[Federal Register Volume 89, Number 80 (Wednesday, April 24, 2024)]
[Proposed Rules]
[Pages 31119-31125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08627]
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DEPARTMENT OF STATE
22 CFR Parts 122 and 129
[Public Notice: 12236]
RIN 1400-AF78
International Traffic in Arms Regulations: Registration Fees
AGENCY: Department of State.
ACTION: Proposed rule.
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SUMMARY: The Department of State proposes to amend the International
Traffic in Arms Regulations (ITAR) by increasing and specifying the
fees required for registration with the Directorate of Defense Trade
Controls (DDTC).
DATES: Send comments on or before June 10, 2024.
ADDRESSES: Interested parties may submit comments by one of the
following methods:
Email: [email protected]. Include the subject
line: ``Registration Fees--RIN 1400-AF78''
Federal eRulemaking Portal: http://www.regulations.gov.
Identify by the Department docket number DOS-2023-0034 or RIN 1400-
AF78. Follow the instructions for sending comments.
Comments received after that date may be considered if feasible,
but consideration cannot be assured. Those submitting comments should
not include any personally identifying information they do not desire
to be made public or information for which a claim of confidentiality
is asserted, because any such claim will be deemed waived and comments
and/or transmittal emails may be made publicly available. 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. Per 5 U.S.C. 553(b)(4), a concise summary of this proposed rule
may be found at https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Allison Smith, PM/DDTC Director of
Management, Bureau of Political-Military Affairs, U.S. Department of
State, telephone 202-647-1282; email: [email protected].
Subject: Registration Fee Change.
SUPPLEMENTARY INFORMATION:
Overview
For the first time in fifteen years, the State Department proposes
to revise and increase the registration fees (also referred to as
``fees'') charged to those required to register with DDTC. In
accordance with section 38(b) of the Arms Export Control Act (AECA) (22
U.S.C. 2778(b)), every person who engages in the business of
manufacturing, exporting, temporarily importing, or brokering any
defense articles or defense services is required to register with DDTC,
the agency charged with administering the relevant sections of the
AECA. Section 38(b) of the AECA also requires that every person
required to register pay a registration fee. As the ITAR implements
section 38 of the AECA, and as its parts 122 and 129 (22
[[Page 31120]]
CFR parts 122 and 129) address registration, the Department proposes to
revise those provisions to restate registration requirements without
substantive change, to revise the Department's methodology for
determining the fees paid by certain registrants, to increase
registration fees, and to reinsert the actual amount of fees within the
ITAR itself.
Uses of Registration Fees
Registration fees required under section 38 of the AECA are, by a
separate statute (22 U.S.C. 2717), used to fund a large share of DDTC
and the many functions it provides to exporters, importers, brokers,
manufacturers, and the general public. The Department briefly outlines
some of these functions here so that registrants can have more context
for how their fees help DDTC's mission. Services like the DDTC Response
Team, Help Desk, commodity jurisdiction determinations, advisory
opinions, guidance on brokering, and support for registration all offer
assistance for the approximately 14,500 current DDTC registrants and
the general public. Moreover, DDTC often conducts outreach, visits,
webinars, speaking engagements and other educational services to help
people understand the ITAR and its requirements and exemptions. For
fiscal year 2022, for example, DDTC experts attended over 60 outreach
events and engaged with over 6,000 industry attendees in online
webinars.
Issuing licenses or other authorizations under the ITAR is also a
core and large part of DDTC's work. In fiscal year 2022, DDTC received
approximately 22,500 license applications and issued authorizations
that were valued at just over $153.7 billion. Although licensing
officials currently are some of the only DDTC officials paid through
congressional appropriations, contractor support and other technologies
impacting the processing, adjudication. and monitoring of licenses are
funded by fees.
DDTC also provides crucial public services in investigating
possible ITAR violations to maintain U.S. foreign policy and national
security imperatives. Again, using the last fiscal year as an
illustrative example, DDTC received over 600 disclosures, either
voluntary or directed, and conducted over 300 end-use monitoring
checks. Because investigations and compliance actions can be complex
and span several months or years, the monetary value that DDTC's
Compliance office secured is best viewed as a three-year rolling
average for FY 2020-2023, where an average of over $7.6M per year in
settlement funds were obtained for alleged ITAR violations, all of
which was deposited into the Treasury Department's General Fund and
does not go to DDTC. DDTC also assists Department of Justice (DOJ)
officials in certain criminal proceedings related to the ITAR,
including by providing testimony.
