[Federal Register Volume 81, Number 107 (Friday, June 3, 2016)]
[Rules and Regulations]
[Pages 35611-35617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12732]
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DEPARTMENT OF STATE
22 CFR Parts 120, 123, 124, 125, and 126
[Public Notice: 9487]
RIN 1400-AD70
International Traffic in Arms: Revisions to Definition of Export
and Related Definitions
AGENCY: Department of State.
ACTION: Interim final rule.
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SUMMARY: As part of the President's Export Control Reform (ECR)
initiative, the Department of State amends the International Traffic in
Arms Regulations (ITAR) to update the definitions of ``export,'' and
``reexport or retransfer'' in order to continue the process of
harmonizing the definitions with the corresponding terms in the Export
Administration Regulations (EAR), to the extent appropriate.
Additionally, the Department creates definitions of ``release'' and
``retransfer'' in order to clarify and support the interpretation of
the revised definitions that are in this rulemaking. The Department
creates new sections of the ITAR detailing the scope of licenses,
unauthorized releases of controlled information and revises the section
on ``exports'' of technical data to U.S. persons abroad. Finally, the
Department consolidates regulatory provisions on the treatment of
foreign dual and third country national employees within one exemption.
DATES: The rule is effective on September 1, 2016. The Department of
State will accept comments on this interim final rule until July 5,
2016.
ADDRESSES: Interested parties may submit comments within 30 days of the
date of publication by one of the following methods:
Email: [email protected] with the subject line,
``ITAR Amendment--Final Revisions to Definitions.''
Internet: At www.regulations.gov, search for this notice
by using this rule's RIN (1400-AD70).
Comments received after that date may be considered, but
consideration cannot be assured. Those submitting comments should not
include any personally identifying information they
[[Page 35612]]
do not desire to be made public or information for which a claim of
confidentiality is asserted because those comments and/or transmittal
emails will be made available for public inspection and copying after
the close of the comment period via the Directorate of Defense Trade
Controls Web site at www.pmddtc.state.gov. 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. Comments submitted via www.regulations.gov are immediately
available for public inspection.
FOR FURTHER INFORMATION CONTACT: Mr. C. Edward Peartree, Director,
Office of Defense Trade Controls Policy, Department of State, telephone
(202) 663-1282; email [email protected]. ATTN: ITAR
Amendment--Revisions to Definitions. The Department of State's full
retrospective plan can be accessed at http://www.state.gov/documents/organization/181028.pdf.
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 through 130). The items
subject to the jurisdiction of the ITAR, i.e., defense articles and
defense services, are identified on the ITAR's U.S. Munitions List
(USML) (22 CFR 121.1). With few exceptions, items not subject to the
export control jurisdiction of the ITAR are subject to the jurisdiction
of 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. Both the ITAR and the
EAR create license requirements for exports and reexports of controlled
items. Items not subject to the ITAR or to the exclusive licensing
jurisdiction of any other set of regulations are subject to the EAR.
BIS is concurrently publishing amendments (BIS companion rule) to
definitions, including ``export,'' ``reexport,'' ``release,'' and
``transfer (in-country)'' in the EAR.
Changes in This Rule
The following changes are made to the ITAR with this interim final
rule: (i) Revisions to the definitions for ``export'' and ``reexport or
retransfer;'' (ii) new definitions for ``release'' and ``retransfer;''
(iii) new sections of the ITAR detailing the scope of licenses,
unauthorized releases of information; (iv) revisions to the section on
``exports'' of technical data to U.S. persons abroad; and (v)
consolidates Sec. Sec. 124.16 and 126.18 within one exemption. The
remaining definitions published in the June 3, 2015 proposed rule (80
FR 31525), will be the subject of separate rulemakings and the public
comments on those definitions will be addressed therein.
The Department received several public comments that address the
rule as a whole. These comments are addressed here. Comments on a
specific definition or other proposed change are addressed below in the
relevant section of the rule.
