[Federal Register Volume 73, Number 187 (Thursday, September 25, 2008)]
[Rules and Regulations]
[Pages 55439-55441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22574]



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DEPARTMENT OF STATE

22 CFR Parts 122 and 129

[Public Notice 6370]
RIN 1400-AC50


Amendment to the International Traffic in Arms Regulations: 
Registration Fee Change

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: The Department of State is amending the text of the 
International Traffic in Arms Regulations (ITAR) to increase the 
registration fees, change the registration renewal period, and make 
other minor administrative changes.

DATES: Effective Date: This rule is effective September 25, 2008.

FOR FURTHER INFORMATION CONTACT: Patricia Slygh, Directorate of Defense 
Trade Controls, Bureau of Political-Military Affairs, Department of 
State (202) 663-2830 or FAX (202) 261-8199; e-mail 
DDTCResponseTeam@state.gov, ATTN: Regulatory Change, ITAR Parts 122 and 
129.

SUPPLEMENTARY INFORMATION: On July 28, 2008, the Department published a 
Notice of Proposed Rulemaking (NPRM) to increase the registration fees, 
change the registration renewal period, and make other minor 
administrative changes to Parts 122 and 129 of the ITAR. Further 
background is provided within the NPRM at 73 FR 43653.
    This rule increases the fee charged to those persons required to 
register with the Directorate of Defense Trade Controls (DDTC) in 
accordance with Section 38 of the Arms Export Control Act (AECA) (22 
U.S.C. 2778). ITAR registration fees are set forth at 22 CFR 122.3 and 
were last adjusted in 2004.
    To align registration fees with the cost of licensing, compliance 
and other related activities, the Department is adopting a three-tier 
registration fee schedule. The first tier will be a set fee of $2,250 
per year for registrants who are renewing a registration, required to 
register by law, and for whom DDTC has not reviewed, adjudicated or 
issued a response to any applications during the twelve-month period 
ending 90 days prior to the expiration of their current registration. 
This tier includes those registering with the Department for the first 
time.
    The second tier is for registrants for whom DDTC has reviewed, 
adjudicated or issued a response to between one and ten applications 
during the twelve-month period ending 90 days prior to the expiration 
of their current registration. For this tier, registrants will pay a 
set fee of $2,750 per year.
    The third tier is for registrants for whom DDTC has reviewed, 
adjudicated or issued a response to more than ten applications during 
the twelve month period ending 90 days prior to the expiration of their 
current registration. For this tier, registrants will pay a fee of 
$2,750 plus an additional fee that is based on the number of 
applications for which DDTC has reviewed, adjudicated or issued a 
response during the twelve months ending 90 days prior to the 
expiration of their current registration. The additional fee will be 
determined by multiplying $250 times the number of applications for 
which DDTC has reviewed, adjudicated or issued a response during the 
twelve-month period ending 90 days prior to the expiration of the 
current registration.
    Fees for registrants whose total registration fee is greater than 
3% of the total value of applications for which DDTC has reviewed, 
adjudicated or issued a response during the 12-month period ending 90 
days prior to expiration of the current registration will be reduced to 
3% of such total application value or $2,750, whichever is greater. 
Fees for registrants, including universities, who are exempt from 
income taxation pursuant to 26 U.S.C. 501(c)(3) may be reduced to the 
first-tier registration fee provided proof of such status (i.e., IRS 
certification) is submitted with their registration package.
    In addition, 22 CFR 129.4(a) and 22 CFR 129.4(b) are revised to 
reflect the new registration fee schedule.

Comment Analysis

    The Department received comments from twenty-seven (27) individuals 
and companies. Seventeen (17) commenting parties voiced their 
opposition either to DDTC raising registration fees or to the 
collection of registration fees at all. Registration fees are collected 
and utilized in accordance with the AECA. The President has directed 
the Department of State to implement a series of improvements to its 
export licensing system to make it more timely, predictable, and 
transparent. To support that effort, the President has required that 
the U.S. Department of State initiate a self-financing mechanism so 
that the DDTC's mission will eventually be at least 75% self-financed. 
Six (6) commenting parties offered actions that could be taken by DDTC 
to reduce its licensing workload. These comments were not considered at 
this time as they are outside the scope of this rule. However, the 
Department remains committed to continuing to reform the export control 
process. As DDTC continues to reform the export control process, the 
budgetary requirements will be reviewed on a regular basis, which may 
result in a revision to the registration fee schedule.
    Ten (10) commenting parties suggested alternate funding schedules 
for registration fees. Nine of these alternates were not adopted as 
they would not have generated the funds required by DDTC or appeared to 
be unfair to small businesses that, while required to register with 
DDTC, utilize only limited Department resources. The tenth proposal 
recommended several flat tiers based on licensing activity. While this 
proposal would provide the necessary funds for DDTC, imposing a minimal 
administrative burden upon the Department, it was not adopted primarily 
since the incremental cost of submitting one more license under this 
proposal could be significant as the total cost is recomputed in light 
of the higher fee at the next tier.
    Six (6) commenting parties raised concerns that the proposed fee 
schedule would be an administrative burden on the Department as well as 
on industry. Four (4) comments regarding reinstitution of multi-year 
registrations were received. DDTC has attempted to adopt a fee schedule 
that will result in minimal burden to applicants, recognizing that any 
change to the current one fee for all registrants will impose some 
additional burden. The multi-year registrations have been discontinued 
in order to provide DDTC with a revenue stream that reflects its costs. 
The Department will contemplate reconsidering multi-year registrations 
after the Department has experience with a single-year fee structure.
    Two (2) commenting parties recommended reconsideration of 22 CFR 
122.2(a) and 22 CFR 129.4(a) regarding Department policy for returning 
incomplete registration packages. Discretion will continue to be used 
when determining if it is necessary to return an incomplete 
registration package; only those registration packages materially 
incomplete will be returned.
    Four (4) commenting parties recommended that license amendments not 
be counted when determining the registration fee. Since license 
amendments have a material impact on the authorized activity and 
require DDTC to review, adjudicate and respond to the applicant, they 
will be counted. Activities under 22 CFR parts 123 through 126 not 
requiring the Department to respond to the applicant will not be 
counted as part of the registration fee; examples include

