[Federal Register Volume 89, Number 145 (Monday, July 29, 2024)]
[Proposed Rules]
[Pages 60980-60985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16501]



[[Page 60979]]

Vol. 89

Monday,

No. 145

July 29, 2024

Part II





Department of State





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Department of Commerce





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 Bureau of Industry and Security





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15 CFR Parts 730, 732, 734, et al.

22 CFR Parts 120 and 121





International Traffic in Arms Regulations: Revisions to Definition and 
Controls Related to Defense Services; End-Use and End-User Based Export 
Controls, Including U.S. Persons Activities Controls: Military and 
Intelligence End Uses and End Users; and Export Administration 
Regulations: Crime Controls and Expansion/Update of U.S. Persons 
Controls; Proposed Rules

  Federal Register / Vol. 89 , No. 145 / Monday, July 29, 2024 / 
Proposed Rules  

[[Page 60980]]


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DEPARTMENT OF STATE

22 CFR Parts 120 and 121

[Public Notice: 12259]
RIN 1400-AF29


International Traffic in Arms Regulations: Revisions to 
Definition and Controls Related to Defense Services

AGENCY: Department of State.

ACTION: Proposed rule.

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SUMMARY: The Department of State proposes to revise the definition of 
defense service and the scope of related controls in the International 
Traffic in Arms Regulations and seeks comment on the proposed revision.

DATES: The Department of State will accept comments on this proposed 
rule through September 27, 2024.

ADDRESSES: Interested parties may submit comments by one of the 
following methods:
     Email: [email protected] with the subject line: 
``Regulatory Change: Defense Service Definition''.
     Internet: At www.regulations.gov, search for this notice, 
by docket number DOS-2024-0023.
    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. In addition to comments directly responsive to this proposed 
rule, the Department of State specifically requests comments regarding 
the scope of this rule and the complementary proposed rule from the 
Bureau of Industry and Security, Department of Commerce published today 
in the Federal Register (RIN 0694-AJ43), with specific attention to any 
actual or perceived overlap or ambiguity regarding proposed controls as 
a result of the two agencies' regulations. A summary of this proposed 
rule may be found at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Sarah Heidema, Director, Office of 
Defense Trade Controls Policy, Department of State, telephone (202) 
663-1282; email [email protected]. ATTN: Revisions to 
Definition and Controls Related to Defense Services.

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 120-130). The regulations, 
codified as subchapter M of chapter I, title 22 of the Code of Federal 
Regulations (``the subchapter'') implement certain authorities of the 
Arms Export Control Act (AECA) (22 U.S.C. 2751 et seq.) delegated to 
the Secretary of State pursuant to Executive Order 13637. In accordance 
with 5 U.S.C. 553(b)(4), a summary of this rule may be found at 
www.regulations.gov.
    The Department of State (``Department'') undertook a review led by 
DDTC of the definition of defense service in the ITAR at Sec.  120.32. 
This review focused on identifying activities of U.S. persons that (1) 
provide a critical military or intelligence advantage such that they 
warrant control under the ITAR and are activities that are not 
currently subject to the ITAR; or (2) are controlled under the ITAR, 
but the current control language would benefit from additional clarity. 
Following the review, the Department proposes a revised definition of 
defense service to better describe existing controls and the scope of 
activities it proposes to regulate through the revised definition and 
also proposes certain additions to the United States Munitions List 
(USML) at ITAR Sec.  121.1.
    While this review was underway, in December 2022, the Bureau of 
Industry and Security, Department of Commerce (BIS) received expanded 
statutory authority to control certain activities of U.S. persons 
pursuant to an amendment to section 4812 of the Export Control Reform 
Act of 2018 (ECRA), 50 U.S.C. 4801-4852, made as part of the National 
Defense Authorization Act for Fiscal Year 2023 (Pub. L. 117-263) (NDAA 
for FY 2023).
    Originally authorizing the control of ``activities of [U.S.] 
persons, wherever located, relating to specific . . . foreign military 
intelligence services,'' that provision in 50 U.S.C. 4812(a)(2) was 
amended and broadened in December 2022 to control ``. . . foreign 
military, security, and intelligence services.'' As a result, and in 
coordination with other federal departments and agencies and offices, 
the Departments of State and Commerce are each issuing separate but 
complementary proposed rules in this edition of the Federal Register: 
this Department of State proposed rule to amend the definition of 
defense service and the USML, and a separate Commerce proposed rule to 
implement its new ECRA authority by amending the U.S. person controls 
set forth in the Export Administration Regulations, 15 CFR parts 730-
774, and making related changes to the EAR's Part 744: Control Policy: 
End-User and End-Use Based. Additionally, BIS's rule clarifies the 
scope of BIS's jurisdiction over certain U.S. person activities. By 
publishing both rules simultaneously and seeking public comment on the 
proposed changes, DDTC and BIS hope to ensure awareness as to the 
distinct areas of coverage of U.S. person activities under their 
respective legal and regulatory authorities.

