Rule2024-18249
International Traffic in Arms Regulations: Amendments to the Definition of Activities That Are Not Exports, Reexports, Retransfers, or Temporary Imports
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 15, 2024
Effective
September 16, 2024
Issuing agencies
State Department
Abstract
The Department of State (the Department) published a proposed rule on December 16, 2022, to include two new entries to the International Traffic in Arms Regulations (ITAR) to expand the definition of "activities that are not exports, reexports, retransfers, or temporary imports." The Department is now responding to the public comments received in response to that proposed rule and finalizing the proposed rule with changes.
Full Text
<html>
<head>
<title>Federal Register, Volume 89 Issue 158 (Thursday, August 15, 2024)</title>
</head>
<body><pre>
[Federal Register Volume 89, Number 158 (Thursday, August 15, 2024)]
[Rules and Regulations]
[Pages 66210-66214]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-18249]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF STATE
22 CFR Part 120
[Public Notice: 12422]
RIN 1400-AF26
International Traffic in Arms Regulations: Amendments to the
Definition of Activities That Are Not Exports, Reexports, Retransfers,
or Temporary Imports
AGENCY: Department of State.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of State (the Department) published a proposed
rule on December 16, 2022, to include two new entries to the
International Traffic in Arms Regulations (ITAR) to expand the
definition of ``activities that are not exports, reexports,
retransfers, or temporary imports.'' The Department is now responding
to the public comments received in response to that proposed rule and
finalizing the proposed rule with changes.
DATES: The rule is effective on September 16, 2024.
FOR FURTHER INFORMATION CONTACT: Sarah Heidema, Office of Defense Trade
Controls Policy, Department of State, telephone (202) 634-4981; email
<a href="/cdn-cgi/l/email-protection#befafaeafdfdcbcdcad1d3dbcceddbccc8d7dddbfecdcadfcadb90d9d1c8"><span class="__cf_email__" data-cfemail="a3e7e7f7e0e0d6d0d7cccec6d1f0c6d1d5cac0c6e3d0d7c2d7c68dc4ccd5">[email protected]</span></a> ATTN: Regulatory Change, ITAR 120.54
additions.
SUPPLEMENTARY INFORMATION: On December 16, 2022, the Department of
State published a proposed rule (87 FR 77046), to include two new
entries to Sec. 120.54 of the International Traffic in Arms
Regulations (ITAR) to expand the definition of ``activities that are
not exports, reexports, retransfers, or temporary imports.'' Activities
listed in ITAR Sec. 120.54 do not require an authorization from the
Department's Directorate of Defense Trade Controls (DDTC). The
Department has received delegated authority under section 38 of the
Arms Export Control Act (AECA) (22 U.S.C. 2778) to issue regulations
regarding the export of defense articles and defense services. It has
long used this authority to define what events are controlled as
exports and what events are not. Moreover, section 38(b) of the AECA
also provides supporting authority, as the Department may by regulation
except instances where a license would otherwise be required.
Accordingly, the Department proposed this rule to amend ITAR Sec.
120.54 in two ways. First, the proposed rule provided that, subject to
certain conditions, the taking of U.S. defense articles outside a
previously approved country by the armed forces of a foreign government
or United Nations personnel on a deployment or training exercise is not
an export, reexport, retransfer, or temporary import. Second, the
proposed rule provided that a foreign defense article that enters the
United States, either permanently or temporarily, and that is
subsequently exported from the United States pursuant to a license or
other approval under this subchapter, is not subject to the reexport
and retransfer requirements of this subchapter, provided it has not
been modified, enhanced, upgraded, or otherwise altered or improved or
had a U.S.-origin defense article incorporated into it. In that
proposed rule, the Department requested comments from the public. The
Department now provides responses to those comments and amends the
ITAR, with changes from the proposed rule, through this final
rulemaking.
Summary of Changes From the Proposed Rule
The following are six changes the Department made in this final
rule since the development and publication of the December 16, 2022,
proposed rule (87 FR 77046). First, to provide additional clarity, the
Department inverted the order of proposed paragraphs (a)(6)(i)
[[Page 66211]]
and (ii). The first provision now notes there is no change in end-use
or end-user, and the next provision is the requirement that the items
be transported by and remain in the possession of the previously
authorized armed forces or United Nations military personnel.
Second, the Department amended the text of proposed paragraph
(a)(6)(ii), which will now become paragraph (a)(6)(i), by changing
``subject defense article'' to ``defense article'' to reduce
unnecessary text.