These services provide broad protection to industry and the public
alike, ensuring that a uniform set of rules are enforced for all, that
one business or exporter does not have an unfair advantage over the
other, and that exports, temporary imports, or brokering of defense
articles and defense services are consistent with the national security
and foreign policy of the United States.
Apart from these ongoing crucial services, DDTC has also recently
made significant advancements in processes for registration statements
and license applications, and for those members of the public seeking
advisory opinions or commodity jurisdiction determinations. One of
those is the creation, maintenance, and enhancement of the Defense
Export Control and Compliance System (DECCS). Launched in February
2020, DECCS simplifies the submission processes for applicants and
allows applicants to track electronic forms submitted to DDTC. DDTC's
Information Technology Modernization Team also supports enhanced
security and operations features and regularly connects with DECCS
users through the DECCS Users Group where industry users can provide
direct feedback and suggest enhancements to DECCS. In the area of
improved customer service and response, since February 2020, DDTC has
used DECCS to implement a fully electronic case-management system,
receiving and resolving 81,604 Help Desk tickets and 29,653 Response
Team tickets. DECCS users can engage directly with DDTC Help Desk and
Response Team customer service experts to resolve their issue. DDTC
also implemented a customer satisfaction survey to engage with
industry, and DDTC's average survey rating is 4.6 out of 5.
Other enhancements and improvements have also been made
specifically to the registration processes. Since 2022, registration
processing times have dropped from an average of around 45 days to 30
days. DDTC implemented automated email reminders and status updates for
industry to track registration applications. The DECCS application also
automatically calculates the registration fee for all registrants, and
now registrants can download their renewal fees calculation letter.
Additionally, there is enhanced communication between industry and DDTC
through DECCS. DDTC has instituted additional improvements, including
providing a list of approved licenses and other authorizations and
registration guides for DECCS and FAQs.
How DDTC Calculated the New Proposed Registration Fees
The Department assessed that after fifteen years of inflation,
increasing technological improvements, and improved services (which are
described in further detail below), that an increase in the amount of
registration fees is necessary for the continued and modernized
operations of DDTC. DDTC has engaged in some public engagement on this
issue, previewing that it was considering increasing its registration
fees in multiple industry engagement events over the last twelve
months. No questions or comments on the topic were raised by the public
at those events. Separately, different industry representatives have
suggested to DDTC that increased fees would be worthwhile to continue
receiving improved services.
To compute the new fees proposed here, the Department looked at
DDTC's past and projected fee collections projected against future
operating costs. It found that although DDTC's operating budget has
remained mostly the same over the past few years, apart from inflation,
increasing expenses are resulting in operating costs that currently
exceed the amount of revenue generated by fees. While DDTC has been
able to draw from its collections over the past few years to meet its
costs, these funds and the current registration fee amounts will not
cover DDTC's increased operational expenses. The need to increase fees
to keep up with inflation and increased costs related to enhanced
services has therefore become particularly pressing and DDTC would have
to cut back on certain services if registration fees are not adjusted
in the near future. Similarly, obtaining more funds from other sources
may not be feasible. DDTC operates with only limited congressionally
appropriated funds, comprising under 17% of its total operating costs,
and the congressional sense and presidential national security
directive is that DDTC be mostly fee funded.
Since 2008, the time of the last registration fee increase, DDTC
has structured registration fees into three basic tiers, based on
groupings of registrants that approximate their potential interactions
with DDTC. The tier groupings also turn on whether
[[Page 31121]]
persons have submitted a license application or other request for
authorization and have received any favorable determinations in
response during a look-back period prescribed in the regulations.
Although the DDTC website's section on registration fees and tier
groups currently makes reference to ``favorable authorizations,'' DDTC
aims to use the term ``favorable determinations'' in the future to more
accurately reflect that its licensing officials adjudicate and make
determinations on license applications and other authorization types
described in Sec. 120.57. There is no practical change intended in
using the updated term. Favorable determinations include an approval,
an approval with provisos (sometimes also referred to as an approval
with conditions), or written authorization from DDTC to conduct an
activity regulated by the ITAR. An application that is returned without
action or denied, on the other hand, is not a type of favorable
determination. Persons who do not submit a license application or other
request for authorization during the look-back period are included in
the first tier at the lowest amount.