Background

    In considering what to designate as a defense article or defense 
service on the USML, the State Department primarily focuses on those 
articles or services that provide a critical military or intelligence 
advantage such that they warrant control under the ITAR (see Sec.  
120.3(b)).
    During its recent review of defense services, DDTC identified 
certain (1) military, (2) cyber, and (3) intelligence services, 
furnished to foreign persons that are not currently controlled or which 
are controlled but for which the applicable control language could 
benefit from additional clarity. The Department now proposes a new 
definition of defense service, coupled with a detailed articulation of 
currently and newly controlled services on the USML, along with 
language that would provide the basis for the regulation of certain 
proposed new services as defense services. In doing so, the Department 
intends to provide greater clarity regarding the activities currently 
controlled and to specifically describe those activities that are 
proposed for control by this rulemaking. Included in this proposal is 
specific language regarding the furnishing of intelligence-related 
assistance that is not directly related to a defense article to certain 
types of foreign persons (i.e., a foreign unit, force, or government) 
or their proxies or agents. The Department assessed that these 
activities warrant and require control equivalent to those of 
intelligence-related defense articles since such assistance (including 
training or consulting) similarly furnishes a critical military or 
intelligence advantage to the foreign person. Review of such activity 
by the Department for consistency with U.S. foreign policy and national 
security interests is necessary prior to any furnishing of such 
services.

[[Page 60981]]

Further, the inclusion of the activities in this proposed rule is 
reflective of the stated aims of AECA Sec.  38(a)(2) (22 U.S.C. 
2778(a)(2)) and principles in the United States Conventional Arms 
Transfer Policy.