Third, the Department amended the text of proposed paragraph
(a)(6)(i), which will now become paragraph (a)(6)(ii), by adding the
phrase ``previously authorized'' before ``armed forces'' to reinforce
that the armed forces or United Nations (U.N.) military personnel
transporting and in possession of the defense articles must be
previously authorized end-users of the defense articles.
Fourth, the Department also amended the text of proposed paragraph
(a)(6)(i), which will now become paragraph (a)(6)(ii), by revising the
phrase ``U.N. personnel'' to ``U.N. military personnel.'' The
Department added the additional word to ensure that non-military
persons associated with U.N. missions, such as civilians, including
police, working for various U.N. agencies are not mistakenly believed
to be described by the provision.
For the fifth and sixth changes, the Department narrowed the scope
of the proposed excluded list of activities that are not exports,
reexports, retransfers, or temporary imports, by not excluding
temporary imports into the United States, or subsequent exports.
Although exports and temporary imports were originally included in the
proposed rule, since publication and during the review period, the
Department reassessed the inclusion of those activities in light of a
comment received, information received from an interagency partner, and
the intended purpose of the rule. More specifically, one commenter
requested clarification that licenses for temporary imports would not
be required under the proposed rule text. The response to this comment
is discussed more below, but highlighted aspects of the proposed rule
the Department was already focused on. In addition, the Department
conferred with interagency partners regarding the Automated Commercial
Environment (ACE), the system through which imports, including
temporary imports, and exports are reported. Considerations of tracking
temporary imports and a long process to change ACE reporting and coding
options led the Department to reevaluate this aspect of its proposal in
this particular rulemaking. Moreover, the intent of the proposed rule
was to consider eliminating the need to submit reexport and retransfer
requests for activities that are routinely approved and to provide
clarity regarding subsequent control of unmodified foreign-origin
defense articles that have been subject to ITAR control while in the
United States. The resulting change in this rule does not impose any
new obligation or requirement. Rather, it is a reduction in the scope
of the broader exemption initially proposed.
Accordingly, the Department added a third limitation to proposed
paragraph (a)(6). This third limitation in what will now become ITAR
Sec. 120.54(a)(6)(iii), ``the defense article is not being exported
from or temporarily imported into the United States,'' prohibits the
applicability of the provision for exports from the United States and
temporary imports into the United States. The Department added this
third limitation to avoid complications when transiting the U.S. border
and to stay within the intent of this portion of the rule, which is to
clarify policy regarding reexports and retransfers of defense articles
previously authorized for export from the United States and in the
possession of the armed forces of a foreign government or United
Nations military personnel. This makes express in the regulations a
long-standing practice set forth since 2013 in DDTC's publicly
available ``Guidelines for Preparing Agreements.''
Similarly, the Department added a new paragraph (a)(7)(iii), using
the same language as found in new paragraph (a)(6)(iii). The new
paragraph (a)(7)(iii) states that a transfer of a wholly foreign
defense article is not a controlled event, unless it is an export from,
or a temporary import into, the United States. This addition is for
clarification purposes only and reinforces that the transfer of a
wholly foreign defense article outside of the United States and not
otherwise subject to the ITAR does not require authorization.
Response to Comments
Two commenters noted the two proposed entries to ITAR Sec. 120.54
help clarify what activities are controlled events subject to the
ITAR's jurisdiction. Specifically, both commenters noted the two new
entries are appropriately narrow in construing events that are and are
not controlled in a manner consistent with U.S. national security
interests. One commenter expressed their agreement with proposed
paragraph (a)(6) but not paragraph (a)(7). The commenter specifically
stated paragraph (a)(7) ``says that foreign defense articles,
presumably meaning guns, ammunition, and other weapons, will not be
subject to the normal procedures of a controlled event. I disagree with
this because I believe controlling the flow of weapons is of the utmost
importance, and even if the weapons come from a partner country, they
deserve a certain level of scrutiny, even if it causes some frustration
from interested parties. . . .'' The Department notes paragraph (a)(7)
is an accurate reflection of the current jurisdiction of the ITAR,
which does not control transfers of foreign defense articles that
originally entered the United States and have since been exported from
the United States if the enumerated criteria in paragraph (a)(7)(i) to
paragraph (a)(7)(iii) are all met. Like foreign persons who generally
become subject to U.S. laws and regulations when they enter the United
States, foreign defense articles that enter the United States generally
become subject to U.S. laws and regulations, including the ITAR, while
in the United States. However, U.S. laws and regulations generally do
not govern the activities of foreign persons abroad. Similarly, foreign
defense articles that leave the United States are no longer subject to
the ITAR under the circumstances described in paragraph (a)(7). To help
illustrate this concept, the Department notes the following scenario--
U.S. Company A purchases a foreign defense article from Foreign Company
B located outside the United States. The purchased foreign defense
article is imported into the United States but U.S. Company A later
realizes it no longer needs the foreign defense article and obtains the
necessary DDTC authorization to export the foreign defense article back
to Foreign Company B. Foreign Company B does not subsequently need
further Department authorization to sell the returned foreign defense
article to a separate party, assuming the criteria in paragraph (a)(7)
are met. As a result, no change is being made to proposed paragraph
(a)(7) in response to this comment.