Tier 1 registrants are currently comprised of persons in the
business of manufacturing who either do not export, or who rely on ITAR
exemptions for export authorizations. Persons who have submitted a
license application or other request for an authorization, but who did
not receive any favorable determination qualify for this tier.
Additionally, persons engaged in the business of brokering activities
also register under Tier 1, regardless of the number of brokering
authorizations sought or obtained; however, if these persons have
already registered with DDTC and obtained an M-code as a manufacturer,
exporter, or temporary importer, and if these persons are identified as
a broker within that registration, a separate registration fee for
brokering activities is not currently required. In contrast, if brokers
register separately (sometimes referred to as ``stand-alone brokers''),
then they are required to pay the Tier 1 fee.
Tier 2 registrants currently include those who have submitted and
received a favorable determination on ten or fewer license applications
or requests for authorization during the twelve-month period ending 90
days prior to the expiration of their current registration.
Tier 3 registrants have more frequent interactions with DDTC and
thus require more DDTC services. These are registrants who have
submitted and received a favorable determination on more than ten
license applications or requests for authorization during the twelve-
month period ending 90 days prior to the expiration of their current
registration.
The Department now proposes to increase the existing fees of Tier 1
and Tier 2 roughly in line with inflation over the last fifteen years.
This represents the Department's goal of not asking these registrants
to pay an increased amount relative to 2008 costs adjusted to today's
dollars. As detailed more below, the Tier 1 annual flat fee would
increase from $2,250 to $3,000. This would be a 33% increase over
current amounts, but just below the amount of inflation over that same
period, which was approximately 40.1%, as calculated by the Department
of Labor's Consumer Price Index (CPI). Using the CPI calculator on the
Department of Labor's Bureau of Labor Statistics website (https://www.bls.gov/data/inflation_calculator.htm), $2,250 in August 2008 would
have the same buying power today as around $3,153.40.
Similarly, the Tier 2 annual flat fee would increase from $2,750 to
$4,000. This would be about a 45% increase over current amounts, just
over the roughly 40% inflation since the amount was last adjusted. The
CPI calculator shows that $2,750 in August 2008 would be about
$3,854.15 today. Tier 2 registrants are proposed to have a slightly
higher percentage increase than Tier 1 registrants because Tier 2
registrants receive additional services and benefits, and because they
actually submit license applications or requests for authorization that
require review. Whereas Tier 1 registrants do not interact as often
with DDTC, and generally require less direct services, and may not
engage in as much exporting or temporarily importing of defense
articles or defense services.
The conditions for Tier 2, however, are proposed to be adjusted.
Whereas currently, this tier is for registrants who have submitted and
received a favorable determination on ten or fewer license applications
or requests for authorization, the Department now proposes that the
number of favorable determinations decreases from ten to five. This
change was based in part on an analysis of DDTC data over the last five
years, which found that the average Tier 2 registrant received three
favorable determinations on license applications or requests for
authorization. Consequently, the majority of registrants previously in
Tier 2 would remain in this tier under the newly proposed conditions.
However, those registrants who have received more than five favorable
determinations in the look-back period would become Tier 3 registrants
under this proposal.
Tier 3 registrants, in contrast to the other tiers, would see an
increase beyond the adjusted amount of inflation. Both the calculated
fee and the baseline for that fee would increase. The baseline would
rise from $2,750 to $4,000, and the additional fee multiplier for
favorable determinations, proposed to now be over five instead of over
ten, would rise from $250 to $1,100 for each. Thus, as an example, if
an exporter has applied for and obtained seven licenses or other
authorizations within the look-back period, this exporter would pay the
registration fee prescribed in Tier 3, which would be a baseline of
$4,000, plus $2,200 (because there were two favorable determinations
obtained above the baseline of five), for a total fee of $6,200.
The Department has concluded that Tier 3 registrants have benefited
the most from DDTC's improvements, specifically DECCS and customer
service improvements, they are best positioned to contribute from their
export-derived revenue to continue and improve DDTC's services.
Because these improvements would primarily benefit Tier 3
registrants, it is those registrants that will be asked to contribute
more.
DDTC currently has discounts available for exporters and temporary
importers of low-value items who fall under Tier 3. This low-value
discount formula is currently available on the DDTC website. Under this
proposed change, this discount would remain as currently structured and
would be referenced in a new paragraph (b) in Sec. 122.3, directing
the public to the DDTC website for the conditions and formula.