Proposed Design and Structure of Amendments

    The proposed amendments to the definition of defense service at 
Sec.  120.32, and additions to the USML, include several key changes. 
These changes affect the design and structure of the relevant 
provisions of the ITAR, which, in turn, affect how the USML describes 
and controls activities falling under the definition of defense 
service.
    First, a proposed revision would amend Sec.  120.32(a)(1) by 
revising the list of regulated activities currently found in (a)(1) to 
include ``assistance, including training or consulting, to foreign 
persons in the development (including, e.g., design), production 
(including, e.g., engineering and manufacture), assembly, testing, 
repair, maintenance, modification, disabling, degradation, destruction, 
operation, processing, use, or demilitarization of a defense article.'' 
This revised list moves several activities currently individually 
specified in (a)(1) (i.e., design, engineering, and manufacture) into 
parentheticals following defined terms in which they are included. 
Those activities were folded into the revised definitions of 
``production'' and ``development'' at Sec.  120.43 by a recent ITAR 
rule (87 FR 16396, Mar. 23, 2022).
    In addition, the revised list of activities includes two new 
references, ``disabling'' and ``degradation.'' The Department proposes 
these terms to make explicit that the act of harming a military 
capability through the disabling or degradation of defense articles via 
any method remains controlled. In assessing non-traditional methods of 
disrupting a nation's military capabilities during its review, the 
Department noted that, while the current definition of defense service 
includes such activities, advances in technology that facilitate such 
activities merit explicit reference. The proposed revision clarifies 
that cyber services, or any other activities, that disable and degrade 
defense articles, but fall short of total destruction or 
demilitarization, are included within the definition of defense service 
at Sec.  120.32(a)(1).
    The Department also proposes a clarifying addition to the 
introductory text of paragraph (a)(1) in order to better describe the 
scope of activities controlled by the definition. In describing the 
assistance covered by the paragraph, the Department proposes to replace 
the parenthetical ``(including training)'' with a new clause clarifying 
that assistance includes training or consulting. In so doing, the 
Department does not intend to add a new level of control to its 
existing control of defense services, but rather intends to clarify 
that it does not treat training to mean only direct instructional 
activity. The proposed addition would reaffirm that providing the tools 
or means of furnishing training to a foreign person so that the foreign 
person may conduct training in lieu of the regulated person is included 
in the control. Such consulting is not limited to the furnishing of a 
completed product, but includes assisting in the development of such 
training.
    Second, the proposed amendments would remove current Sec.  
120.32(a)(2) as redundant since the furnishing of technical data to a 
foreign person is already a controlled event described in Sec. Sec.  
120.50 through 120.52. Further, the proposed amendments would remove 
current paragraph (a)(3). In their stead, these two provisions are 
replaced by a proposed new paragraph (a)(2) that directs persons to the 
USML where descriptions of services to be controlled under ITAR are 
provided. The Department includes a proposed note to Sec.  120.32 
directing the regulated community to the new location.
    Specifically, the proposed paragraph (a)(2) directs persons to two 
new proposed USML entries in Category IX that would control defense 
services related to intelligence and military assistance. The proposed 
entries differ from the type of defense services described in paragraph 
(a)(1), which directly relate to defense articles and already have 
corresponding entries in each USML category (e.g., Category I(i), 
Category II(k), etc.).
    The two new entries are proposed for a currently reserved paragraph 
(s) of Category IX, and the category is proposed to be renamed 
``Military Training Equipment, Intelligence Defense Services, and 
Military Defense Services'' to more accurately describe the controls in 
the category. The Department proposes to reserve paragraph (s)(1) for 
use as a future entry and to place the new controls in proposed 
paragraphs (s)(2) and (3) within that category. For purposes of this 
preamble, the intelligence assistance controlled by paragraph (s)(2) is 
referred to as ``intelligence assistance'' and the military and 
paramilitary assistance controlled by paragraph (s)(3) are referred to 
by the singular ``military assistance.''
    The introductory text of proposed new USML Category IX(s)(2) 
describes defense services relating to intelligence assistance that do 
not necessarily involve defense articles. Following the introductory 
control text of proposed USML Category IX(s)(2), subsequent paragraphs 
would provide specified carve-outs to the general description of 
activities described in paragraph (s)(2). Similar carve-out provisions 
are also proposed to the military assistance control in USML Category 
IX(s)(3). The Department determined that rather than relying solely on 
the definition of defense service, it would be better to direct users 
to the USML to conduct their classification analysis since this 
approach is similar to how users currently conduct defense article 
classification analysis, and it allows for a more detailed articulation 
of certain specific activities meriting ITAR control. Moreover, AECA 
Sec.  38(a)(1) (22 U.S.C. 2778(a)(1)) provides that defense services, 
like defense articles, are to be designated on the USML. By adding 
specific entries in addition to the existing USML paragraphs 
controlling defense services, including those furnished in connection 
with a defense article, the Department brings additional clarity to the 
regulations. Further to that effort, the Department proposes to amend 
Sec.  120.11, which describes the order of review, to include a 
proposed paragraph (d) specific to defense services and to redesignate 
current paragraph (d) as paragraph (e).
    As to the objective of the proposed additions to the USML, the 
Department determined revised and clarified controls are warranted and 
necessary to address the risks to U.S. national security and foreign 
policy interests posed by U.S. persons furnishing assistance in 
intelligence activities. In particular, the Department determined that 
certain intelligence activities that do not involve defense articles 
provide a critical military or intelligence advantage such that they 
warrant and require revised controls under the ITAR.
    The proposed USML Category IX(s)(3) describes defense services 
relating to military assistance that do not necessarily involve defense 
articles and provides specified carve-outs to the controls. Persons 
furnishing certain military assistance to foreign persons can cause 
local and regional instability in a manner equal to or greater than the 
supply of a tangible article or weapon to a foreign person end-user. 
The proposed inclusion of certain specific forms of military assistance 
as a defense service within the USML is intended to provide U.S. 
persons with clear notice that such activities require authorization 
as, depending on the circumstances, the activities may be counter to 
U.S.