Several commenters replied to DDTC's request for public comments on
the effective date described in the proposed rule, suggesting dates
ranging from 60 to 180 days. Some commenters also requested that the
rule be published as an interim final rule to allow additional public
comments. The Department partially accepts these comments. The
Department determined that the changes to definitions and additional
definitions included in this rule can be implemented with minimal
impact on the export control management systems. However, the
Department agrees that additional public comment on all aspects of this
rule may be beneficial. Therefore, the rule will be effective 90 days
from publication, with a public comment period of 30 days to allow the
Department to make any necessary improvements to the rule prior to it
becoming effective.
One commenter suggested that the Department place all terms defined
within the ITAR in quotations marks, as is done in the EAR. The
Department does not accept this comment. The Department has determined
that the addition of quotation marks will not enhance the readability
of the ITAR.
Several commenters noted that the revised and new definitions in
the proposed rule created layered definitions, where exporters must
understand multiple definitions of words used within a definition. The
Department recognizes that the new definitions require additional study
of the new regulations.
One commenter suggested that the Department harmonize Sec. 126.1
with the list of restricted destinations under the EAR, specifically
Crimea. The Department does not accept this comment. The imposition of
a license requirement under the EAR is not the same as a presumption of
denial for exports to a destination listed under Sec. 126.1. All
defense articles require authorization from the Department for
``export'' or ``reexport'' to, or ``retransfer'' within, Ukraine and
Russia, and all applications are processed consistent with U.S.
government policy.
One commenter requested that the Department adopt an intra-company
transfer exception, authorizing exports and reexports between company
facilities in different destinations. This suggestion is outside the
scope of the rulemaking and the Department does not accept the comment.
1. Export Definition Revised
The Department revises the definition of ``export'' in Sec. 120.17
to better align with the EAR's revised definition of the term and to
remove activities associated with the further movement of a defense
article or its ``release'' outside the United States, which now fall
within the definition of ``reexport'' in Sec. 120.19 or ``retransfer''
in Sec. 120.51. The definition is revised to explicitly identify that
Sec. Sec. 126.16 and 126.17 (exemptions pursuant to the Australia and
United Kingdom Defense Trade Cooperation Treaties) have their own
definitions of ``export,'' which apply exclusively to those exemptions.
Although the wording of paragraph (a)(1) of this section has
changed, the scope of the control is the same. Paragraph (a)(2)
includes the control listed in the former paragraph (a)(4) (transfer of
technical data to a foreign person). Paragraph (a)(3) includes the
control listed in the former paragraph (a)(2) (transfer of
registration, control, or ownership to a foreign person of an aircraft,
vessel, or satellite). Paragraph (a)(4) includes the control listed in
the former paragraph (a)(3) (transfer in the United States to foreign
embassies). Paragraph (a)(5) maintains the control on performing a
defense service. Paragraph (a)(6) is retained from the existing text to
continue to advise exporters that the launch of a launch vehicle or
payload does not constitute an export, but may involve a defense
service. Paragraph (b) is added to clarify that disclosing technical
data to a foreign person in the United States is deemed to be an
``export'' to all countries in which the foreign person holds or has
held citizenship or holds permanent residency.
In response to public comments, the Department revised proposed
paragraph (a)(4) to clarify that it is the ``release'' or transfer to
an embassy or one of its agencies or subdivisions that is the activity
of concern. This includes transfers to employees of an embassy or other
foreign persons who will take the defense article to an embassy.
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The Department also removed proposed paragraphs (a)(6) and (7).
Proposed paragraph (a)(6) is no longer necessary, and the Department
will address controls on encrypted technical data in a separate
rulemaking. Proposed paragraph (a)(7) will also be addressed in a
separate rulemaking, and until such time, the existing ITAR controls
remain in place.
One commenter suggested that the Department adopt the definition of
``export'' that was in the EAR, which states ``[e]xport means an actual
shipment or transmission of items out of the United States,'' and state
that the other activities identified in Sec. 120.17 are ``subject to
the regulations in the same manner and with the same effect as an
export.'' The Department does not accept this comment. All of the
activities identified in this section are an ``export.''
Several commenters stated that the definition of ``export'' is too
broad, as individuals may share information that they do not believe to
be technical data and accidentally violate the ITAR. The Department
does not accept this comment. For information to be ITAR-controlled, it
must be directly related to a defense article or specifically
enumerated on the USML, and not satisfy one of the exclusions in Sec.
120.10(b).
