[Federal Register Volume 84, Number 76 (Friday, April 19, 2019)]
[Rules and Regulations]
[Pages 16398-16402]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-07696]
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DEPARTMENT OF STATE
22 CFR Part 126
[Public Notice: 10363]
RIN 1400-AE24
International Traffic in Arms Regulations: Transfers Made by or
for a Department or Agency of the U.S. Government
AGENCY: Department of State.
ACTION: Final rule.
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SUMMARY: The Department of State is amending the International Traffic
in Arms Regulations (ITAR) to revise the licensing exemption for
transfers made by or for an agency of the U.S. Government.
DATES: This rule is effective on April 19, 2019.
FOR FURTHER INFORMATION CONTACT: Robert Monjay, Office of Defense Trade
Controls Policy, Department of State, telephone (202) 663-2817; email
[email protected]. ATTN: ITAR Amendment--By or For.
SUPPLEMENTARY INFORMATION: The Department published a proposed rule on
May 22, 2015 (RIN 1400-AC88, 80 FR 29565) (Proposed Rule) and received
17 public comments. The Department published a final rule on August 17,
2016 (81 FR 54732) covering those elements of the Proposed Rule not
related to the exemption for exports and temporary imports made to or
on behalf of a department or agency of the U.S. Government in ITAR
Sec. 126.4, and addressed the relevant public comments. This final
rule addresses only the proposed revision of that exemption, and
addresses only the public comments related to that proposal. The
changes to Sec. 126.4 relevant to the existing text are described
below.
This final rule revises ITAR Sec. 126.4 to clarify when exports,
reexports, retransfers, temporary imports, and performance of a defense
service (collectively described as ``transfers'' for the remainder of
this rule) may be made by or for an agency of the U.S. Government
without a license, including by employees of the U.S. Government in the
performance of their official duties. This rule expands the scope of
this exemption to allow for permanent exports, reexports, and
retransfers, in addition to temporary exports and imports, and to allow
transfers by third parties acting for the U.S. Government. In addition,
this rule revises the section heading from shipments to transfers to
reflect the scope of the exemption.
The authorization to transfer defense articles and defense services
by or for the U.S. Government is divided between paragraphs (a) and (b)
in the revised Sec. 126.4. Paragraph (a) applies to transfers made by
the U.S. Government and paragraph (b) applies to transfers made for, or
on behalf of, the U.S. Government. Paragraphs (c), (d), (e) and (f) set
out additional requirements applicable to transfers made under either
paragraph (a) or (b).
Paragraph (a) is revised to authorize those transfers made by a
department or agency of the U.S. Government (1) for official use by the
U.S. Government, (2) for carrying out certain international agreements
or arrangements, (3) for carrying out foreign assistance, or sales
programs authorized by statute, or (4) for carrying out certain
Department of Defense (DOD) ``security cooperation
[[Page 16399]]
programs and activities,'' as that term is defined in paragraph
(a)(4)(i). Certain agreements or arrangements entered into with
international partners authorized by Title 10, Title 22, or a National
Defense Authorization Act are included in paragraph (a)(2), and may be
for cooperative research, development, testing, evaluation, or
production; reciprocal use of test facilities; loan of equipment and
material; personnel exchange; cooperative logistics support,
acquisition, and cross-servicing; security of supply; or reciprocal
defense procurement activities, among others. The exemption continues
to authorize the transfer of technical data, although the Department
has deleted the term as redundant because the definition of ``defense
article'' in Sec. 120.6 includes technical data.
Paragraph (a)(1) also provides that use by U.S. Government
contractors can be within the scope of the official use of the U.S.
Government, when the U.S. Government contractor is either operating
within a U.S. Government-controlled facility or a U.S. Government
employee is empowered and responsible to exercise control over the
defense article. Additionally, the Deputy Assistant Secretary of State
for Defense Trade Controls may approve the use of this exemption for
other activities by U.S. Government contractors if requested by a
department or agency of the U.S. Government. Paragraph (a)(1)(ii)(D) is
added to clarify that the provision does not authorize the release of
technical data to persons or entities of a country identified in Sec.
