[Federal Register Volume 81, Number 228 (Monday, November 28, 2016)]
[Notices]
[Pages 85668-85670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28514]


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DEPARTMENT OF STATE

[Public Notice: 9791]


30-Day Notice of Proposed Information Collection: Disclosure of 
Violations of the Arms Export Control Act

ACTION: Notice of request for public comment.

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SUMMARY: The Department of State is seeking Office of Management and 
Budget (OMB) approval for the information collection described below. 
In accordance with the Paperwork Reduction Act of 1995, we are 
requesting comments on this collection from all interested individuals 
and organizations. The purpose of this notice is to allow 30 days for 
public comment preceding submission of the collection to OMB.

DATES: The Department will accept comments from the public up to 
December 28, 2016.

ADDRESSES: Direct comments to the Department of State Desk Officer in 
the Office of Information and Regulatory Affairs (OIRA) at the Office 
of Management and Budget (OMB). You may submit comments by the 
following methods:
     Email: [email protected]. You must include the 
DS form number, information collection title, and the OMB control 
number in the subject line of your message.
     Fax: 202-395-5806. Attention: Desk Officer for Department 
of State.
    You must include the DS form number, information collection title, 
and OMB control number in any correspondence.

FOR FURTHER INFORMATION CONTACT: Direct requests for additional 
information regarding the collection listed in this notice, including 
requests for copies of the proposed collection instrument and 
supporting documents, to Danielle Canfield, Directorate of Defense 
Trade Controls, Department of State, who may be reached at 
[email protected].

SUPPLEMENTARY INFORMATION: 
     Title of Information Collection: Disclosure of Information 
Related to Potential Violations of the Arms Export Control Act.
     OMB Control Number: 1405-0179.
     Type of Request: Revision of a Currently Approved 
Collection.
     Originating Office: T/PM/DDTC.
     Form Number: DS-7787.
     Respondents: Individuals and companies engaged in the 
business of manufacturing, exporting, or temporarily importing defense 
hardware or defense technical data; furnishing defense services; or 
brokering.
     Estimated Number of Respondents: 1500.
     Estimated Number of Responses: 1500.
     Average Time per Response: 10 hours.
     Total Estimated Burden Time: 15,000 hours.
     Frequency: On occasion.
     Obligation to Respond: Voluntary, unless required under 
ITAR Sections 126.1, 126.16, 126.17, 123.17.
    We are soliciting public comments to permit the Department to:
     Evaluate whether the proposed information collection is 
necessary for the proper functions of the Department.
     Evaluate the accuracy of our estimate of the time and cost 
burden for this proposed collection, including the validity of the 
methodology and assumptions used.

[[Page 85669]]

     Enhance the quality, utility, and clarity of the 
information to be collected.
     Minimize the reporting burden on those who are to respond, 
including the use of automated collection techniques or other forms of 
information technology.

Please note that comments submitted in response to this notice are 
public record. Before including any detailed personal information, you 
should be aware that your comments as submitted, including your 
personal information, will be available for public review.