One commenter suggested that the Department revise paragraphs
(a)(1) and (2) so that (a)(1) includes only hardware exports and (a)(2)
includes all technical data exports, whether to a foreign person in the
United States or to someone in another country. The Department does not
accept this comment. A major purpose of this rule is to harmonize the
ITAR with the EAR, and the Department determined it would better align
the definition of ``export'' by adopting the EAR's framework of
including one paragraph for an ``export'' that moves a defense article
to another country, whether tangible or intangible, and another
paragraph that addresses the ``export'' of technical data to foreign
persons in the United States.
One commenter suggested that the changes to paragraph (a)(2), which
define transfers to a foreign person in the United States as an
``export,'' and transfers to a foreign person outside the United
States, but within one foreign country, as a ``reexport'' under Sec.
120.19(a)(2), would preclude a U.S. company from obtaining a DSP-5 to
authorize their overseas foreign national employee to receive technical
data. The Department does not accept this comment. The sending or
taking of technical data out of the United States to a foreign person
employee will remain an ``export'' under paragraph (a)(1).
One commenter requested that the Department exclude software object
code from paragraph (a)(2) so that the provision of ITAR-controlled
object code to a foreign person is not an ``export.'' The Department
does not accept this comment. Due to the sensitivity of items that
remain defense articles following the revisions on the USML through
ECR, retaining those items that provide the United States a critical
military or intelligence advantage, ITAR control of the ``release'' of
object code that is within the scope of the USML to foreign persons is
appropriate.
Several commenters requested that the Department remove the portion
of (a)(6) that addressed the provision of physical access to technical
data. The Department has removed paragraph (a)(6). However, as
described above for paragraph (a)(7), while the act of providing
physical access does not constitute an ``export,'' any release of
technical data to a foreign person is an ``export,'' ``reexport,'' or
``retransfer'' and will require authorization from the Department. If a
foreign person views or accesses technical data as a result of being
provided physical access, then an ``export'' requiring authorization
will have occurred and the person who provided the foreign person with
physical access to the technical data is an exporter responsible for
ITAR compliance.
A commenter suggested that the Department revise paragraph (b) to
state that only the last country of citizenship or permanent residency
will be considered for foreign persons, to harmonize with the EAR. The
Department does not accept this comment. A main tenet of ECR is that
the ITAR will have higher walls around fewer, more sensitive items, and
this aspect of the control system is an example of the more stringent
controls that the ITAR maintains.
One commenter noted that the preamble to the proposed rule and
paragraph (b) are inconsistent because the preamble language was not
limited to ``releases'' in the United States. The Department confirms
that a disclosure to a foreign person in the United States is an
``export,'' while a ``release'' to a third-country foreign person
abroad is a ``reexport,'' and a ``release'' to a foreign person within
their own country is a ``retransfer.'' However, all such activities
require authorization, and all citizenships held and any permanent
residency status must be accounted for in the authorization.
One commenter requested the Department define permanent residency.
The Department notes that permanent resident is defined at 8 U.S.C.
Chapter 12, Immigration and Nationality, for the purpose of U.S. law.
For the purpose of the ITAR related to third-country foreign persons in
a foreign country, the Department generally considers the right to
reside in the country indefinitely, be employed by an employer in the
country, to make unlimited entry and exit to/from the country without a
visa, and rights of voting or office holding in making a determination.
2. Reexport Definition Revised
The Department revises the definition of ``reexport'' in Sec.
120.19 to better align with the EAR's revised definition and describe
transfers of items subject to the jurisdiction of the ITAR between two
foreign countries. The activities identified are the same as those in
paragraphs (a)(1) through (3) of the revised definition of ``export,''
except that the shipment, ``release,'' or transfer is between two
foreign countries or is to a third country national foreign person
outside of the United States.
One commenter requested that the Department address the
implications of Sec. 124.16 and Sec. 126.18 on the control in Sec.
120.19(a)(2). The Department notes that Sec. 120.19(a)(2) does not
impose a new license requirement. However, the Department has
determined that the authorization that may be requested for an
agreement under Sec. 124.16 may be used for any authorization from the
Department. Therefore, Sec. 124.16 is converted into an exemption and
moved to Sec. 126.18(d).
