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###### Department of State

          - 22 CFR Parts 120, 122, 123 and 129
          - [Public Notice 7338]
          - RIN 1400-AC74

# AGENCY:

Department of State.

# ACTION:

Proposed rule and information collection; request for comments.

# SUMMARY:

The Department of State is proposing to amend the International Traffic in Arms Regulations (ITAR) to change the method of payment to electronic submission of registration fees. Definitions for “Foreign Ownership” and “Foreign Control” are to be added. Pursuant to the Paperwork Reduction Act, public comment is requested on the Statement of Registration, the form used for the submission of the registration fee.

# DATES:

The Department of State will accept comments on this proposed rule until April 25, 2011.

# ADDRESSES:

Interested parties may submit comments within 60 days of the date of the publication by any of the following methods (for those seeking to submit comments regarding the information collection aspect of the Statement of Registration, contact information is supplied below):
      -  E-mail: DDTCResponseTeam@state.gov                          with the subject line, “Electronic Payment of Registration Fees.”                    
      -  Mail:                          PM/DDTC, SA-1, 13th Floor, Directorate of Defense Trade Controls, Office of Defense Trade Controls Compliance,                          Attn:                          Electronic Payment of Registration Fees, Bureau of Political Military Affairs, U.S. Department of State, Washington, DC 20522-0112.                    
      - Persons with access to the Internet may also view and comment on this notice by searching for its RIN on the U.S. Government regulations Web site at http://regulations.gov/​index.cfm. 

# FOR FURTHER INFORMATION CONTACT:

                        Lisa V. Studtmann, Director, Office of Defense Trade Controls Compliance,                               ( print page 10292)                            Directorate of Defense Trade Controls, Department of State, 2401 E Street, NW., SA-1, Room H1200, Washington, DC 200522-0112; Telephone 202-663-2477 or Fax 202-261-8198; or e-mail through                         *DDTCResponseTeam@state.gov,*                         with the subject line, “Electronic Payment of Registration Fees.”                    

# SUPPLEMENTARY INFORMATION:

The Directorate of Defense Trade Controls (DDTC) is responsible for the collection of registration fees from persons in the business of manufacturing, exporting, and/or brokering defense articles or defense services.

To date, registration fees have been received by check or money order and processed manually. The collection of electronic payments will simplify the collection and verification of payments, eliminate the need to manually process and collect returned payments, and eliminate the possibility of lost payments.

Section 122.2(a) is to be revised to provide for electronic payment as the sole means of registration fee submission. The form used for obtaining registration, the DS-2032 (Statement of Registration), has been revised to reflect that fee payments are to be made electronically. Additionally, the certifications previously required through the transmittal letter referenced in § 122.2(b) of the ITAR have been incorporated into the revised DS-2032. Consequently, § 122.2(b) no longer will address a separate transmittal letter, but will address certain certifications to be made on the Statement of Registration that used to be provided via the transmittal letter. The new § 122.2(b) title will be “Statement of Registration Certification.” Definitions for “ownership” and “control” have been removed from part 122 by the removal of § 122.2(c). Definitions for “Foreign Ownership” and “Foreign Control” are to constitute the new § 120.37.

Section 122.3(a) is to be revised to remove reference to the transmittal letter.

The proposed revision to § 129.4(a) is in line with the proposed change in part 122 regarding the provision of electronic payment of registration fees. References to the transmittal letter are to be removed from §§ 129.4(a) and (b).

Title and number of the registration form is to be corrected in § 120.28(a)(2), and § 123.16(b)(9) is to be revised to correct a reference to § 122.2(c) and replace it with a reference to proposed § 120.37.

## Regulatory Analysis and Notices

### Administrative Procedure Act

This proposed amendment involves a foreign affairs function of the United States and, therefore, is not subject to the procedures contained in 5 U.S.C. 553 and 554. Nevertheless, it is being published as a Notice of Proposed Rule Making, with a 60-day public comment period.

### Regulatory Flexibility Act

Since this proposed amendment is not subject to the notice-and-comment procedures of 5 U.S.C. 553, it does not require analysis under the Regulatory Flexibility Act.