Similarly, registrants who fall under Tier 2 and Tier 3, but who are
wholly exempt from income taxation pursuant to 26 U.S.C. 501(c)(3) may
be eligible for a discount to the Tier 1 fee. The DDTC website has and
will continue to have information relevant to this non-profit discount
as well. The new paragraph (b) would include mention of the non-profit
discount alongside the Tier 3 low-value discount and direct the public
to the DDTC website for more information on both. Once on the DDTC
website at https://www.pmddtc.state.gov, relevant information can be
found by clicking on the ``Conduct Business'' link on the top menu bar,
and then by clicking ``Registration'' on the next page's left-hand
menu.
[[Page 31122]]
New Proposed Registration Fees
Accordingly, the Department proposes amendments to the three
registrant tiers as follows:
1. Tier 1: The first tier is a set fee of $3,000 per year. This
applies to new registrants. It also applies to those who are renewing
their registration and for whom the Department did not issue a
favorable determination on a license application or other request for
authorization, or who did not submit a license application or other
request for authorization, during the twelve-month period ending 90
days prior to the expiration of the current registration.
2. Tier 2: The second tier is a set fee of $4,000 for those who are
renewing their registration and have submitted license applications or
other requests for authorization and received five or fewer favorable
determinations during the twelve-month period ending 90 days prior to
the expiration of their current registration.
3. Tier 3: The third tier is a calculated fee for those who are
renewing their registration and have submitted license applications or
other requests for authorization and received more than five favorable
determinations during the twelve-month period ending 90 days prior to
the expiration of their current registration. For these registrants,
the fee calculation is $4,000 plus $1,110 times the total number of
favorable authorizations above five.
Registration fees for persons who engage in brokering activities
would remain tied to Tier 1, regardless of authorizations submitted or
determinations received. If a person has already registered with DDTC
as a manufacturer or exporter, and if that person is listed and
identified as a broker within their manufacturer or exporter
registration, then no additional fee is currently required to also
register as a broker. But if a broker registers separately (i.e., as a
``stand-alone broker''), then they are required to pay the Tier 1 fee,
as is the case for the current registration fee structure.
DDTC has also maintained a discount for registrants who would
otherwise fall in Tiers 2 or 3, but who are wholly exempt from income
taxation pursuant to 26 U.S.C. 501(c)(3). The discount is proposed to
still be available; however, guidance on how to apply for the discount
will remain on the DDTC website. Currently, and with no proposed
change, the qualifying registrant must attach proof of such status
(i.e., IRS certification form) for their fee to be reduced to the Tier
1 amount. Importantly, for this discount, the IRS certification must
apply to all entities/subsidiaries/affiliates listed in the
registration submission.
DDTC will be prepared to assist registrants with the proposed
change to registration fees. If adopted in a final rule, the DECCS
application will be updated to auto-calculate the revised fees once
they go into effect. The DDTC public website will also have up-to-date
information, and the Help Desk and the Response Team will be available
to field questions. As is the case now, approximately 90 days prior to
the expiration of a registration, DECCS will calculate the
registration's renewal fee and post it to the DECCS Registration
Dashboard. DDTC will also continue to send registration renewal
notification emails 90 days and 30 days prior to a registration
expiration date. And registrants will still be able to view a ``Renewal
Fee Details'' button on their Registration Dashboard, which will
display the total number of favorable determinations in the look-back
period used to calculate the registrant's upcoming tier and total
registration fee. Finally, as always, if a registrant feels the amount
calculated is incorrect, they may submit a written request to DDTC
explaining the basis for their request. Other frequently asked
questions (FAQs) about registration fees and the registration process
are available on the DDTC website, including by searching for
``registration fee'' and will be updated after any changes to the
registration fees occur.
Returning the Registration Fee Amounts to the ITAR
Prior to October 2013, registration fees were outlined within the
regulations themselves. Effective October 25, 2013 (78 FR 52680), the
amounts of the registration fees and the tier groupings were removed
from the ITAR and placed on the DDTC website. To ensure that the
registration fees amounts are easily available, the Department proposes
to return them to the text of the regulations in Sec. 122.3, entitled
``Registration fees.'' Similarly, with respect to registration fees for
stand-alone brokering registrations (i.e., brokers who are not
otherwise registered as a manufacturer or exporter, see Sec.