One commenter requested that the Department state that no
``reexport'' occurs if an item is moved from one foreign country to
another either under the possession of the same end user or by being
sent to the same end user. The Department does not accept this comment.
Any movement of a defense article between two foreign countries is a
``reexport'' and requires an authorization. However, an ``export''
authorization may authorize further ``reexport.''
3. Release Definition Added
The Department adds a definition of ``release'' in Sec. 120.50.
This term is added to harmonize with the EAR, which has long used the
term to cover activities that disclose information to foreign persons.
``Release'' includes the activities encompassed within the undefined
term ``disclose.'' The activities that are captured include allowing a
foreign person to inspect a
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defense article in a way that reveals technical data to the foreign
person and oral or written exchanges of technical data with a foreign
person. The adoption of the definition of ``release'' does not change
the scope of activities that constitute an ``export'' and other
controlled transactions under the ITAR. The word software was removed
from the proposed definition of ``release'' because the Department is
not revising the definitions of defense article and technical data at
this time, and as such, all ITAR controlled software remains technical
data under Sec. 120.10.
Several commenters requested that the Department revise (a)(1) by
replacing inspection with examination or ``close examination'' and
state that such inspection or examination must ``actually reveal
technical data or software'' to the foreign person. The Department does
not accept this comment. Inspection and examination are synonyms.
Adding the modifier ``close'' may be appropriate in certain
circumstances, but other defense articles may not require a close
examination for the ``release'' of technical data to occur. The
Department is confident that limiting the control to situations where a
visual or other inspection ``releases'' technical data sets the
appropriate scope of control. Additionally, the Department confirms
that the information about the defense article must be technical data
and not simply attributes, such as size or weight.
4. Retransfer Definition Added
The Department adds a definition of ``retransfer'' in Sec. 120.51.
This interim final rule moves ``retransfer'' from the definition of
``reexport'' in Sec. 120.19, better describes the activities being
regulated and harmonizes it with the EAR, which controls ``exports,''
``reexports,'' and ``transfers (in country)'' as discrete events. Under
the definition adopted in this interim final rule, a ``retransfer''
occurs with a change of end use or end user within the same foreign
territory. Certain activities may fit within the definition of
``reexport'' and ``retransfer,'' such as the disclosure of technical
data to a third country national abroad. Authorizations to ``reexport''
or ``retransfer'' a defense article are generally issued through the
General Correspondence process under Sec. 123.9(c), or by an
exemption.
One commenter requested that the Department confirm that the new
definition of ``retransfer''--i.e., a change in end use or end user--
means that authorizations will no longer be required for transfers to
subcontractors or intermediate consignees within the same country. The
Department does not accept this comment. Providing a defense article to
a subcontractor, or any party not explicitly authorized, for additional
processing or repair is a change in the end user and end use of the
defense article. Such a ``retransfer'' requires authorization, even if
the party is required to return the defense article to the transferor.
One commenter requested that the Department remove ``change of end
use'' from the definition of ``retransfer,'' asserting that this is an
expansion of the scope of activities controlled under the ITAR. The
commenter alternatively requested that the Department confirm that the
party responsible for any violation due to change in end use is the
ultimate consignee. The Department does not accept these comments.
Change in end use is within the prior definition of reexport/retransfer
that was in Sec. 120.19. An ultimate consignee may also contact the
Department to obtain authorization for a change in end use under Sec.
123.9(c). If a violation does occur, the Department will assess
responsibility pursuant to its civil enforcement authority based on the
relative culpability of all of the parties to the transaction. (See,
e.g., Sec. 127.1(c)).
5. Exemption for the Export of Technical Data to or for U.S. Persons
Abroad Revised
The Department revises Sec. 125.4(b)(9) to better harmonize
controls on the ``release'' of controlled information to U.S. persons
abroad and to update the provisions of this section. The most
significant updates are that foreign persons authorized to receive
technical data in the United States will be eligible to receive that
same technical data abroad, when on temporary assignment on behalf of
their employer, and that the exemption will now authorize a
``reexport'' or ``retransfer'' as well. The revisions also clarify that
a person travelling abroad may use this exemption to ``export''
technical data for their own use abroad. In all events, the technical
data must be secured while abroad to prevent unauthorized ``release.''