Abstract of Proposed Collection

    The Directorate of Defense Trade Controls (DDTC), Bureau of 
Political-Military Affairs, U.S. Department of State, in accordance 
with the Arms Export Control Act (AECA) (22 U.S.C. 2751 et seq.) and 
the AECA's implementing regulations, the International Traffic in Arms 
Regulations (ITAR) (22 CFR parts 120-130), has the principal missions 
of taking final action on license applications and other requests for 
defense trade transactions via commercial channels, ensuring compliance 
with the statute and regulations, and collecting various types of 
reports. By statute, Executive Order, regulation, and delegation of 
authority, DDTC is charged with controlling the export and temporary 
import of defense articles and the provision of defense services 
covered by the U.S. Munitions List, and the brokering thereof.
    In accordance with ITAR Part 127, DDTC maintains a robust program 
to ensure compliance with the AECA and ITAR. As a part of this program, 
DDTC encourages the voluntary disclosure of potential violations of the 
AECA, ITAR, and any regulation, order, or authorization issued 
thereunder. The information disclosed is analyzed to determine whether 
administrative action concerning any violation is warranted; the 
voluntary nature of such a disclosure may be considered a mitigating 
factor in determining the administrative penalties, if any, which may 
be imposed. Failure to report a violation may result in circumstances 
detrimental to U.S. national security and foreign policy interests and 
will be considered as an adverse factor in determining the appropriate 
disposition of such violations. Also, the activity in question might 
merit referral to the Department of Justice for consideration of 
whether criminal prosecution is warranted. In such cases, DDTC will 
notify the Department of Justice of the voluntary nature of the 
disclosure, but the Department of Justice is not required to give that 
fact any weight.
    The ITAR also imposes a duty to notify DDTC of potential violations 
of the AECA and ITAR in certain instances. In accordance with ITAR 
Sec. Sec.  123.17(j), 126.1(e)(2), 126.16(h)(8) and (n), and 
127.17(h)(8) and (n), any person involved in or with knowledge of 
activities identified or prohibited by these sections must notify DDTC 
of the violations or produce documents and information, respectively.
    In certain circumstances, DDTC may also request or direct a 
registrant or another party to disclose details about a particular 
transaction or program based on information it receives from partner 
federal agencies or other sources. The information required for a 
directed disclosure is largely the same as that requested in a 
voluntary disclosure and must be sufficient for DDTC to determine the 
precise nature of the violation, the circumstances surrounding it, and 
any remediation efforts that have been put in place.
    ITAR Sec.  127.12 enunciates the information which should accompany 
a disclosure. Historically, respondents to this information collection 
submitted their disclosures to DDTC in writing via hard copy 
documentation. However, as part of an IT modernization project designed 
to streamline the collection and use of information by DDTC, a form has 
been developed for the submission of disclosures. This will allow both 
DDTC and respondents submitting a disclosure to more easily track and 
analyze submissions. This method of submission is discussed in detail 
below.

Response to Public Comments

    On June 20, 2016, DDTC published a Federal Register Notice 
requesting initial public comments on the proposed disclosure form, DS-
7787 ``Disclosure of Violations of the Arms Export Control Act.'' 81 FR 
39994. DDTC received nine comments in response to this request, 
summarized below along with DDTC's responses:
    Several commenters opined that the DS-7787 form should merely 
function as a cover sheet for disclosure submissions in order to allow 
submitters to use a more narrative format to notify DDTC of potential 
violations. DDTC notes that the intended use of the form is to utilize 
uniform data fields for greater search and analytics capabilities and 
readability in the case management system; the unlimited-character text 
boxes associated with each data field will allow ample room for 
narratives to be included in the submission and therefore this comment 
was not accepted. DDTC does recognize, however, that the need exists 
for a mechanism to allow submitters to explain ancillary information, 
and will add an ``Additional Relevant Information'' text box and the 
ability to upload supporting documentation to the form. However, DDTC 
stresses that this does not absolve submitters of the responsibility to 
use the form as the primary vehicle for declaring violations.
    Other comments concerned the burden associated with the form, which 
DDTC reasons to be an average of 10 hours per submission. These 
commenters argued that a 10-hour burden is inadequate to capture the 
amount of effort that is required by certain complex disclosures; DDTC 
appreciates these comments but replies that 10 hours is an average 
figure, and while some disclosures are very complex, the vast majority 
of disclosures declared on an annual basis are discrete instances which 
take far less than 10 hours per response. Therefore, DDTC believes 10 
hours to be an accurate representation of the total average burden per 
response.
    Several commenters also requested that the instructions be revised 
to, among others, define which fields of the form are mandatory; 
explain how to determine the number of violations; clarify what 
information is required for ``related disclosures,'' ``discovery 
date,'' and ``relevant Department of State license(s) or 
authorization(s)''; describe the disclosure method for companies and 
individuals under a consent agreement or similar reporting arrangement; 
and describe the method of submission of the form. DDTC appreciates all 
of these comments and has re-worked the instructions based on this 
feedback; the instructions are posted and available for review along 
with the revised form on DDTC's Web site at www.pmddtc.state.gov.
    Another commenter noted that the form does not discuss how to make 
a disclosure that involves classified information. DDTC has addressed 
this guidance in the revised instructions and stresses that classified 
information should never be included on the DS-7787. Similarly, 
guidance on making a disclosure related to a country proscribed by ITAR 
Sec.  126.1 has also been included in the instructions.
    Multiple commenters also asked that the form be updated to accept 
submissions from third parties such as an outside counsel. DDTC notes 
that the ITAR requires an empowered official, as defined in ITAR Sec.  
120.25, to certify the disclosure, but that outside counsel may be 
listed as a point-of-contact for the