Several commenters expressed appreciation for the Department's
effort regarding new paragraph (a)(6). Specifically, these commenters
noted proposed paragraph (a)(6) provides ``positive assurance to [U.S.]
partner countries' armed forces'' of an understanding that was
previously ``only noted in DDTC's Guidelines for Preparing Agreements
document'' and applauded DDTC for making explicit in the regulations
DDTC's long-standing policy expressed in that document that
[[Page 66212]]
the taking of a defense article outside a previously approved country
by the armed forces of a foreign government or international
organization is not a controlled event, provided certain criteria are
met. One commenter noted that it would simplify the process their
country's armed forces must follow to take U.S. defense articles
outside a previously approved country during a deployment or on
exercises, while another expressed their belief that new paragraph
(a)(6) would enhance interoperability amongst allies.
However, one commenter suggested the language of paragraph (a)(6)
is too narrow and requested an expansion to enable other foreign or
U.S. parties to an agreement (who are not the armed forces of a foreign
government or United Nations personnel) to take defenses articles on
operations or deployments outside a previously approved country without
requesting additional authorization from the Department. The commenter
suggested a specific modification to the ``Deployment Clause'' language
included in DDTC's ``Guidelines for Preparing Agreements'' to implement
their suggestion. The Department emphasizes the goal of this rulemaking
is to memorialize long-standing Department polices that were specified
in the ``Guidelines for Preparing Agreements.'' Therefore, the
Department notes its purposeful limited intent for this rulemaking to
be applicable to activities of armed forces of a foreign government or
United Nations military personnel. In contrast, the Department assesses
that activities undertaken by other foreign or U.S. parties to an
agreement who are not the armed forces of a foreign country or United
Nations military personnel still warrant additional review and should
continue to require authorization from the Department in order to take
defenses articles outside a previously approved country. For these
reasons, the Department is not revising the text of proposed paragraph
(a)(6) in response to this comment.
Another commenter noted with respect to paragraph (a)(6) ``that the
proposed addition lacks any reference to related technical data.''
Specifically, the commenter explained that ``codifying the Department's
long-standing policy without an explicit reference to `related
technical data' might lead to confusion [as to] whether separate
authorization is required for the export, reexport, retransfer or
temporary import of technical data needed to operate the defense
article and/or generated by the defense article.'' Subsequently, the
commenter suggested adding ``and any related technical data'' to the
term ``defense article'' in ITAR Sec. 120.54(a)(6). The Department
notes, per ITAR Sec. 120.31, ``defense article'' means any item or
technical data designated in ITAR Sec. 121.1; therefore, the addition
of ``and any related technical data'' would be duplicative. For this
reason, the Department is not making the changes proposed by this
commenter.
As introduced above, one commenter requested that the Department
provide clarification that, as a result of this rulemaking, licenses
for temporary imports into the United States that meet the criteria of
ITAR Sec. 120.54(a)(6) are not required. The Department declines to
adopt this recommendation for the reasons previously expressed in this
preamble. Specifically, the Department wishes to stay within the intent
of this portion of the rule, which is to clarify long-standing policy
regarding reexports and retransfers outside of the United States of
properly authorized defense articles previously exported from the
United States and in the possession of the armed forces of a foreign
government or United Nations military personnel. The comment did,
however, bring to the attention of the Department the issues which led
to the inclusion of new paragraphs (a)(6)(iii) and (a)(7)(iii), as
discussed above. The commenter also recommended a revision to proposed
paragraph (a)(6) to enable the armed forces of a foreign government or
United Nations personnel to ``[share] equipment with foreign partners
that also have access to the same equipment, albeit via different
licenses and agreements'' during deployments and training exercises.