In response to public comments, the Department includes the ability
to use this exception to authorize ``reexports'' and ``retransfers,''
in addition to ``exports.'' The Department also revises the
introductory text from the proposed text to clarify that the
requirement that a person be travelling or on temporary assignment
abroad only applies to foreign person employees, maintaining the
current scope of the exemption for U.S. persons. Further, the
Department removes the additional proposed recordkeeping requirement,
as the Department has determined that the recordkeeping requirements in
Sec. 123.26 applicable to all exemptions are sufficient.
One commenter noted that the data security provisions appear to be
wholly within the control of the person abroad, and not the exporter,
at least in instances where the exporter is not also the person abroad.
The Department agrees that the person in possession of the technical
data abroad will have the primary responsibility for ensuring that the
technical data is adequately secured, consistent with paragraph
(b)(9)(ii). As with all ``exports,'' however, the exporter is
responsible for ITAR compliance and must, prior to using the exemption,
be confident that the person abroad is aware of the requirement and
will properly implement the necessary security.
One commenter requested that the Department remove the reference to
``encryption of the technical data'' from the security provision in
subparagraph (ii). The Department partially accepts this comment.
Subparagraph (ii) requires that sufficient security precautions be
taken and has been revised to clarify that the list of security
precautions is exemplary.
One commenter requested that the Department explicitly state that
technical data stored on servers in the United States may be accessed
by a U.S. person in a foreign country through a secure/encrypted
connection, using this exemption. The Department confirms that a U.S.
person or authorized foreign person may access technical data in the
United States from abroad using a secure connection. This activity
constitutes an ``export'' of the technical data because it is sent to
the foreign country, even if only as a transient or temporary document
in electronic storage, and such export may be authorized by this
exemption.
One commenter requested that the Department include foreign
subsidiaries and affiliates of U.S. companies in paragraph (b)(9), so
long as the foreign subsidiary or affiliate is authorized to receive
the technical data. The Department does not accept this comment. If an
authorization exists that allows a foreign subsidiary or affiliate
access to technical data, that authorization is an authorization to
``export'' that technical data to its employees within the approved
territory. If the employees are outside of approved territory, they are
not authorized to receive the technical data.
One commenter requested that the Department clarify whether a party
who followed DDTC guidance in direct conflict with the National
Industrial
[[Page 35615]]
Security Program Operating Manual (NISPOM), as provided by subparagraph
(v), would be at risk of violating the NISPOM. The Department notes
that the Secretary of State has the authority to impose different
conditions on ``exports'' apart from those imposed by the Department of
Defense, as noted in 71 FR 20534, 20535 (April 21, 2006), and that this
paragraph is not being revised by the current rulemaking.
One commenter requested that the Department clarify whether a U.S.
person sending or taking technical data overseas on an encrypted device
for his personal use or use by another U.S. person is engaged in an
``export.'' As noted above, the Department will address the proposed
Sec. 120.52(a)(4) in a separate rulemaking.
One commenter requested that the Department insert a note cross-
referencing to Sec. 120.52 for other options for sending information
to persons abroad. As noted above, the Department will address the
proposed Sec. 120.52 in a separate rulemaking.
One commenter stated that this section implies that technical data
sent to a foreign country in compliance with the proposed Sec.
120.52(a)(4) is an ``export.'' As noted above, the Department will
address the proposed Sec. 120.52 in a separate rulemaking.
6. Scope of License Added
The Department adds Sec. 123.28 and Sec. 124.1(e) to clarify the
scope of a license, in the absence of a proviso, and to state that
authorizations are granted based on the information provided by the
applicant. This means that while providing false information to the
U.S. government as part of the application process for the ``export,''
``reexport,'' or ``retransfer'' of a defense article or the performance
of a defense service is a violation of the ITAR (see Sec. 127.2(a)),
the Department may also deny, revoke, suspend, or amend the license
under Sec. 126.7(a) as a result of the false information.
One commenter suggested that the Department not adopt these
sections, as an exporter could identify a defense article, end user, or
end use in the supporting documentation for a license application that
the Department did not intend to authorize in the license itself. The
Department does not accept this comment. The Department reviews all
information submitted by an applicant and includes provisos to
condition the scope of the authorization to the defense articles,
parties, and end uses that are intended to be authorized.