126.1, even if they are in a contractual relationship with the U.S.
Government.
The existing note is deleted, as the special definition of an item
considered to be permanently exported is no longer necessary because
the exemption is expanded to allow for permanent and temporary
transactions. Paragraph (a)(5) is added to explain that authorization
of a transfer under Sec. 126.4 is for purposes of the ITAR only, and
that it does not constitute any other form of U.S. Government approval
that may be required, including but not limited to requirements imposed
by statutes, contracts, or agreements, such as a third party transfer
requirement under a Memorandum of Understanding or foreign assistance
program. Additionally, authorization to export does not absolve parties
of the requirement to comply with any applicable U.S. Government
processes, procedures, or practices, including the need for exports of
items on the MTCR Annex to receive the case-by-case review called for
by the MTCR Guidelines.
Paragraph (a)(6) is added to retain the existing provision that
this exemption cannot be used when the U.S. Government is acting as a
transmittal agent on behalf of a private individual or firm, even when
it does so in satisfaction of security requirements. The Department
removed the requirement that the U.S. Government must conduct all
aspects of the transaction and the special definition of permanent
export. The Department also eliminated language limiting the scope of
the rule to temporary imports and temporary exports, and added a new
paragraph (f) to clarify that a Directorate of Defense Trade Controls
(DDTC) authorization is required for any change in end-use or end-user
not authorized by the section.
Paragraph (a)(7) is added to clarify that exports made in
compliance with section 38(b)(2) of the Arms Export Control Act (AECA)
(22 U.S.C. 2778(b)(2)) are excluded from the licensing requirements of
the AECA and do not require export authorization from DDTC. Any defense
article or defense service exported in compliance with section 38(b)(2)
is excluded from ITAR control provided it is either: (1) For official
use by a department or agency of the United States Government, as
implemented in Sec. 126.4(a)(1) and (b), or (2) for carrying out any
foreign assistance or sales program authorized by law and subject to
the control of the President by other means, as stated in Sec.
126.4(a)(3) and (b). Unless otherwise authorized pursuant to U.S. law
or regulation, reexport or retransfer of defense articles and services
exported pursuant to section 38(b)(2) but which no longer are subject
to independent controls require authorization from the Department of
State. Nothing in ITAR Sec. 126.4 relieves exporters from any other
obligation imposed by U.S. law or regulation outside of the ITAR,
including any applicable United Nations or U.S. embargo or sanction.
Paragraph (a)(4)(ii) is added to clarify that the U.S. Government
agency or entity exporting pursuant to the exemption is required to
obtain appropriate end-use assurances from the recipient, including
verification that the recipient has knowledge of and intent to comply
with paragraph (f).
A new paragraph (b) is added to authorize transfers performed by
another entity for a department or agency of the U.S. Government. Third
parties may only perform a transfer for a department or agency of the
U.S. Government under this exemption when that department or agency
would have been authorized to perform the transfer itself under
paragraph (a). Transfers by third parties directly to the U.S.
Government overseas may be conducted at the request of the U.S.
Government. Transfers by third parties to anyone other than the U.S.
Government, including directly to any U.S. Government contractors, must
be conducted pursuant to written direction from the U.S. Government
department or agency, such as through contractual documents, or
pursuant to an international agreement or arrangement. For example,
transfers by a company to itself may be authorized by written direction
from the U.S. Government department or agency requiring the transfer.
Under no circumstances shall a transfer to any non-U.S. Government
entity be authorized under paragraph (b)(1). Each department or agency
will determine for itself who is authorized to issue such written
directions.
A new paragraph (c) is added to clarify that the ITAR does not
require an authorization for the return to the United States of a
defense article exported under this section provided the defense
articles have not been subsequently transferred without authorization
or by license or other approval pursuant to another provision of the
ITAR. The defense article must be returned to the U.S. Government or to
the person who exported it pursuant to paragraph (b).