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annual submission of sales reports, prior notifications, provision of 
documents required by proviso, and submission of purchase orders to 
support offshore procurement. Other activities outside of 22 CFR parts 
123 through 126 that require DDTC to respond to the applicant will not 
be counted in determining registration fees; examples of these actions 
include commodity jurisdictions and disclosures. Eight (8) commenting 
parties recommended that those license applications ``returned without 
action'' not be counted when determining the level of licensing 
activity. DDTC has adopted this recommendation and 22 CFR 122.3(a)(7) 
has been revised accordingly. Additionally, the Department will not 
consider denied licenses when determining registration fees.

Regulatory Analysis and Notices

    Administrative Procedure Act: This amendment involves a foreign 
affairs function of the United States and, therefore, is not subject to 
the procedures contained in 5 U.S.C. 553 and 554. However, as noted in 
the Supplementary Information, notice of the rule was provided and 
comments were solicited and received on this amendment.
     Regulatory Flexibility Act: Because this rule is exempt from 
notice and comment rulemaking under 5 U.S.C. 553, it is exempt from the 
regulatory flexibility analysis requirements set forth in sections 603 
and 604 of the Regulatory Flexibility Act (5 U.S.C. 603 and 604).
     Unfunded Mandates Reform Act of 1995: This amendment does not 
involve a mandate that will result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$100 million or more in any year and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.
     Small Business Regulatory Enforcement Fairness Act of 1996: This 
amendment is not a major rule within the meaning of the Small Business 
Regulatory Enforcement Fairness Act of 1996.
     Executive Orders 12372 and 13132: This amendment will not have 
substantial 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. Executive Order 12372, regarding intergovernmental 
consultation on Federal programs and activities, does not apply to this 
amendment.
     Executive Order 12866: This amendment is exempt from the review 
under Executive Order 12866, but has been reviewed internally by the 
Department of State to ensure consistency with the purposes thereof.
     Executive Order 12988: The Department of State has reviewed the 
proposed regulations 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.
     Paperwork Reduction Act: This rule does not impose any new 
reporting or recordkeeping requirements subject to the Paperwork 
Reduction Act, 44 U.S.C. Chapter 35.

List of Subjects

22 CFR Part 122

    Arms and munitions, Exports, Reporting and recordkeeping 
requirements.

22 CFR Part 129

    Arms and munitions, Exports, Technical assistance.

0
Accordingly, for the reasons set forth above, Title 22, Chapter I, 
Subchapter M, parts 122 and 129 are amended as follows:

PART 122--REGISTRATION OF MANUFACTURERS AND EXPORTERS

0
1. The authority citation for part 122 continues to read as follows:

    Authority: Secs. 2 and 38, Public Law 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311, 1977 Comp. p. 79, 22 
U.S.C. 2651a.


0
2. Section 122.2 is amended by revising paragraph (a) to read as 
follows:


Sec.  122.2  Submission of registration statement.

    (a) General. The Department of State Form DS-2032 (Statement of 
Registration) and the transmittal letter required by paragraph (b) of 
this section must be submitted by an intended registrant with a payment 
by check drawn against the registrant's account, payable to the 
Department of State of the fee prescribed in Sec.  122.3(a) of this 
subchapter. Checks must be in U.S. currency, and must be payable 
through a U.S. financial institution. In addition, the Statement of 
Registration and transmittal letter must be signed by a senior officer 
(e.g., Chief Executive Officer, President, Secretary, Partner, Member, 
Treasurer, General Counsel) who has been empowered by the intended 
registrant to sign such documents. The intended registrant also shall 
submit documentation that demonstrates that it is incorporated or 
otherwise authorized to do business in the United States. The 
Directorate of Defense Trade Controls will notify the registrant if the 
Statement of Registration is incomplete either by notifying the 
registrant of what information is required or through the return of the 
entire registration package. Registrants may not establish new entities 
for the purpose of reducing registration fees.
* * * * *

0
3. Section 122.3 is amended by revising paragraph (a) to read as 
follows:


Sec.  122.3  Registration fees.

