reasons described above, the Department
adds a new paragraph (c) to provided notice of the availability of
exemptions to registration.
In Sec. 120.40(g) (formerly found at Sec. 120.45(f)), the
Department amends the final clause of the second sentence to revise
reference from ``a technical data license'' to ``a license.'' This
revision is in accordance with a future rulemaking, RIN 1400-AE26, to
revise descriptions of licenses in order to bring usage into better
conformity with the definition of license at Sec. 120.57(a) (formerly
found at Sec. 120.20) and the approved information collections from
which licenses are issued, and which was not included in that
rulemaking. In Sec. 121.1, the Department amends Category XIII(l), by
correcting the closing parenthetical to the paragraph by removing an
errant close parenthesis within the parenthetical.
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 military or
foreign affairs function of the United States Government and that rules
implementing this function are exempt from sections 553 (rulemaking)
and 554 (adjudications) of the Administrative Procedure Act (APA),
pursuant to 5 U.S.C. 553(a)(1). Since the Department is of the opinion
that this rule is exempt from 5 U.S.C 553, it is the view of the
Department that the provisions of section 553 do not apply to this
rulemaking.
Regulatory Flexibility Act
Since this rule is exempt from the notice-and-comment provisions of
5 U.S.C. 553(b), it does not require 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 are deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
Congressional Review Act
The Department does not believe this rulemaking is a major rule
within the definition of 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 amendment does not have
sufficient federalism implications to require consultations or warrant
the preparation of a federalism summary impact statement. The
regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this 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). Because
the scope of this rule does not impose additional regulatory
requirements or obligations, the Department believes costs associated
with this rule will be minimal. This rule has been designated a
``significant regulatory action'' by the Office and Information and
Regulatory Affairs under Executive Order 12866.
Executive Order 12988
The Department of State 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 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 rule does not impose or revise any information collections
subject to 44 U.S.C. chapter 35.
List of Subjects in 22 CFR Parts 120 and 121
Arms and munitions, Classified information, Exports.
Accordingly, for the reasons set forth in the preamble and under
the authority of 22 U.S.C. 2778, the interim final rule
[[Page 12213]]
amending title 22, chapter I, subchapter M, which was published at 87
FR 16396 on March 23, 2022, is adopted as final with the following
changes:
PART 120--PURPOSE AND DEFINITIONS
0
1. The authority citation for part 120 continues to read as follows:
Authority: 22 U.S.C. 2651a, 2752, 2753, 2776, 2778, 2779,
2779a, 2785, 2794, 2797; E.O. 13637, 78 FR 16129, 3 CFR, 2013 Comp.,
p. 223.
0
2. Amend Sec. 120.13 by adding paragraph (c) to read:
Sec. 120.13 Registration.
* * * * *
(c) The registration requirements as set forth in parts 122 and 129
of this subchapter include limited exemptions.
Sec. 120.40 [Amended]
0
3. In Sec. 120.40 paragraph (g), remove the phrase ``a technical data
license'' and add in its place ``a license''.
PART 121--THE UNITED STATES MUNITIONS LIST
0
4. 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.
Sec. 121.1 [Amended]
0
5. In Sec. 121.1, Category XIII, paragraph (l), remove the phrase
``(see Sec. 120.32) of this subchapter)'' and add in its place ``(see
Sec. 120.32 of this subchapter)''.
Bonnie Jenkins,
Under Secretary, Arms Controls and International Security, Department
of State.
[FR Doc. 2023-03828 Filed 2-24-23; 8:45 am]
BILLING CODE 4710-25-P
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