[[Page 60982]]

national security or foreign policy interests, the stated aims of AECA 
Sec.  38(a)(2) (22 U.S.C. 2778(a)(2)), Conventional Arms Transfer 
Policy objectives, or shared interests with our allies and partners. To 
ensure that the military assistance controls are consistent with ITAR 
Sec.  120.3(b) and only control those activities that provide a 
critical military or intelligence advantage, the proposed controls 
described in Category IX(s)(3) would regulate a higher level of support 
than front-line combatant activities. The Department notes, however, 
that although not intended for control in proposed Category IX(s)(3), 
such activities may be otherwise regulated by other provisions in the 
ITAR, or by regulations administered by other agencies of the U.S. 
Government. In conjunction with the addition of this proposed USML 
entry, the Department is proposing to remove the existing USML entry 
for military training at current Category IX(e)(3). In so doing, the 
Department does not intend to narrow the scope of what is controlled by 
that existing military training entry, but rather aims to bring 
additional clarity to that control as part of new text proposed as 
Category IX(s)(3).
    The proposed amendments utilize a method of control sometimes known 
as ``catch and release,'' which functions to initially describe a broad 
range of activities as a ``catch,'' and then specifies certain limited 
carve-outs as a ``release'' from the ``catch.'' As applied here, the 
catch-and-release design establishes that furnishing certain forms of 
listed assistance to a foreign person is controlled. Specifically, 
proposed USML Category IX, paragraphs (s)(2) and (s)(3)(i) through 
(iii) catch certain activities while paragraphs (s)(2)(i) through (vii) 
and (s)(3)(iv)(A) through (C) release, or carve out, specific 
activities that were initially caught. Only assistance that is both 
``caught'' and not ``released'' by the respective paragraphs is 
controlled under paragraphs (s)(2) or (s)(3)(i) through (iii). Included 
in the releases for both intelligence assistance (paragraph (s)(2)(ii)) 
and military assistance (paragraph (s)(3)(iv)(B)) are activities 
performed by U.S. persons who have been drafted into the regular 
military forces of a foreign nation. The Department proposes this 
inclusion in addition to the existing exclusion at Sec.  124.2(b) from 
the current definition of defense service so that persons reviewing the 
USML for controlled activities fully understand which activities are 
controlled. The exclusion at Sec.  124.2(b), which has been in the ITAR 
since 1984 (see 49 FR 47682, Dec. 6, 1984), provides that: ``[s]ervices 
performed as a member of the regular military forces of a foreign 
nation by U.S. persons who have been drafted into such forces are not 
deemed to be defense services for purposes of Sec.  120.32 of this 
subchapter.'' The Department proposes to include similar provisions 
within the new paragraph (s) in USML Category IX to preclude any 
possible confusion by the regulated community, including both persons 
long aware of the existing Sec.  124.2(b) and persons new to the 
regulations who may be unfamiliar with the current exclusion, as to 
whether the Department intends to regulate the activities of draftees. 
The Department further notes Sec.  124.2(b) applies to the entirety of 
Sec.  120.32, whereas the defense services described in Category 
IX(s)(2) and (3) and the specific carve-outs to them, are related to 
proposed Sec.  120.32(a)(2). By including the carve-outs from the 
proposed USML paragraphs and a ``see'' parenthetical directing users to 
Sec.  124.2(b), the Department endeavors to ensure awareness of the 
exclusion in light of the proposed new control.