129.3(d)), the Department proposes to amend Sec. 129.8 to specify the
fee amount for stand-alone broker registrations by specific reference
to the Tier 1 amount prescribed in Sec. 122.3(a)(1). Registration fee
amounts and related guidance would still also remain available on the
DDTC website.
ITAR Reorganization
In addition to the registration-fee-specific proposals discussed
above, the Department takes this opportunity to propose additional
revisions in keeping with the Department's ITAR reorganization efforts
initiated by 87 FR 16396, Mar. 23, 2022. That rule restructured part
120 of the ITAR to better organize the definitions previously found in
that part and other locations throughout the ITAR and consolidated
provisions that provide background information or otherwise apply
throughout the regulations. In keeping with those aims, the Department
further proposes to remove those parts of Sec. 122.3 that are not
specific to fees, but are more generally related to registration (i.e.,
paragraphs (b) and (c) regarding frequency and lapse of registration,
respectively), and relocate them to Sec. 122.2, which more generally
describes registration. The changes proposed would not substantively
alter registration requirements, but rather would reword existing
provisions for clarity and relocate them from one adjoining section of
the ITAR to another. The Department proposes to make related, non-
substantive, changes to Sec. 122.1 through Sec. 122.3. The ITAR
Reorganization proposed changes are as follows:
In Sec. 122.1:
--Revising the section heading to better describe the content from
``Registration requirements'' to ``Registration: requirements,
exemptions, and purpose.''
--Adding a paragraph heading to paragraph (a) to read: ``Requirement to
register.''
In Sec. 122.2:
--Revising the section heading to better describe the content from
``Submission of registration statement.'' to ``Registration: submission
of registration statement, certification, frequency, renewal, and
lapse.''
--In paragraph (a), revising the introductory heading to read
``Submission of registration statement.'' and streamlining the
remaining text by breaking out of the introductory text, and placing
into level 2 paragraphs, the two required elements of the statement:
that it be signed by a U.S. person officer, and that it include
documentation of incorporation or authorization.
--Adding new paragraph (c) to provide greater clarity regarding
incomplete submissions, by removing and relocating text from the
general requirement in paragraph (a).
--Adding new paragraph (d) by relocating text from Sec. 122.3
regarding frequency of registration.
[[Page 31123]]
--Adding new paragraph (e) by relocating and revising text from Sec.
122.3 regarding renewal of registration.
--Adding new paragraph (f) by relocating and revising text from Sec.
122.3 regarding lapses in registration.
Because the Department proposes to remove all non-fee related text
from Sec. 122.3 by revising and relocating the text of current
paragraphs Sec. 122.3(b) and (c), it proposes to limit registration
fee related text to paragraph (a) of Sec. 122.3 and to revise
paragraph (b) to direct readers to the DDTC website for certain
discounts and for further guidance on the process of registration.
Regulatory Analysis and Notices
Administrative Procedure Act
The Department has historically determined that rulemakings
implementing the Arms Export Control Act or amending the ITAR involve a
military or foreign affairs function of the United States under 5
U.S.C. 553(a). However, due to Department's interest in seeking public
comment on this rule, the Department is soliciting comments during a
45-day comment period, to which it will respond in a final rule, should
the Department choose to finalize all or part of this proposal.
Regulatory Flexibility Act
Since this rule is exempt from the notice-and-comment rulemaking
provisions of 5 U.S.C. 553, it does not require analysis under the
Regulatory Flexibility Act.
Unfunded Mandates Reform Act of 1995
This rulemaking does not involve a mandate that will result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any year and it
will not significantly or uniquely affect small governments. Therefore,
no actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
Executive Orders 12372 and 13132
This rulemaking does not have sufficient federalism implications to
require consultations or warrant the preparation of a federalism
summary impact statement. The regulations implementing Executive Order
12372 regarding intergovernmental consultation on Federal programs and
activities do not apply to this rulemaking.
Executive Orders 12866, 14094, and 13563
Executive Orders 12866 (as amended by Executive Order 14094) and
13563 direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributed
impacts, and equity). Executive Order 13563 emphasizes the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. This rule has been
designated as a significant regulatory action by the Office of
Information and Regulatory Affairs under Executive Order 12866, as
amended.