### Unfunded Mandates Reform Act of 1995

This proposed amendment 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 Order 13175

The Department has determined that this proposed rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not pre-empt tribal law. Accordingly, the requirements of Section 5 of Executive Order 13175 do not apply to his proposed rulemaking.

### Small Business Regulatory Enforcement Fairness Act of 1996

This proposed amendment has been found not to be a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996.

### Executive Orders 12372 and 13132

This proposed amendment 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 proposed 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 amendment.

### Executive Order 12866

The proposed amendment is exempt from review under Executive Order 12866, but has been reviewed internally by the Department of State to ensure consistency with the purposes thereof.

### Executive Order 12988

The Department of State has reviewed the proposed amendment in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

### Paperwork Reduction Act

The Paperwork Reduction Act requires all Federal agencies to analyze proposed regulations for potential time burdens on the regulated community created by provisions in the proposed regulations, which require the submission of information. The information collection requirements must be submitted to the Office of Management and Budget (OMB) for approval. Persons are not required to respond to a collection of information unless it displays a currently valid OMB control number or is exempt from the PRA.

                    As part of its continuing effort to reduce paperwork and respondent burden, the Department of State proposes to change the reporting requirement on the DS-2032, Statement of Registration. This notice serves to inform the general public and Federal agencies of the opportunity to comment on this information collection in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501*et seq.*). This helps to ensure that the public understands the Department's collection instructions, respondents provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Department can properly assess the impact of collection requirements on respondents.                

The information collection (IC) requirements for the current Statement of Registration are approved under OMB control number 1405-0002.

### Abstract of Proposed Collection

                    The export, temporary import, temporary export and brokering of defense articles, defense services, and related technical data are licensed by the Directorate of Defense Trade Controls (DDTC) in accordance with the International Traffic in Arms Regulations (“ITAR,” 22 CFR parts 120-                          ( print page 10293)                        130) and Section 38 of the Arms Export Control Act (AECA). Those who manufacture or export defense articles, furnish defense services, or engage in brokering activities, must register with the Department of State. We are soliciting public comments to permit the Department to:                
    - Evaluate whether the proposed information collection is necessary for the proper performance of our functions.
    - Evaluate the accuracy of our estimate of the burden of the proposed collection, including the validity of the methodology and assumptions used.
    - Enhance the quality, utility, and clarity of the information to be collected.
    - Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of technology.

### Methodology

Currently, the ITAR, § 122.2(b), requires the respondent to provide separate correspondence (via a “transmittal letter,” to accompany the DS-2032, Statement of Registration, submission) certifying criminal history, eligibility, and foreign ownership. Often, this mandate was overlooked by the respondent, resulting in the return without action of the incomplete application. The revised DS-2032 incorporates these certifications within the form, only requiring the user to select the appropriate response with a single click and providing the option to provide a response within the form.

The Department proposes to change other reporting requirements on the DS-2032. The DS-2032 was modified to include additional data fields necessary to match electronic payment to the DS-2032. Whereas payments will be received electronically, respondents will continue submitting the DS-2032 in paper format. New data elements specific to electronic payment were not previously required on the DS-2032 because such information is visible on U.S. and foreign bank drafts.

Additionally, data elements were added to ensure clarification during analysis as well as standardization of responses. Specifically, necessary information is listed in the form, only requiring the respondent to make a selection by simply clicking the applicable checkbox. Country and state information is now listed via a pick list requiring a selection rather than manual insertion of information. This enhancement eliminates typographical errors and the misinterpretation of information requested which often results in the submission of incorrect information.

With these proposed changes, the estimated burden time for completion will be reduced from two (2) hours to one (1) hour.

This proposed change does not impose any new recordkeeping requirements.