Proposed USML Amendments

    Proposed USML Category IX(s)(3) describes defense services relating 
to military assistance and provides specified carve-outs. Specifically, 
proposed paragraph (s)(3)(i) controls persons furnishing assistance 
that creates, supports, or improves the organization or formation of 
foreign military or paramilitary forces. This text is included to cover 
assistance in the development and organization of foreign military 
services (e.g., armies, navies, air forces, etc.) at any stage. 
Proposed paragraph (s)(3)(ii) controls persons furnishing assistance 
that creates, supports, or improves military or paramilitary operations 
by planning, leading, or evaluating all aspects of such operations, 
including, e.g., logistical support. In contrast to (s)(3)(i), this 
text is included to cover assistance being provided in the conduct and 
analysis of military operations by the foreign military services, 
whether in war or peace. The Department notes that this rule proposes 
to remove the text of current Sec.  120.32(a)(3) regarding military 
training, along with the current corresponding reference to military 
training in Category IX(e)(3). The Department believes that the 
essential elements of Sec.  120.32(a)(3) would be better situated and 
described in proposed Category IX(s)(3)(iii). In addition, removal 
furthers the Department's aim to better align the definition of defense 
service at Sec.  120.32 with the definition of defense article at Sec.  
120.31. In changing nomenclature from regular or irregular units and 
forces to the capabilities of a military or paramilitary, the 
Department aims to provide what it believes are more generally 
understood terms. ``Regular'' and ``irregular'' forces are terms that 
have been used in the context of international humanitarian law. But 
illicit actors or unassuming persons may be put on even clearer notice 
that providing training to create, support, or improve the military or 
paramilitary capabilities of any kind of unit or force, governmental or 
not, is a defense service requiring authorization. In this way the 
focus is on the nature and type of training or advice provided 
(military or paramilitary capabilities) more than on the recipients, 
which are now more broadly defined as expressly including proxies or 
agents of a foreign government, foreign unit, or foreign force. The 
examples of methods of providing military training now contained in 
that part of Sec.  120.32(a)(3) beginning with ``correspondence 
courses'' are non-exhaustive examples of instruction. The Department 
believes that those example methods and any other methods of training 
need not be listed and does not retain that text in the proposed 
paragraph (s)(3)(iii), even though they would still be controlled as 
either formal or informal instruction, advice, or other forms of 
training.
    Proposed USML Category IX(s)(2) describes furnishing intelligence 
assistance for a foreign government, unit, or force, or their proxy or 
agent, and training a foreign government, unit, or force, or their 
proxy or agent, to furnish such services, while providing specified 
carve-outs to the controls. The creation of a separate entry in 
proposed paragraph (s)(2) separates the control text governing 
intelligence assistance from the control text describing military 
assistance. It is intended to provide clearer notice to the regulated 
community, and in particular to U.S. persons with relevant experience, 
that the ITAR regulates services related to intelligence activities, 
regardless of nexus to a defense article. The text of proposed 
paragraph (s)(2) for intelligence assistance uses the same descriptors 
found in proposed paragraph (s)(3) for military assistance, but also 
includes ``providing analysis for'' and ``participating in.'' The 
phrase ``providing analysis for'' is included since conducting an 
intelligence analysis can provide a critical advantage even without 
involvement in intelligence collection or other intelligence 
operations. ``Participating

[[Page 60983]]

in'' is included to make clear persons hired and assisting in an 
intelligence operation on behalf of a designated foreign government, 
unit, or force, or their proxy or agent, are controlled activities.
    Second, including ``training or consulting'' in the text of 
proposed paragraph (s)(2) allows the Department to specifically and 
explicitly describe on the USML the conduct of U.S. persons (or foreign 
persons in the United States) who furnish any described defense service 
to enable a foreign government, unit, or force, or their proxy or 
agent, to conduct intelligence activities themselves. The Department 
assesses regulating assistance on tactics, techniques, procedures, and 
other types of training that enables the intelligence activities a 
foreign government, unit, or force, or their proxy or agent, is 
consistent with the aims and authority of the ITAR and the AECA. Again, 
the Department notes this text would regulate assistance to any kind of 
foreign unit or foreign force, regardless of government affiliation, as 
well as to their proxies or agents.
    The listed assistance activities identified in proposed paragraph 
(s)(2) are caveated by the inclusion of ``for compensation,'' thereby 
limiting the control to those services that are provided commercially 
or in a professional capacity. Compensation in this context need not be 
limited to financial compensation, but would require some measurable 
response from the recipient in exchange for the service. This could 
include a wide of range compensation for example, from gifts and or 
lodging, to goods or services, political favors, legislative or legal 
relief, etc. Activities of the U.S. Government are generally not 
included within the furnishing of assistance for compensation. This 
text is included to ensure the ITAR does not control non-critical 
intelligence assistance provided on a volunteer basis (and not for hire 
or compensation). Further, it is not intended to control assistance of 
a type that ordinarily occurs in today's technically advanced society. 
For example, the Department does not intend for the activities of 
hobbyists or casually interested persons forwarding or commenting on 
open-source, publicly available satellite imagery relevant to the 
invasion of Ukraine, to be considered the furnishing of a defense 
service.
    While the ``for compensation'' language is proposed as an objective 
criterion to provide clarity and to help ensure the ITAR does not 
unintentionally control non-critical intelligence assistance provided 
on a volunteer basis (and not for compensation), suggesting a less-
concerning quality of assistance, the Department would consider 
additional alternative controls. Any such alternative would need to 
provide notice to the public of clear, objective standards to control 
the kind of intelligence services proposed as Category IX (s)(2), 
without inadvertently capturing more activities than are necessary.
    Therefore, the Department seeks input on the clarity and scope of 
the ``for compensation'' criterion. Concurrently, the Department also 
seeks input as to additional control criteria in paragraph (s)(2) that 
could provide sufficient notice, as well as objective standards, to 
control assistance that clearly provides a critical intelligence 
advantage, but which does not turn on compensation. This could include, 
as but one example, intelligence assistance that was asked-for or 
otherwise solicited by a foreign person, directly or indirectly. The 
Department also welcomes input on the six carve-outs or exclusions as 
to their clarity, and whether other exclusions could serve to clearly 
and objectively narrow the scope of the proposed or any additional 
controls.