In FY 2023, roughly 14,500 registrants contributed registration
fees to DDTC's FY23 collections amounting to $33.8 million. Based on
projections made from registrant data from recent years, the new
registration structure, which presumes roughly the same number of
registrants, is expected to bring in an overall total of roughly $67.2
million per year, which would be an overall increase of $33.4 million
per year. Although this is a 99% projected increase in collections
overall from current registration fees, the largest increase, on a per-
registrant basis, would fall on Tier 3 registrants. On average, Tier 3
registrants would see their individual fee amounts increase by over
250%. The Department believes this increase is justified for the
reasons discussed previously in the preamble, but specifically due to
the fact that more than fifteen years have passed since DDTC last
adjusted fees, and Tier 3 registrants derive greater benefits from
engaging in regulated activities while also consuming a
disproportionate amount of DDTC support services. Because we project
registrants in Tier 3 to account for over 22,000 of the roughly 26,000
applications expected to be favorably determined by DDTC, the
Department believes that this would be a more equitable distribution of
financial costs. Tier 1 and Tier 2 registrants, on the other hand, will
see a 33% and 45% increase, respectively, not far from the near 40%
inflation rate in the over fifteen years since the registration fees
were last adjusted. For FY 2025, DDTC's projected operational budget
will be nearly $60 million, and that amount is expected to increase
based on inflation and other increases in expenses. Setting a
registration fee structure that aims to offer a stable price for a
number of years is also expected to be a benefit to registrants, so
that they may better know what fees to expect for future years.
Additionally, the proposed registration fee structure benefits DDTC by
meeting its budget demands in a way that also reasonably accounts for
unknown variables such as changes in the number of registrants, or
potential exemptions that would not require specific license
applications or approvals and would therefore decrease the expected
collections from Tiers 2 and 3. It also allows for DDTC to address
unexpected contingencies as it did in 2020, when it temporarily lowered
registration fee amounts as a relief measure during the pandemic. DDTC
welcomes public comment on the impact of this proposed rule.
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 requirements of Executive Order 13175 do
not apply to this rulemaking.
Paperwork Reduction Act
This rulemaking does not impose or revise any information
collections subject to 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, Brokers, Exports, Technical assistance.
Amendatory Instructions
For the reasons discussed in the preamble and under the authority
of 22 U.S.C. 2778, the Department of State proposes to revise title 22,
chapter I, subchapter M, parts 122 and 129 to read as follows:
PART 122--REGISTRATION OF MANUFACTURERS AND EXPORTERS
0
1. The authority citation for part 122 continues to read as follows:
Authority: Sections 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778); 22 U.S.C. 2651a; E.O. 13637, 78 FR 16129.
[[Page 31124]]
0
2. Amend Sec. 122.1 by revising the section heading and adding a
heading to paragraph (a) to read as follows:
Sec. 122.1 Registration: requirements, exemptions, and purpose.
(a) Requirement to register. * * *
* * * * *
0
3. Revise Sec. 122.2 to read as follows:
Sec. 122.2 Registration: submission of registration statement,
certification, frequency, renewal, and lapse.
(a) Submission of registration statement. An intended registrant
must submit a Statement of Registration (Department of State form DS-
2032) to the Office of Defense Trade Controls Compliance by following
the electronic filing instructions available on the Directorate of
Defense Trade Controls website at www.pmddtc.state.gov. The Statement
of Registration may include subsidiaries and affiliates when more than
50 percent of the voting securities are owned by the registrant or the
subsidiaries and affiliates are otherwise controlled by the registrant
(see Sec. 120.66 of this subchapter). Registrants may not establish
new entities for the purpose of reducing registration fees. The
Statement of Registration must:
(1) Be signed by a U.S. person 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; and
(2) Include documentation that demonstrates the registrant is
incorporated or otherwise authorized to do business in the United
States.