*Summary of Proposed Collection:*                     The Department of State is seeking Office of Management and Budget (OMB) approval for the information collection described below. The purpose of this notice is to allow 60 days for public comment in the                     **Federal Register**                    . We are conducting this process in accordance with the Paperwork Reduction Act of 1995.                
    -  Title of Information Collection:                      DS-2032 Statement of Registration.                
    -  OMB Control Number:                      1405-0002.                
    -  Type of Request:                      Approved of Information Collection.                
    -  Originating Office:                      Bureau of Political-Military Affairs, Directorate of Defense Trade Controls, PM/DDTC.                
    -  Form Number:                      DS-2032.                
    -  Respondents:                      Business and Nonprofit Organizations.                
    -  Estimated Number of Respondents:                      10,435.                
    -  Estimated Number of Responses:                      9,600.                
    -  Average Hours Per Response:                      1 hours.                
    -  Total Estimated Burden:                      9,600 hours.                
    -  Frequency:                      Annually and On Occasion.                
    -  Obligation to Respond:                      Mandatory.                

Comments from the public on the information collection may be submitted to OMB up to 60 days after February 24, 2011.

Comments should be sent to the Department of State Desk Officer in the Office of Management and Budget (OMB) at the Office of Information and Regulatory Affairs. Comments may be submitted to OMB by the following methods:
    -  E-mail: oira_submission@omb.eop.gov.                      You must include the DS form number, information collection title, and OMB control number in the subject line of your message.                
    -  Fax:                      202-395-5806.                      Attention:                      Desk Officer for Department of State.                

OMB requests that comments be received within 60 days of publication of the Proposed Rule to ensure their consideration. Please note that comments submitted to OMB are a matter of public record. You must include the DS form number (if applicable), information collection title, and OMB control number in any correspondence.

                    Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed information collection and supporting documents, to Tanya Phillips, Bureau of Political Military Affairs, U.S. Department of State, SA-1, 12th Floor, Washington, DC 20522, who may be reached on (202) 663-2825 or                     *phillipsta@state.gov.*

# List of Subjects in 22 CFR Part 120, 122, 123 and 129

      - Arms and munitions
      - Registration
      - Exports
      - Brokering

Accordingly, for the reasons set forth above, Title 22, Chapter I, Subchapter M, parts 120, 122, 123, and 129 are proposed to be amended as follows:

# PART 120—PURPOSE AND DEFINITIONS

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

Authority:  Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2794; E.O. 11958, 42 FR 4311; E.O. 13284, 68 FR 4075; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 2651a; Pub. L. 105-261, 112 Stat. 1920.

2. Section 120.28(a)(2) is revised to read as follows:

§ 120.28 

* * * * *

(a) * * *

(2) Statement of Registration (Form DS-2032).

* * * * *

3. Sections 120.33 through § 120.36 are added and reserved, and a new § 120.37 is added to read as follows:

§ 120.33 

§ 120.34 

§ 120.35 

§ 120.36 

§ 120.37 

Foreign ownership means more than 50 percent of the outstanding voting securities of the firm are owned by one or more foreign persons (as defined in § 120.16). Foreign control means one or more foreign persons have the authority or ability to establish or direct the general policies or day-to-day operations of the firm. Foreign control is presumed to exist where foreign persons own 25 percent or more of the outstanding voting securities unless one U.S. person controls an equal or larger percentage.

      ( print page 10294)    

# PART 122—REGISTRATION OF MANUFACTURERS AND EXPORTERS

4. The authority citation for part 122 continues to read as follows:

Authority:  Secs. 2 and 38, Public Law 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311; 1977 Comp. p. 79, 22 U.S.C. 2651a.

5. Section 122.2 is revised to read as follows:

§ 122.2 

                            (a)                             *General.*                             An intended registrant must submit a Department of State Form DS-2032 (Statement of Registration) to the Office of Defense Trade Controls Compliance by registered or overnight mail delivery, and must submit an electronic payment via Automated Clearing House (ACH) payable to the Department of State of one of the fees prescribed in § 122.3(a) of this subchapter. Automated Clearing House is an electronic network used to process financial transactions in the United States. Intended registrants should access DDTC's Web site at                             *http://www.pmddtc.state.gov*                             for detailed guidelines on submitting an ACH electronic payment. Electronic payments must be in U.S. currency and must be payable through a U.S. financial institution. Cash, checks, foreign currency or money orders will not be accepted. In addition, the Statement of Registration must be signed by a 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. The intended registrant also shall submit documentation that demonstrates that it is incorporated or otherwise authorized to do business in the United States. 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. Registrants may not establish new entities for the purpose of reducing registration fees.                        