The Department redesignated the existing paragraph (b) as new
paragraph (d) and existing paragraph (d) as new paragraph (e). The
Department also removed the text of the existing paragraph (c), as
permanent exports are now included in the authorizations in paragraphs
(a) and (b). The Department revised new paragraph (d) for clarity and
to specifically state that this exemption does not authorize exports
that would violate a U.S. or United Nations Security Council arms
embargo. The Department revised new paragraph (e) (former paragraph
(d)) to clarify that exporters no longer need to provide U.S. Customs
and Border Protection with a written certification of compliance with
this section and to clarify that the ITAR does not impose an Electronic
Export Information (EEI) filing requirement on exports via U.S.
Government vehicles, aircraft and vessels. To the extent that other
U.S. Government statutes and regulations do impose an EEI filing
requirement, this provision is not intended to serve as an exemption
from that requirement.
The Department added a new paragraph (f) which provides that
authorization from DDTC in the form of a license or other approval,
including through Sec. 126.4, is required for any change in the end-
use or end-user.
[[Page 16400]]
The Department also revised Sec. 126.1(a) to add Sec. 126.4(a)(1)
and (3) and (b)(1) to the list of exemptions provided for in the ITAR
that apply with respect to defense articles or defense services
originating in or for export to any proscribed countries, areas, or
persons. Exports may not be made under any other provision of this
exemption to the countries that are subject to restrictions identified
in Sec. 126.1.
Public Comments and Responses
Several commenters noted the removal of the reference to technical
data and assumed that this indicated that the exemption would no longer
authorize exports of technical data. As noted above, the Department
removed the reference to technical data because it was redundant and
confusing. Technical data is a form of defense article and is
authorized by the language authorizing the export (now export,
reexport, retransfer, and temporary import) of defense articles. By
including a reference to technical data, the provision implied that
other references to defense articles may not include technical data,
which is not accurate. This could leave readers with an incorrect
understanding of the ITAR. When the Department wishes to refer only to
hardware defense articles or otherwise exclude technical data, it does
so explicitly. When the Department refers to defense articles, without
modification, the reference includes technical data.
Several commenters requested clarification regarding the scope of
official use. Several commenters requested that the Department allow
use by contractors who are not U.S. persons. One commenter requested
that the Department reevaluate the scope of allowed use by contractors
under the exemption. One commenter specifically asked the Department to
state that any use by a U.S. Government contractor in the course of
contract is within the scope of official use by the U.S. Government. As
noted above and in response to these comments, the Department has
revised the provisions regarding use by a U.S. Government contractor,
and provided that use by U.S. Government contractors is within the
scope of the exemption when: (1) The contractor is operating within a
U.S. Government-owned facility; (2) a U.S. Government employee is
responsible for control of the defense articles; or (3) otherwise
approved by DDTC. The Department also removed the requirement from the
proposed rule that the contractors be U.S. persons in response to
comments, but maintained a restriction on using contractors from Sec.
126.1 countries.
Two commenters requested clarification with respect to exports to
U.S. Government contractors for the purpose of carrying out any foreign
assistance, cooperative project, or sales program authorized by law.
The Department declines to provide a general rule on who can be the
recipient of such transfers, but notes that the transfers should be
guided by their authorizing language, such as in an international
agreement or statute. If you have questions regarding the scope of a
specific international agreement or statutory program, please first
contact the department or agency responsible for its implementation. If
questions still exist as to the applicability of this provision to a
transfer, please submit a request for an advisory opinion to DDTC.
One commenter objected to the prohibition on using the exemption to
export an item subject to the Export Administration Regulations (EAR)
that is on the MTCR Annex, as the exemption may be used to export a
defense article that is on the MTCR Annex. The commenter noted that it
does not make sense to require a separate individual authorization for
items subject to the EAR, which have been determined to be less
sensitive. The Department agrees with this comment. Any MTCR Annex item
subject to the EAR may be authorized under this exemption when used in
or with a defense article and transferred with a defense article, as
set forth in Sec. 120.5(b), and where consistent with paragraph
(a)(5).