    (a) A person who is required to register must do so on an annual 
basis upon submission of a completed Form DS-2032, transmittal letter, 
and payment of a fee as follows:
    (1) Tier 1: A set fee of $2,250 per year is required for new 
registrants or registrants for whom the Directorate of Defense Trade 
Controls has not reviewed, adjudicated or issued a response to any 
applications during a 12-month period ending 90 days prior to 
expiration of the current registration.
    (2) Tier 2: A set fee of $2,750 per year is required for 
registrants for whom the Directorate of Defense Trade Controls has 
reviewed, adjudicated or issued a response to between one and ten 
applications during a 12-month period ending 90 days prior to 
expiration of the current registration.
    (3) Tier 3: The third tier is for registrants for whom the 
Directorate of Defense Trade Controls has reviewed, adjudicated or 
issued a response to more than ten applications during a 12-month 
period ending 90 days prior to expiration of the current registration. 
For this tier, registrants will pay a fee of $2,750 plus an additional 
fee based on the number of applications for which the Directorate of 
Defense Trade Controls has reviewed, adjudicated or issued a response. 
The additional fee will be determined by multiplying $250 times the 
number of applications over ten for whom the Directorate of Defense 
Trade Controls has reviewed, adjudicated or issued a response during a 
12-month period ending 90 days prior to expiration of the current 
registration.
    (4) For registrants, including universities, exempt from income

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taxation pursuant to 26 U.S.C. 501(c)(3), their fee may be reduced to 
the Tier 1 registration fee provided a copy of their certification 
letter from the Internal Revenue Service is submitted with their 
registration package. To be eligible, the registrant and all of its 
subsidiaries/affiliates must be exempt from income taxation pursuant to 
26 U.S.C. 501(c)(3).
    (5) The fee for registrants whose total registration fee is greater 
than 3% of the total value of applications for whom the Directorate of 
Defense Trade Controls has reviewed, adjudicated or issued a response 
during the 12-month period ending 90 days prior to expiration of the 
current registration will be reduced to 3% of such total application 
value or $2,750, which ever is greater.
    (6) For those renewing a registration, notice of the fee due for 
the next year's registration will be sent to the registrant of record 
at least 60 days prior to its expiration date.
    (7) For purposes of this subsection, ``applications'' refers to the 
actions enumerated within parts 123 through 126 of this subchapter that 
require the Directorate of Defense Trade Controls to review, adjudicate 
and issue responses. Only those applications that the Department has 
taken final action on and provided response to will be counted in 
determining the annual registration fee. Those applications that are 
``returned without action'' or ``denied'' will not be counted.
* * * * *

PART 129--REGISTRATION AND LICENSING OF BROKERS

0
4. The authority citation for part 129 continues to read as follows:

    Authority: Sec. 38, Pub. L. 104-164, 110 Stat. 1437 (22 U.S.C. 
2778).


0
5. Section 129.4 is amended by revising paragraph (a) to read as 
follows:


Sec.  129.4  Registration statement and fees.

    (a) General. The Department of State Form DS-2032 (Statement of 
Registration) and the transmittal letter meeting the requirements of 
Sec.  122.2(b) of this subchapter must be submitted by an intended 
registrant with a payment by check, payable to the Department of State, 
of the fees prescribed in Section 122.3(a) of this subchapter. Foreign 
brokers must submit a check in U.S. dollars payable through a U.S. 
financial institution that includes the registrant's legal name and 
address on the check. The Statement of Registration and transmittal 
letter must be signed by a senior officer (e.g., Chief Executive 
Officer, President, Secretary, Partner, Member, Treasurer, General 
Counsel) who has been empowered by the intended registrant to sign such 
documents. The intended registrant shall also submit documentation that 
demonstrates that it is incorporated or otherwise authorized to do 
business in the United States. The requirement to submit a Department 
of State Form DS-2032 and to submit documentation demonstrating 
incorporation or authorization to do business in the United States does 
not exclude foreign persons from the requirement to register. Foreign 
persons who are required to register shall provide information that is 
substantially similar in content as that which a U.S. person would 
provide under this provision (e.g., foreign business license or similar 
authorization to do business). The Directorate of Defense Trade 
Controls will notify the registrant if the Statement of Registration is 
incomplete either by notifying the registrant of what information is 
required or through the return of the entire registration package with 
payment. Registrants may not establish new entities for the purpose of 
reducing registration fees.
* * * * *

    Dated: September 19, 2008.
John C. Rood,
Acting Under Secretary for Arms Control and International Security, 
Department of State.
[FR Doc. E8-22574 Filed 9-24-08; 8:45 am]
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