(b) Statement of Registration Certification. The Statement of
Registration of the intended registrant shall include a certification
by an authorized senior officer of the following:
(1) Whether the intended registrant or its parent, subsidiary, or
other affiliate listed in the Statement of Registration, or any of its
chief executive officers, presidents, vice presidents, secretaries,
partners, members, other senior officers or officials (e.g.,
comptroller, treasurer, general counsel), or any member of the board of
directors of the intended registrant, or of any parent, subsidiary, or
other affiliate listed in the Statement of Registration:
(i) Has ever been indicted or otherwise charged (e.g., charged by
criminal information in lieu of indictment) for or has been convicted
of violating any U.S. criminal statutes enumerated in Sec. 120.6 of
this subchapter or violating a foreign criminal law on exportation of
defense articles where conviction of such law carries a minimum term of
imprisonment of greater than 1 year; or
(ii) Is ineligible to contract with, or to receive a license or
other approval to import defense articles or defense services from, or
to receive an export license or other approval from, any agency of the
U.S. Government; and
(2) Whether the intended registrant is foreign owned or foreign
controlled (see Sec. 120.65 of this subchapter). If the intended
registrant is foreign owned or foreign controlled, the certification
shall include an explanation of such ownership or control, including
the identities of the foreign person or persons who ultimately own or
control the registrant. This requirement applies to a registrant who is
a U.S. person and is owned or controlled by a foreign person. It also
applies to a registrant who is a foreign person and is owned or
controlled by a foreign person from the same country or a foreign
person from another country.
(c) Incomplete registration submission. 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.
(d) Frequency. A person who is required to register and pay a
registration fee must renew the registration and pay a registration fee
on an annual basis after initial registration.
(e) Renewal of registration. A registrant must submit its request
for registration renewal at least 30 days but no earlier than 60 days
prior to the expiration date. 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.
(f) Lapse in registration. A registrant who fails to renew a
registration and, after an intervening period, seeks to register again
must pay registration fees for any part of such intervening period
during which the registrant engaged in the business of manufacturing or
exporting defense articles or defense services.
0
4. Revise Sec. 122.3 to read as follows:
Sec. 122.3 Registration fees.
(a) Registration fee. A person who is required to register must
submit payment of a fee following the payment guidelines available on
the Directorate of Defense Trade Controls website at
www.pmddtc.state.gov. The fee to be paid shall be one of the following:
(1) Tier 1: The first tier is a set fee of $3,000 per year. This
applies to new registrants. It also applies to those who are renewing
their registrations and for whom the Department did not issue a
favorable determination on a license application or other request for
authorization during the twelve-month period ending 90 days prior to
the expiration of the current registration.
(2) Tier 2: The second tier is a set fee of $4,000 for registrants
renewing their registrations who have submitted license applications or
other requests for authorization and received five or fewer favorable
determination during the twelve-month period ending 90 days prior to
the expiration of their current registration.
(3) Tier 3: The third tier is a calculated fee for registrants who
have submitted license applications or other requests for authorization
and received more than five favorable determinations during the twelve-
month period ending 90 days prior to the expiration of their current
registration. For these registrants, the fee calculation is $4,000 plus
$1,110 times the total number of favorable authorizations over five.
(b) Website, discounts, and further guidance. Information on
certain discounts for registrants who are wholly exempt from income tax
pursuant to 26 U.S.C. 501(c)(3), and for Tier 3 registrants who are
low-value exporters or temporary importers are available on the
Directorate of Defense Trade Controls website at www.pmddtc.state.gov
by selecting ``Conduct Business'' on the top heading bar, then
selecting ``Registration'' from the left menu bar, and finally
selecting ``Payment of Registration'' from the subsequent left menu
bar. Other guidance and information relevant to the payment of
registration fees is also available on the website.
PART 129--REGISTRATION AND LICENSING OF BROKERS
0
5. The authority citation for part 129 continues to read as follows:
Authority: Section 38, Pub. L. 104-164, 110 Stat. 1437, (22
U.S.C. 2778); E.O. 13637, 78 FR 16129.
Sec. 129.8 [Amended]
0
6. Amend Sec. 129.8(b)(1), in the first sentence, by removing the
phrase ``and a fee following the fee guidelines available on the
Directorate of Defense Trade Controls website at
www.pmddtc.state.gov.'' and adding in its place ``and the Tier 1 fee
specified in Sec. 122.3(a)(1) of this subchapter, regardless of how
many favorable determinations the person received during the twelve-
month period ending 90 days prior to the expiration of their current
registration.''
[[Page 31125]]
The Under Secretary, Arms Control and International Security,
Bonnie D. Jenkins, having reviewed and approved this document, has
delegated the authority to electronically sign this document to Jessica
Lewis, Assistant Secretary, Bureau of Political-Military Affairs, for
purposes of publication in the Federal Register.
Jessica A. Lewis,
Assistant Secretary, Bureau of Political-Military Affairs, Department
of State.
[FR Doc. 2024-08627 Filed 4-23-24; 8:45 am]
BILLING CODE 4710-25-P