One commenter requested that the Department revise the provision
requiring the U.S. Government to perform or direct all aspects of the
transaction. The Department has removed this provision, and replaced it
with provisions providing specific guidance that most exports by third
parties require written direction from the relevant department or
agency, but that exports directly to the U.S. Government may be
performed on request.
Several commenters requested that the Department remove the
requirement to include a certification on the airway bill. The
Department agrees.
Several commenters requested that the Department remove the
requirement to provide a certification to the Port Director. The
Department agrees.
Regulatory Analysis and Notices
Administrative Procedure Act
This rulemaking is exempt from section[thinsp]553 (Rulemaking) and
section[thinsp]554 (Adjudications) of the Administrative Procedure Act
(APA) pursuant to 5 U.S.C. 553(a)(1) as a military or foreign affairs
function of the United States Government. Although the Department is of
the opinion that this rule is exempt from the rulemaking provisions of
the APA, the Department published a proposed rule with a 45-day
provision for public comment.
Regulatory Flexibility Act
Since the Department of State is of the opinion that this rule is
exempt from the provisions of 5 U.S.C. 553, and there is no other
statute that requires that the Regulatory Flexibility Act apply, 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
The Department does not believe this rulemaking is a major rule as
defined in 5 U.S.C. 804.
Executive Orders 12372 and 13132
This rulemaking will not have substantial direct effects on the
States, on the relationship between the national Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, it is determined that this 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
[[Page 16401]]
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributed impacts, and equity). These executive orders
stress the importance of quantifying both costs and benefits, of
reducing costs, of harmonizing rules, and of promoting flexibility.
This rule has been designated a ``significant regulatory action,''
although not economically significant, under Executive Order 12866.
Accordingly, this rule has been reviewed by the Office of Management
and Budget (OMB).
Executive Order 12988
The Department of State has 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 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, the provisions of Executive Order 13175 do not
apply to this rulemaking.
Paperwork Reduction Act
This rule does not impose any new reporting or record-keeping
requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter
35.
List of Subjects in 22 CFR Part 126
Arms and munitions, Exports.
Accordingly, for the reasons set forth above, title 22, chapter I,
subchapter M, part 126, of the Code of Federal Regulations is amended
as follows:
PART 126--GENERAL POLICIES AND PROVISIONS
0
1. 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; Section 7045, Pub. L. 112-74; Section 7046, Pub. L. 112-74;
E.O. 13637, 78 FR 16129.
0
2. Section 126.1 is amended by revising paragraph (a) to read as
follows:
Sec. 126.1 Prohibited exports, imports, and sales to or from certain
countries.
(a) General. It is the policy of the United States to deny licenses
and other approvals for exports and imports of defense articles and
defense services, destined for or originating in certain countries. The
exemptions provided in this subchapter, except Sec. 123.17 of this
subchapter and Sec. Sec. 126.4(a)(1) or (3) and (b)(1) and 126.6, or
when the recipient is a U.S. Government department or agency, do not
apply with respect to defense articles or defense services originating
in or for export to any proscribed countries, areas, or persons. (See
Sec. 129.7 of this subchapter, which imposes restrictions on brokering
activities similar to those in this section).
* * * * *
0
3. Section 126.4 is revised to read as follows:
Sec. 126.4 Transfers by or for the United States Government.
(a) By a department or agency. A license is not required for the
export, reexport, retransfer, or temporary import of a defense article
or the performance of a defense service, when made by a department or
agency of the U.S. Government:
(1) For official use by a department or agency of the U.S.
Government, including:
(i) By employees of the U.S. Government acting within their
official capacity; or
(ii) By persons or entities in a contractual relationship with the
U.S. Government using the defense article or performing the defense
service to conduct the contracted-for activities within the scope of
the contractual relationship and:
(A) Within a U.S. Government-controlled facility;
(B) When an employee of the U.S. Government is empowered and
responsible to ensure that the defense article is not diverted and is
only used within the scope of the contractual relationship; or
(C) Use of the exemption in paragraph (a)(1)(ii) is authorized by
the Deputy Assistant Secretary of State for Defense Trade Controls at
the request of a department or agency of the U.S. Government.