The Department notes that foreign partners who have access to the same
equipment via different licenses and agreements do not always have
access to the same configuration of the equipment and thus foreign
partners would not always have the ability to make an accurate
determination as to whether their specific defense article
configurations are the same. Therefore, the Department is not revising
the text of the proposed rule as suggested by the commenter.
The same commenter also requested revisions to proposed paragraph
(a)(6) to expand the entry to include third-party contractors in
addition to the armed forces of a foreign government and United Nations
personnel. The Department emphasizes that the goal of this rulemaking
is to memorialize long-standing Department polices that were
articulated in the ``Guidelines for Preparing Agreements.'' Therefore,
the Department notes its purposeful limited intent for this rulemaking
to apply only to the activities of the armed forces of a foreign
government or United Nations military personnel. In contrast,
activities undertaken by other foreign or U.S. persons who are not the
armed forces of a foreign country or United Nations military personnel
should continue to require additional authorization from the
Department. For these reasons, the Department is not making the changes
suggested by this commenter.
The same commenter also requested that ``end-use'' be removed from
proposed paragraph (a)(6)(ii) since Department export control licenses
and agreements do not often explicitly include ``use by a foreign
government (armed forces) for deployment or training exercise,'' even
though such activity is often an implied end-use. The position of the
Department is that the taking of a defense article subject to the
reexport or retransfer requirements of the ITAR on a deployment or
training exercise outside a previously approved country is not a change
in end-use if the enumerated criteria in ITAR Sec. 120.54(a)(6)(i)
through (iii) are met. This Department position is applicable even if
such deployments or training exercises are not explicitly included on a
license or agreement. For this reason, the Department is not revising
the text of the proposed rule as proposed by the commenter.
Regarding proposed paragraph (a)(7), the same commenter welcomed
this new entry. The commenter further requested the Department provide
clarification on several matters. First, the commenter requested
clarification as to whether a foreign defense article will become
subject to the ITAR's ``reexport/retransfer license obligations if it
had been modified, enhanced, upgraded or otherwise altered or improved
in a manner that changed the basic performance of the item but did not
have a U.S.-origin defense article incorporated while it is in the
United States.'' The Department confirms that in such a scenario the
foreign defense article will be subject to the ITAR and will require
reexport or retransfer authorizations for all subsequent transfers
after it leaves the United States.
The commenter also requested the Department provide ``a clear
threshold for activities undertaken whilst the wholly foreign defense
article is in the United States for controls to be triggered under ITAR
Sec. 120.54(a)(7)(i)'' and to provide guidance on the meaning of
``modified, enhanced, upgraded or otherwise altered or improved in a
manner that changed the basic performance.'' The Department does not
believe it needs to offer definitions of commonly used terms and
phrases such as ``modified,'' ``enhanced,'' ``upgraded''
[[Page 66213]]
or ``otherwise altered or improved.'' The regulated community should
apply the ordinary meaning of those words consistent with how it has
interpreted those terms as they already exist in the ITAR (e.g., ITAR
Sec. 123.4(b)).
Finally, the commenter also requested the Department put in place
``a mechanism in U.S. export licenses to indicate that a wholly foreign
defense article has been modified, enhanced, upgraded or otherwise
altered or improved in a manner that changed the basic performance of
the item.'' The commenter asserted that, if such a mechanism were not
put in place, ``that these changes [would] place the onus of
identifying whether controls apply on foreign recipients [which] may
lead to excessive and unnecessary licensing to avoid non-compliance.''
The Department notes that an authorization would be required for a
person modifying, enhancing, upgrading, or otherwise altering or
improving a foreign defense article while in the United States.
Therefore, the subsequent recipient of an altered or improved foreign
defense article should have clear notice of whether the criteria in
paragraph (a)(7)(i) are met. Consequently, the Department does not
envision any excessive or unnecessary licensing will occur because of
these changes. For this reason, the Department is not adopting the
commenter's recommendation.
One commenter requested that the Department provide additional
guidance regarding the word ``transported'' in paragraph (a)(6)(i).
Specifically, the commenter requested guidance or amendments to the
proposed rule that would enable transport of defense articles by third-
party contractors in addition to the armed forces of a foreign
government or United Nations personnel. The Department notes its
purposeful limited intent for this rulemaking to be applicable only to
the activities of the armed forces of a foreign government or United
Nations military personnel. In contrast, activities undertaken by other
foreign or U.S. parties to an agreement that are not the armed forces
of a foreign country or United Nations military personnel should
generally be reviewed on a case-by-case basis and continue to require
authorization from the Department. For this reason, the Department is
not revising the text of the proposed rule in response to the comment.