Carve-Outs to Intelligence Assistance

    Proposed paragraphs (s)(2)(i) through (vi) would carve out six 
specific sets of activities from the proposed controls on intelligence 
assistance described in the introductory text to proposed paragraph 
(s)(2). Three of the carve-outs to intelligence assistance activities, 
those in proposed paragraphs (s)(2)(i) through (iii), are identical to 
the three military assistance activities carve-outs from proposed 
paragraphs (s)(3)(iv)(A) through (C) and are further discussed in the 
preamble discussion of those paragraphs below.
    The fourth carve-out related to intelligence assistance is set 
forth in proposed paragraph (s)(2)(iv). Here, the Department proposes 
to carve out information technology services that are ordinarily 
provided to allow any business entity to operate internally as a modern 
business environment, without a sector-specific specialization. These 
would include, for example, services related to IT infrastructure, 
composed of the hardware (including switches, routers, and servers) and 
software (including operating systems and basic network security 
applications) that enable an organization to run specialized software 
applications. IT infrastructure is not necessarily collocated with the 
organization, as it may include cloud infrastructure such as remote 
data centers, edge computing, and various ``as a service'' (SaaS) 
models.
    The fifth carve-out, proposed in paragraph (s)(2)(v), makes clear 
that the ITAR does not interfere with an otherwise lawful activity of a 
U.S. local or federal law enforcement or intelligence agency. This 
carve-out is similar to one found in 18 U.S.C. 1030(f).
    The sixth carve-out, proposed in paragraph (s)(2)(vi), focuses the 
expanded defense service controls in paragraph (s)(2), and intends to 
avoid imposing a duplicative export licensing requirement for the 
activities described, since they are already regulated or proposed for 
regulation under the ITAR or EAR to the destinations of concern.\1\ The 
Department further notes that, similar to the defense service 
definition at Sec.  120.32(a)(1), the mere act of exporting, 
reexporting, or transferring (in-country) a commodity, software, 
technical data, or EAR technology does not constitute a defense service 
in the context of (s)(2). For items subject to the EAR, the Department 
assesses that the repair or maintenance of that commodity or software 
(when isolated from a defense article) should similarly be subject to 
the EAR, even when caught in (s)(2), since an EAR authorization could 
be used to secure a replacement in lieu of performing the repair or 
maintenance. In contrast, the repair or maintenance of commodities or 
software subject to the ITAR is already regulated via ITAR Sec.  
120.32(a)(1), including when repairing an EAR commodity or software 
incorporated into a defense article.
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    \1\ While the ITAR and EAR generally use similar terminology, 
there are certain exceptions. For example: where the ITAR speaks of 
exports, reexports, and retransfers (Sec. Sec.  120.50 through 
120.52), the EAR uses export, reexport, and transfer (in-country) 
(Sec. Sec.  734.13, 734.14, and 734.16); the ITAR uses ``articles,'' 
and the EAR uses ``items,'' to describe commodities and software. 
EAR terms are used here when used in specific relation to those 
regulations and not the ITAR.
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Carve-Outs to Military Assistance

    With respect to proposed controls over military assistance in 
proposed paragraphs (s)(3)(i) through (iii), proposed paragraph 
(s)(3)(iv) provides three specific carve-outs. The activities carved 
out by (s)(3)(iv)(A) are similar in nature to the brokering activity 
carve-outs already found in part 129. The activities to be carved out 
by proposed paragraph (s)(3)(iv)(B) make certain that the activities of 
U.S. persons drafted into the regular military forces of a foreign 
nation are not controlled by this section. This language is consistent 
with the text of the existing language at ITAR Sec.  124.2(b). Finally, 
proposed paragraph

[[Page 60984]]

(s)(3)(iv)(C) carves out training and advice entirely composed of 
general scientific, mathematical, or engineering principles commonly 
taught in schools, colleges, and universities.