(D) The provision in this paragraph (a)(1)(ii) may not be used to
release technical data to a person or entity of a country identified in
Sec. 126.1.
(2) For carrying out a cooperative project, program, or other
activity in furtherance of an agreement or arrangement that provides
for the export, reexport, retransfer, or temporary import of the
defense article, or the performance of activities that constitute the
defense service, and is one of the following:
(i) A binding international agreement to which the United States or
any agency thereof is a party; or
(ii) An arrangement with international partners authorized by Title
10 or 22 of the United States Code or pertinent National Defense
Authorization Act provisions.
(3) For carrying out any foreign assistance or sales program
authorized by law and subject to control by the President by other
means.
(4) For any other security cooperation programs and activities of
the Department of Defense authorized by law and subject to control by
the President by other means.
(i) For purposes of this paragraph (a)(4), ``security cooperation
programs and activities of the Department of Defense'' means any
program, activity, or interaction of the Department of Defense with the
security establishment of a foreign country to:
(A) Build and develop allied and friendly security capabilities for
self-defense and multinational operations;
(B) Provide the armed forces with access to the foreign country
during peacetime or a contingency operation; or
(C) Build relationships that promote specific United States
security interests.
(ii) The U.S. Government must obtain appropriate end-use and
retransfer assurances from the foreign party and to ensure that the
recipient is aware of and will comply with paragraph (f) of this
section.
(5) Authorization under this section is for compliance with the
ITAR only and does not constitute any other U.S. Government approval
that may be required prior to the transfer of a defense article, and
does not satisfy other obligations of U.S. law or regulation, or
applicable Government process, procedure, or practice, including the
requirement that any export of an item listed on the MTCR Annex receive
the case-by-case review called for in the MTCR Guidelines.
(6) The exemption in this paragraph (a) does not apply when a U.S.
Government department or agency acts as a transmittal agent on behalf
of a private individual or firm, either as a convenience or in
satisfaction of security requirements.
(7) The authorization requirement expressed in paragraph (f) of
this section does not apply to defense articles and services exported
from the United States pursuant to paragraphs (a)(1) and (3) of this
section, provided the defense articles and services are subject to the
terms thereof.
(b) By a person on behalf of a department or agency. A license is
not
[[Page 16402]]
required for the export, reexport, retransfer, or temporary import of a
defense article or the performance of a defense service, when made by
another person for a department or agency of the U.S. Government:
(1) To a department or agency of the U.S. Government at its
request; or
(2) To an entity other than the U.S. Government at the written
direction of a department or agency of the U.S. Government or pursuant
to an international agreement or arrangement, for an activity
authorized for that department or agency in paragraphs (a)(1) through
(4) of this section.
(c) Return to the United States. No license is required under this
subchapter for the return to the United States of a defense article
exported pursuant to this section and not subsequently reexported or
retransferred other than pursuant to this section, to:
(1) A department or agency of the U.S. Government; or
(2) The person who exported the item.
(d) Prohibited activities and arms embargoes. This section does not
authorize any department or agency of the U.S. Government to make or
authorize any export that is otherwise prohibited by any other
administrative provisions or by any statute or that is inconsistent
with U.S. arms embargoes or United Nations Security Council Resolutions
(see Sec. 126.1).
(e) Export clearance. For exports shipped other than by a U.S.
diplomatic pouch or a U.S. Government aircraft, vehicle, or vessel, an
Electronic Export Information (EEI) filing must be submitted to U.S.
Customs and Border Protection using its electronic system(s) at the
time of export, unless electronic submission of such information is
unavailable, in which case U.S. Customs and Border Protection or the
Department of Defense transmittal authority will issue instructions.
(f) Change in end-use or end-user. Any change in end-use or end-
user of a defense article, to any party or use not authorized by this
section, requires approval of the Directorate of Defense Trade Controls
through a license or other approval.
Andrea Thompson,
Under Secretary for Arms Control and International Security, U.S.
Department of State.
[FR Doc. 2019-07696 Filed 4-18-19; 8:45 am]
BILLING CODE 4710-25-P