Request for Comments
The Department invites public comment on any of the definitions set
forth in this rulemaking.
Regulatory Findings
Administrative Procedure Act
The Department of State is of the opinion that controlling the
import and export of defense articles and services is a foreign affairs
function of the U. S. government and that rules implementing this
function are exempt from sections 553 (rulemaking) and 554
(adjudications) of the Administrative Procedure Act (APA). Although the
Department is of the opinion that this rulemaking is exempt from the
rulemaking provisions of the APA, the Department is publishing this
rule with a 30-day provision for public comment and without prejudice
to its determination that controlling the import and export of defense
articles and defense services is a foreign affairs function.
Regulatory Flexibility Act
Since the Department is of the opinion that this rulemaking is
exempt from the rulemaking provisions of 5 U.S.C. 553, there is no
requirement for an analysis under the Regulatory Flexibility Act.
Unfunded Mandates Reform Act of 1995
This rulemaking does not involve a mandate that will result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any year and it
will not significantly or uniquely affect small governments. Therefore,
no actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
Small Business Regulatory Enforcement Fairness Act of 1996
For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (the ``Act''), a major rule is a rule that the
Administrator of the OMB Office of Information and Regulatory Affairs
finds has resulted or is likely to result in: (1) An annual effect on
the economy of $100,000,000 or more; (2) a major increase in costs or
prices for consumers, individual industries, federal, state, or local
government agencies, or geographic regions; or (3) significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic and foreign markets.
The Department does not believe this rulemaking will have an annual
effect on the economy of $100,000,000 or more, nor will it result in a
major increase in costs or prices for consumers, individual industries,
federal, state, or local government agencies, or geographic regions, or
have significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of United
States-based enterprises to compete with foreign-based enterprises in
domestic and foreign markets. The proposed means of solving the issue
of data protection are both familiar to and extensively used by the
affected public in protecting sensitive information.
Executive Orders 12372 and 13132
This rulemaking will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, it is determined that this rulemaking does not have
sufficient federalism implications to require consultations or warrant
the preparation of a federalism summary impact statement. The
regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this rulemaking.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess costs
and benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributed impacts, and equity). The executive orders stress
the importance of quantifying both costs and benefits, of reducing
costs, of harmonizing rules, and of promoting flexibility. This
rulemaking has been designated a ``significant regulatory action,''
although not economically significant, under section 3(f) of Executive
Order 12866. Accordingly, the rulemaking has been reviewed by the
Office of Management and Budget (OMB).
Executive Order 12988
The Department of State has reviewed the rulemaking in light of
sections 3(a) and 3(b)(2) of Executive Order 12988 to
[[Page 35616]]
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, Executive Order 13175 does not apply to this
rulemaking.
Paperwork Reduction Act
This rulemaking does not impose any new reporting or recordkeeping
requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter
35; however, the Department of State seeks public comment on any
unforeseen potential for increased burden.
List of Subjects
22 CFR 120 and 125
Arms and munitions, Classified information, Exports.
22 CFR 123
Arms and munitions, Exports, Reporting and recordkeeping
requirements.
22 CFR Part 124
Arms and munitions, Exports, Technical assistance.
22 CFR 126
Arms and munitions, Exports.
Accordingly, for the reasons set forth above, title 22, chapter I,
subchapter M, parts 120, 123, 124, 125, and 126 are amended as follows:
PART 120--PURPOSE AND DEFINITIONS
0
1. The authority citation for part 120 continues to read as follows:
Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; 22 U.S.C. 2651a; Pub. L.
105-261, 112 Stat. 1920; Pub. L. 111-266; Section 1261, Pub. L. 112-
239; E.O. 13637, 78 FR 16129.
0
2. Section 120.17 is revised to read as follows:
Sec. 120.17 Export.