Regulatory Analysis and Notices

Administrative Procedure Act

    This rulemaking involves a military or foreign affairs function of 
the United States under 5 U.S.C. 553(a). Nevertheless, and without 
prejudice to this determination, the Department has elected to seek 
public comment on this proposed rule.

Regulatory Flexibility Act

    Since this rule is exempt from the notice-and-comment provisions of 
5 U.S.C. 553(b), 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 are deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

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 amendment 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, 13563, and 14094

    Executive Order 12866, as amended by Executive Orders 13563 and 
14094, directs 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). Although this rule may impose additional 
regulatory requirements or obligations, the Department believes that 
costs associated with this rule will be minimal because, to its 
knowledge, the types of new activities proposed to be regulated are 
usually undertaken in conjunction with other services involving a 
defense article that already require a license or other approval. Thus, 
the Department assesses the incremental cost of compliance to be 
minimal for most exporters. Moreover, based on confidential submissions 
to DDTC, the Department believes that when such activities are 
undertaken, typically only a limited number of entities would aim to 
provide such services and seek licenses or other approvals for them. 
Therefore, the Department expects a low number of license applications 
from only a small number of entities would result if these controls 
were to be promulgated in a final rule. Should commenters believe they 
may be subject to new controls on activities they already provide or 
plan to provide, the Department welcomes that specific feedback to 
better understand the costs and benefits of the proposed controls. The 
proposed rule may also provide other benefits in its clarification of 
several activities that are currently controlled and consequently may 
reduce regulatory uncertainty. This too is based on confidential 
submissions to DDTC via commodity jurisdiction requests, advisory 
opinions, and voluntary disclosures. The proposed rule is also expected 
to strengthen the foreign policy and national security of the United 
States as the rule would clarify both the currently regulated and newly 
identified activities that provide a critical military or intelligence 
advantage, providing notice to the regulated community of the 
Department's oversight of these services. Additionally, when 
authorization is sought for these services, the information provided on 
the purpose and kind of such services, including which foreign persons 
who would receive the services, may assist the Department in better 
assessing the effects of these activities on the complex considerations 
of our foreign affairs. This rule has been designated a ``significant 
regulatory action'' by the Office and Information and Regulatory 
Affairs under Executive Order 12866.

Executive Order 12988

    The Department of State 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 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 rule does not impose or revise any information collections 
subject to 44 U.S.C. chapter 35.

List of Subjects in 22 CFR Parts 120 and 121

    Arms and munitions, Classified information, Exports.

    Accordingly, for the reasons set forth above and under the 
authority of 22 U.S.C. 2778, the Department of State proposes to amend 
title 22, chapter I, subchapter M, parts 120 and 121 as follows:

PART 120--PURPOSE AND DEFINITIONS

0
1. The authority citation for part 120 continues to read as follows:

    Authority:  22 U.S.C. 2651a, 2752, 2753, 2776, 2778, 2779, 
2779a, 2785, 2794, 2797; E.O. 13637, 78 FR 16129, 3 CFR, 2013 Comp., 
p. 223.

0
2. Amend Sec.  120.11 by redesignating paragraph (d) as paragraph (e) 
and add new paragraph (d) to read:


Sec.  120.11  Order of review.

* * * * *
    (d) Defense service. Defense services described in Sec.  
120.32(a)(1) are controlled under the relevant paragraph of each USML 
category that includes defense services ``directly related'' or 
``relating'' to defense articles as described therein. For defense 
services described in Sec.  120.32(a)(2) that are not controlled in the 
defense article-specific defense services paragraphs, see USML Category 
IX(s)(2) and (3) in Sec.  121.1 of this subchapter.
0
3. Section 120.32 is revised to read as follows:


Sec.  120.32  Defense service.