                            (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, chief executive officer, president, vice presidents, other senior officers or officials (                            *e.g.,*                             Comptroller, Treasurer, General Counsel) or any member of the board of directors:                        

(i) Has ever been indicted for or convicted of violating any of the U.S. criminal statutes enumerated in § 120.27 of this subchapter; 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.

                            (2) Whether the intended registrant is foreign owned or foreign controlled (                            *see*                             § 120.37). If the intended registrant is foreign owned or foreign controlled, the certification shall also include whether the intended registrant is incorporated or otherwise authorized to engage in business in the United States.                        

6. Section 122.3 is amended by revising paragraph (a) introductory text to read as follows:

§ 122.3 

(a) A person who is required to register must do so on an annual basis upon submission of a completed Form DS-2032 and payment of a fee as follows:

* * * * *

# PART 123—LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

7. The authority citation for part 123 continues to read as follows:

Authority:  Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2753; E.O. 11958, 42 FR 4311; 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 2651a; 22 U.S.C. 2776; Pub. L. 105-261, 112 Stat. 1920; Sec. 1205(a), Pub. L. 107-228.

8. Section 123.16 is amended by revising paragraph (b)(9) introductory text to read as follows:

§ 123.16 

* * * * *

(b) * * *

                            (9) Port Directors of U.S. Customs and Border Protection shall permit the temporary export without a license by a U.S. person of any unclassified component, part, tool or test equipment to a subsidiary, affiliate or facility owned or controlled by the U.S. person (                            *see*                             § 120.37 of this subchapter for definition of foreign ownership and foreign control) if the component, part, tool or test equipment is to be used for manufacture, assembly, testing, production, or modification provided:                        

* * * * *

# PART 129—REGISTRATION AND LICENSING OF BROKERS

9. The authority citation for part 129 continues to read as follows:

Authority:  Sec. 38, Pub. L. 104-164, 110 Stat. 1437 (22 U.S.C. 2778).

10. Section 129.4 is amended by revising paragraphs (a) and (b) to read as follows:

§ 129.4 

                            (a)                             *General.*                             An intended registrant must submit to the Department of State Form DS-2032 (Statement of Registration) by registered or overnight mail delivery to the Office of Defense Trade Controls Compliance, and must submit an electronic payment via Automated Clearing House (ACH) or Society for Worldwide Interbank Financial Telecommunications (SWIFT), payable to the Department of State of the fees prescribed in § 122.3(a) of this subchapter. Automated Clearing House (ACH) is an electronic network used to process financial transactions originating from within the United States and SWIFT is the messaging service used by financial institutions worldwide to issue international transfers for foreign accounts. Payment methods (                            *i.e.,*                             ACH and SWIFT) are dependent on the source of the funds (U.S. or foreign bank) drawn from the applicant's account. The originating account must be the registrant's account and not a third party's. Intended registrants should access DDTC's Web site at                             *http://www.pmddtc.state.gov*                             for detailed guidelines on submitting ACH and SWIFT electronic payments. Payments, including from foreign brokers, must be in U.S. currency, payable through a U.S. financial institution. Cash, checks, foreign currency or money orders will not be accepted. The Statement of Registration must be signed by a 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. The intended registrant, whether a U.S. or foreign person, shall submit documentation that demonstrates it is incorporated or otherwise authorized to do business in its respective country. Foreign persons who are required to register shall provide information that is substantially similar in content to that which a U.S. person would provide under this provision (                            *e.g.,*                             foreign business license or similar authorization to do business). 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. Registrants may not establish new entities for the purpose of reducing registration fees.                                  ( print page 10295)    

(b) A person registering as a broker who is already registered as a manufacturer or exporter in accordance with part 122 of this subchapter must cite their existing manufacturer or exporter registration, and must pay an additional fee according to the schedule prescribed in § 122.3(a) for registration as a broker.

* * * * *

 Dated: January 20, 2011.

Ellen O. Tauscher,

Under Secretary, Arms Control and International Security, Department of State.

[FR Doc. 2011-3878 Filed 2-23-11; 8:45 am]

BILLING CODE 4710-25-P