The same commenter expressed their support for proposed paragraph
(a)(7), noting that it is a ``welcome clarification over an issue that
has caused different risk-based approaches by [companies] over many
years.'' The commenter also requested the Department provide additional
guidance regarding when a foreign defense article is imported into the
United States for testing and how any generated test data should be
controlled. In addition, the commenter requested the Department provide
further clarification regarding how a foreign defense article that
contains U.S.-origin defense articles should be treated when undergoing
testing in a foreign country. The Department notes such requests are
outside the scope of this rulemaking. For this reason, the Department
is not revising the text of the proposed rule in response to this
comment.
Regulatory Analysis and Notices
Administrative Procedure Act
This rulemaking is exempt from the requirements of section 553 of
the Administrative Procedure Act (APA) as a military or foreign affairs
function of the United States. Without prejudice to this determination,
the Department elected to solicit comments on the proposed regulatory
changes and has responded to those comments in this final rule.
Regulatory Flexibility Act
Since this rule is exempt from the notice-and-comment rulemaking
provisions of 5 U.S.C. 553, it does not require analysis under the
Regulatory Flexibility Act.
Unfunded Mandates Reform Act of 1995
This 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 Office of Management and Budget has determined that this
rulemaking is not a major rule within the definition of 5 U.S.C. 804.
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, 13563, and 14094
Executive Orders 12866, as amended by Executive Orders 13563 and
14094, 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. Although the
Department cannot determine based on available data how many fewer
licenses will be submitted as a result of this rule, the amendments to
the definition of activities that are not exports, reexports,
retransfers, or temporary imports will relieve licensing burdens.
Qualitatively, this rule should have significant benefits for industry.
The rule will provide more certainty and clarity by expressly stating
in regulatory text what was already in Guidelines published by the
Department. Additionally, it should have helpful impacts on our
nation's foreign policy, more clearly conveying that the Department
does not attempt to impose restrictions on other nations transporting
defense articles during deployments or training exercises to other
foreign countries. In turn, this may also encourage other nations to
purchase additional defense articles from U.S. industry. This rule is
consistent with Executive Order 13563, which emphasizes the importance
of quantifying both costs and benefits, of reducing cost, of
harmonizing rules, and of promoting flexibility. This rule has been
designated a ``significant regulatory action,'' although not
significant within the meaning of section 3(f)(1) of Executive Order
12866, by the Office of 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 of State 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,
[[Page 66214]]
Executive Order 13175 does not apply to this rulemaking.
Paperwork Reduction Act
This final rule does not impose or revise any new information
collections subject to 44 U.S.C. chapter 35.
List of Subjects in 22 CFR Part 120
Arms and munitions, Classified information, Exports.
For the reasons set forth above, the Department of State amends
title 22, chapter I, subchapter M, part 120 of the Code of Federal
Regulations as follows:
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. 120.54 by:
0
a. Removing the period at the end of paragraph (a)(5)(v) and adding a
semicolon in its place; and
0
b. Adding paragraphs (a)(6) and (7).
The additions read as follows:
Sec. 120.54 Activities that are not exports, reexports, retransfers,
or temporary imports.
(a) * * *
(6) The taking of a defense article subject to the reexport or
retransfer requirements of this subchapter on a deployment or training
exercise outside a previously approved country, provided:
(i) There is no change in end-use or end-user with respect to the
defense article;
(ii) The defense article is transported by and remains in the
possession of the previously authorized armed forces of a foreign
government or United Nations military personnel; and
(iii) The defense article is not being exported from or temporarily
imported into the United States; and
(7) The transfer of a foreign defense article previously imported
into the United States that has since been exported from the United
States pursuant to a license or other approval under this subchapter,
provided:
(i) The foreign defense article was not modified, enhanced,
upgraded, or otherwise altered or improved in a manner that changed the
basic performance of the item prior to its return to the country from
which it was imported or a third country;
(ii) A U.S.-origin defense article was not incorporated into the
foreign defense article; and
(iii) The defense article is not being exported from or temporarily
imported into the United States.
* * * * *
Bonnie D. Jenkins,
Under Secretary, Arms Control and International Security, Department of
State.
[FR Doc. 2024-18249 Filed 8-14-24; 8:45 am]
BILLING CODE 4710-25-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on August 15, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.