    (a) Defense service means:
    (1) The furnishing of assistance, including training or consulting, 
to foreign persons in the development (including, e.g., design), 
production (including, e.g., engineering and manufacture), assembly, 
testing, repair, maintenance, modification, disabling, degradation, 
destruction, operation, processing, use, or demilitarization of a 
defense article; or

[[Page 60985]]

    (2) The furnishing of assistance, including training or consulting, 
to foreign persons, regardless of whether a defense article is 
involved, as described in USML Category IX(s)(2) or (3) in Sec.  121.1 
of this subchapter.

    Note to paragraph (a):  For military training previously 
described in this paragraph, see paragraph (a)(1) and USML Category 
IX(s)(2) and (3).

    (b) [Reserved]

PART 121--THE UNITED STATES MUNITIONS LIST

0
4. The authority citation for part 121 continues to read as follows:

    Authority:  22 U.S.C. 2752, 2778, 2797; 22 U.S.C. 2651a; Sec. 
1514, Pub. L. 105-261, 112 Stat. 2175; E.O. 13637, 78 FR 16129, 3 
CFR, 2013 Comp., p. 223.

0
5. Amend Sec.  121.1, by revising the heading to Category IX, revising 
paragraph (e), and adding new paragraph (s) to read as follows:


Sec.  121.1  The United States Munitions List.

* * * * *

Category IX--Military Training Equipment, Intelligence Defense 
Services, and Military Defense Services

* * * * *
    (e) Technical data (see Sec.  120.33 of this subchapter) and 
defense services (see Sec.  120.32 of this subchapter):
    (1) Directly related to the defense articles enumerated in 
paragraphs (a) and (b) of this category; or
    (2) Directly related to the software and associated databases 
enumerated in paragraph (b)(4) of this category even if no defense 
articles are used or transferred.
* * * * *
    (s) Defense Services, as follows:
    (1) [Reserved]
    (2) Assistance, including training or consulting, to a foreign 
government, unit, or force, or their proxy or agent, that creates, 
supports, or improves intelligence activities, including through 
planning, conducting, leading, providing analysis for, participating 
in, evaluating, or otherwise consulting on such activities, for 
compensation, except for the following types of assistance:
    (i) Furnishing of medical, translation, financial, insurance, 
legal, scheduling, or administrative services, or acting as a common 
carrier;
    (ii) Participation as a member of a regular military force of a 
foreign nation by a U.S. person who has been drafted into such a force 
(see also Sec.  124.2(b) of this subchapter);
    (iii) Training and advice that is entirely composed of general 
scientific, mathematical, or engineering principles commonly taught in 
schools, colleges, and universities;
    (iv) Information technology services that support ordinary business 
activities not specific to a particular business sector;
    (v) Any lawfully authorized investigative, protective, or 
intelligence activity of a law enforcement or intelligence agency of 
the United States or of a territory, possession, State, or District of 
the United States, including political subdivisions thereof; or
    (vi) Maintenance or repair of a commodity or software.
    (3) Assistance, including training or consulting, to a foreign 
government, unit, or force, or their proxy or agent, that creates, 
supports, or improves the following, other than as specified in 
paragraph (s)(3)(iv) of this category:
    (i) The organization or formation of military or paramilitary 
forces; (ii) Military or paramilitary operations, by planning, leading, 
or evaluating such operations; or
    (iii) Military or paramilitary capabilities through advice or 
training, including formal or informal instruction.
    (iv) Assistance in paragraphs (s)(3)(i) through (iii) of this 
category does not include: (A) Furnishing of medical, translation, 
financial, insurance, legal, scheduling, or administrative services, or 
acting as a common carrier;
    (B) Participation as a member of a regular military force of a 
foreign nation by a U.S. person who has been drafted into such a force 
(see also Sec.  124.2(b) of this subchapter); or
    (C) Training and advice that is entirely composed of general 
scientific, mathematical, or engineering principles commonly taught in 
schools, colleges, and universities.
    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 Zachary 
A. Parker, Director, Office of Directives Management, for purposes of 
publication in the Federal Register.

Zachary A. Parker,
Director, Office of Directives Management, Department of State.
[FR Doc. 2024-16501 Filed 7-25-24; 8:45 am]
BILLING CODE 4710-25-P