(a) Except as set forth in Sec. 126.16 or Sec. 126.17, export
means:
(1) An actual shipment or transmission out of the United States,
including the sending or taking of a defense article out of the United
States in any manner;
(2) Releasing or otherwise transferring technical data to a foreign
person in the United States (a ``deemed export'');
(3) Transferring registration, control, or ownership of any
aircraft, vessel, or satellite subject to the ITAR by a U.S. person to
a foreign person;
(4) Releasing or otherwise transferring a defense article to an
embassy or to any of its agencies or subdivisions, such as a diplomatic
mission or consulate, in the United States;
(5) Performing a defense service on behalf of, or for the benefit
of, a foreign person, whether in the United States or abroad; or
(6) A launch vehicle or payload shall not, by reason of the
launching of such vehicle, be considered an export for purposes of this
subchapter. However, for certain limited purposes (see Sec. 126.1 of
this subchapter), the controls of this subchapter may apply to any
sale, transfer or proposal to sell or transfer defense articles or
defense services.
(b) Any release in the United States of technical data to a foreign
person is deemed to be an export to all countries in which the foreign
person has held or holds citizenship or holds permanent residency.
0
3. Section 120.19 is revised to read as follows:
Sec. 120.19 Reexport.
(a) Reexport means:
(1) An actual shipment or transmission of a defense article from
one foreign country to another foreign country, including the sending
or taking of a defense article to or from such countries in any manner;
(2) Releasing or otherwise transferring technical data to a foreign
person who is a citizen or permanent resident of a country other than
the foreign country where the release or transfer takes place (a
``deemed reexport''); or
(3) Transferring registration, control, or ownership of any
aircraft, vessel, or satellite subject to the ITAR between foreign
persons.
(b) Any release outside the United States of technical data to a
foreign person is deemed to be a reexport to all countries in which the
foreign person has held or holds citizenship or holds permanent
residency.
0
4. Section 120.50 is added to read as follows:
Sec. 120.50 Release.
(a) Technical data is released through:
(1) Visual or other inspection by foreign persons of a defense
article that reveals technical data to a foreign person; or
(2) Oral or written exchanges with foreign persons of technical
data in the United States or abroad.
(b) [Reserved]
0
5. Section 120.51 is added to read as follows:
Sec. 120.51 Retransfer.
A retransfer is a change in end use or end user of a defense
article within the same foreign country.
PART 123--LICENSES FOR THE EXPORT AND TEMPORARY IMPORT OF DEFENSE
ARTICLES
0
6. The authority citation for part 123 continues to read as follows:
Authority: Secs. 2, 38, and 71, 90, 90 Stat. 744 (22 U.S.C.
2752, 2778, 2797); 22 U.S.C. 2753; 22 U.S.C. 2651a; 22 U.S.C. 2776;
Pub. L. 105-261, 112 Stat. 1920; Sec. 1205(a), Pub. L. 107-228;
Section 1261, Pub. L. 112-239; E.O. 13637, 78 FR 16129.
0
7. Section 123.28 is added to read as follows:
Sec. 123.28 Scope of a license.
Unless limited by a condition set out in a license, the export,
reexport, retransfer, or temporary import authorized by a license is
for the item(s), end-use(s), and parties described in the license
application and any letters of explanation. DDTC grants licenses in
reliance on representations the applicant made in or submitted in
connection with the license application, letters of explanation, and
other documents submitted.
PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT, AND OTHER DEFENSE
SERVICES
0
8. The authority citation for part 124 continues to read as follows:
Authority: Secs. 2, 38, and 71, 90, 90 Stat. 744 (22 U.S.C.
2752, 2778, 2797); 22 U.S.C. 2651a; 22 U.S.C. 2776; Section 1514,
Pub. L. 105-261; Pub. L. 111-266; Section 1261, Pub. L. 112-239;
E.O. 13637, 78 FR 16129.
0
9. Section 124.1 is amended by adding paragraph (e) to read as follows:
Sec. 124.1 Manufacturing license agreements and technical assistance
agreements.
* * * * *
(e) Unless limited by a condition set out in an agreement, the
export, reexport, retransfer, or temporary import authorized by a
license is for the item(s), end-use(s), and parties described in the
agreement, license, and any letters of explanation. DDTC approves
agreements and grants licenses in reliance on representations the
applicant made in or submitted in connection with the agreement,
letters of explanation, and other documents submitted.
Sec. 124.8 [Amended]
0
10. Section 124.8 is amended by removing ``Sec. Sec. 124.16 and
126.18'' and
[[Page 35617]]
adding ``Sec. 126.18'' in its place in paragraph (5).