[[Page 85670]]

submission; this option has been added to the form.
    In a similar vein, some commenters requested clarification on how 
to disclose violations that involve a sub-licensee or subcontractor, 
and also how non-U.S. entities (e.g. authorized end-users or foreign 
consignees) will submit disclosures. DDTC replies that sub-licensees 
and subcontractors should be included as involved parties on the form; 
if the violation of the sub-licensee or subcontractor related to one of 
the discloser's authorizations, the discloser may have responsibility 
for the violation and it should be reported as such. If the respondent 
is reporting a violation of a subcontractor or sub-licensee that is not 
related to any of the respondent's authorizations, the option ``Third 
party disclosure'' should be selected. Non-U.S. entities will be 
required to create a unique username and password to access the case 
management system and file a disclosure directly.
    One commenter also requested that DDTC work with its counterpart 
bureau in the Department of Commerce to develop a joint disclosure 
form. The commenter argued that since the Obama Administration's Export 
Control Reform (ECR) initiative has transferred oversight of dozens of 
commodities from the U.S. Munitions List (USML) to the Department of 
Commerce's Export Administration Regulations (EAR), a joint form would 
capture instances where a violation occurred prior to a commodity being 
moved from the USML to the EAR. DDTC replies that the DS-7787 will 
exist beyond the ECR initiative, and submitters are required to explain 
the violation in detail on the form, during which time any ECR 
distinctions should be made.
    Similarly, several commenters remarked that DDTC should include a 
field to allow respondents to include ``mitigating information'' 
regarding the particular matter they are disclosing. DDTC notes that 
the form, as written, contains all of the information required by ITAR 
Sec.  127.12. Additionally, as addressed above, DDTC has added a field 
for additional relevant information on the form, and notes that this 
would be the appropriate place to enter mitigating and/or aggravating 
information that does not more properly fit into another field. The 
respondent is encouraged to provide as much detail of remedial measures 
and mitigating factors as they are able throughout the existing fields; 
however, determinations of exactly what constitutes ``mitigating 
information'' are made solely by DDTC; therefore, such a separate field 
will not be added to the form.
    One commenter also requested DDTC to address the information 
protection and data security elements of the case management system. 
Recognizing the sensitivity of the data submitted in a disclosure, the 
system will meet all current government standards for data security and 
the Privacy Act of 1974. Individual users will also be required to 
create a unique username and password to access the system and submit 
information over an encrypted connection. Similarly, DDTC will protect 
information from public disclosure to the extent permitted by law; DDTC 
encourages submitters to clearly mark proprietary information in 
accordance with the Department of State guidelines at 22 CFR 171.12.
    One commenter requested that the form include a question to declare 
whether a disclosure involves Major Defense Equipment (MDE), which DDTC 
has incorporated into the form.

Methodology

    This information will be collected by electronic submission. 
Respondents will be required to enroll in DDTC's online system and will 
be issued an appropriate credential based on the business the user will 
be transacting. Lower assurance matters (such as initial registration 
in the system) will require a secure username and password. Matters 
requiring higher assurance will require multi-factor credentials, such 
as a certificate based login.

    Dated: November 21, 2016.
Anthony M. Dearth,
Managing Director, Acting Directorate of Defense Trade Controls, 
Department of State.
[FR Doc. 2016-28514 Filed 11-25-16; 8:45 am]
 BILLING CODE 4710-25-P