Sec. 124.12 [Amended]
0
11. Section 124.12 is amended by removing paragraph (a)(10).
Sec. 124.16 [Removed and Reserved]
0
12. Section 124.16 is removed and reserved.
PART 125--LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED
DEFENSE ARTICLES
0
13. The authority citation for part 125 continues to read as follows:
Authority: Secs. 2 and 38, 90, 90 Stat. 744 (22 U.S.C. 2752,
2778); 22 U.S.C. 2651a; E.O. 13637, 78 FR 16129.
0
14. Section 125.4 is amended by revising paragraph (b)(9) to read as
follows:
Sec. 125.4 Exemptions of general applicability.
* * * * *
(b) * * *
(9) Technical data, including classified information, regardless of
media or format, exported, reexported, or retransferred by or to a U.S.
person, or a foreign person employee of a U.S. person travelling or on
temporary assignment abroad, subject to the following restrictions:
(i) Foreign persons may only export, reexport, retransfer, or
receive such technical data as they are authorized to receive through a
separate license or other approval.
(ii) The technical data exported, reexported, or retransferred
under this authorization may only be possessed or used by a U.S. person
or authorized foreign person. Sufficient security precautions must be
taken to prevent the unauthorized release of the technical data. Such
security precautions may include encryption of the technical data; the
use of secure network connections, such as virtual private networks;
the use of passwords or other access restrictions on the electronic
device or media on which the technical data is stored; and the use of
firewalls and other network security measures to prevent unauthorized
access.
(iii) The individual is an employee of the U.S. government or is
directly employed by a U.S. person and not by a foreign subsidiary.
(iv) Technical data authorized under this exception may not be used
for foreign production purposes or for defense services unless
authorized through a license or other separate approval.
(v) Classified information is sent or taken outside the United
States in accordance with the requirements of the Department of Defense
National Industrial Security Program Operating Manual (unless such
requirements are in direct conflict with guidance provided by the
Directorate of Defense Trade Controls, in which case such guidance must
be followed).
* * * * *
PART 126--GENERAL POLICIES AND PROVISIONS
0
15. The authority citation for part 126 continues to read as follows:
Authority: Secs. 2, 38, 40, 42, and 71, Pub. L. 90-629, 90 Stat.
744 (22 U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 U.S.C. 2651a;
22 U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR, 1994 Comp., p. 899;
Sec. 1225, Pub. L. 108-375; Sec. 7089, Pub. L. 111-117; Pub. L. 111-
266; Sections 7045 and 7046, Pub. L. 112-74; E.O. 13637, 78 FR
16129.
0
16. Section 126.18 is amended by removing ``Sec. 124.16'' in paragraph
(a) and adding ``paragraph (d) of this section'' in its place, and
adding paragraph (d).
The addition reads as follows:
Sec. 126.18 Exemptions regarding intra-company, intra-organization,
and intra-governmental transfers to employees who are dual nationals or
third-country nationals.
* * * * *
(d) Notwithstanding any other provisions of this subchapter, no
approval is needed from the Directorate of Defense Trade Controls
(DDTC) for the reexport of unclassified defense articles or defense
services to individuals who are dual national or third-country national
employees of a foreign business entity, foreign governmental entity, or
international organization, that is an authorized end-user, foreign
signatory, or consignee (including approved sub-licensees) for those
defense articles or defense services, when such individuals are:
(1) Bona fide regular employees directly employed by the foreign
business entity, foreign governmental entity, or international
organization;
(2) Nationals exclusively of countries that are members of NATO,
the European Union, Australia, Japan, New Zealand, or Switzerland;
(3) Within the physical territories of the countries listed in
paragraph (d)(2) of this section or the United States during the
reexport;
(4) Signatory to a Non-Disclosure Agreement, unless their employer
is a signatory or sublicensee to an agreement under Sec. 124.1
authorizing those defense articles or defense services; and
(5) Not the recipient of any permanent transfer of hardware.
Dated: May 23, 2016.
Rose E. Gottemoeller,
Under Secretary, Arms Control and International Security, Department of
State.
[FR Doc. 2016-12732 Filed 6-2-16; 8:45 am]
BILLING CODE 4710-25-P