```

[Federal Register Volume 77, Number 118 (Tuesday, June 19, 2012)]
[Proposed Rules]
[Pages 36428-36433]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14471]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF STATE

22 CFR Part 120

RIN 1400-AD22
[Public Notice 7921]

Amendment to the International Traffic in Arms Regulations: 
Definition for ``Specially Designed''

AGENCY: Department of State.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: As part of the President's Export Control Reform (ECR) 
Initiative, the Directorate of Defense Trade Controls (DDTC) seeks 
public comment on the proposed definition of ``specially designed'' to 
be adopted in the International Traffic in Arms Regulations (ITAR). 
This proposed rule is published concurrently with the Department of 
Commerce's proposed revision to the definition of ``specially 
designed'' in the Export Administration Regulations (EAR). The 
revisions contained in this rule are part of the Department of State's 
retrospective plan under E.O. 13563 completed on August 17, 2011. The 
Department of State's full plan can be accessed at http://www.state.gov/documents/organization/181028.pdf.

DATES: The Department of State will accept comments on this proposed 
rule until August 3, 2012.

ADDRESSES: Interested parties may submit comments within 45 days of the 
date of publication by one of the following methods:
     Email: DDTCResponseTeam@state.gov with the subject line, 
``Specially Designed Definition.''
     Internet: At www.regulations.gov, search for this notice 
by using this notice's RIN (1400-AD22).
    Comments received after that date will 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 those comments and/or transmittal emails will be 
made available for public inspection and copying after the close of the 
comment period via the Directorate of Defense Trade Controls Web site 
at www.pmddtc.state.gov. 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. Comments submitted via 
www.regulations.gov are immediately available for public inspection.

FOR FURTHER INFORMATION CONTACT: Ms. Candace M. J. Goforth, Director, 
Office of Defense Trade Controls Policy, U.S. Department of State, 
telephone (202) 663-2792, or email DDTCResponseTeam@state.gov. ATTN: 
Specially Designed Definition.

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 items subject to 
the jurisdiction of the ITAR, i.e., ``defense articles,'' are 
identified on the ITAR's U.S. Munitions List (USML) (22 CFR 121.1). 
With few exceptions, items not subject to the export control 
jurisdiction of the ITAR are subject to the jurisdiction of the Export 
Administration Regulations (``EAR,'' 15 CFR parts 730-774, which 
includes the

[[Page 36429]]

Commerce Control List (CCL) in Supplement No. 1 to Part 774), 
administered by the Bureau of Industry and Security (BIS), U.S. 
Department of Commerce. Both the ITAR and the EAR impose license 
requirements on exports and reexports. Items not subject to the ITAR or 
to the exclusive licensing jurisdiction of any other set of regulations 
are subject to the EAR.

Export Control Reform Update

    The Departments of State and Commerce described in their respective 
Advanced Notices of Proposed Rulemaking (ANPRM) in December 2010 the 
Administration's plan to make the USML and the CCL positive, tiered, 
and aligned so that eventually they can be combined into a single 
control list (see ``Commerce Control List: Revising Descriptions of 
Items and Foreign Availability,'' 75 FR 76664 (December 9, 2010) and 
``Revisions to the United States Munitions List,'' 75 FR 76935 
(December 10, 2010)). The notices also called for the establishment of 
a ``bright line'' between the USML and the CCL to reduce government and 
industry uncertainty regarding export jurisdiction by clarifying 
whether particular items are subject to the jurisdiction of the ITAR or 
the EAR. While these remain the Administration's ultimate Export 
Control Reform objectives, their concurrent implementation would be 
problematic in the near term. In order to more quickly reach the 
national security objectives of greater interoperability with U.S. 
allies, enhancing the defense industrial base, and permitting the U.S. 
Government to focus its resources on controlling and monitoring the 
export and reexport of more significant items to destinations, end-
uses, and end-users of greater concern than NATO allies and other 
multi-regime partners, the Administration has decided, as an interim 
step, to propose and implement revisions to both the USML and the CCL 
that are more positive, but not yet tiered.
    Specifically, based in part on a review of the comments received in 
response to the December 2010 notices, the Administration has 
determined that fundamentally altering the structure of the USML by 
tiering and aligning it on a category-by-category basis would 
significantly disrupt the export control compliance systems and 
procedures of exporters and reexporters. For example, until the entire 
USML was revised and became final, some USML categories would follow 
the legacy numbering and control structures while the newly revised 
categories would follow a completely different numbering structure. In 
order to allow for the national security benefits to flow from re-
aligning the jurisdictional status of defense articles that no longer 
warrant control on the USML on a category-by-category basis while 
minimizing the impact on exporters' internal control and jurisdictional 
and classification marking systems, the Administration plans to proceed 
with building positive lists now and afterward return to structural 
changes.

Definition for ``Specially Designed''

    Although one of the goals of the ECR Initiative is to describe USML 
controls without using design intent criteria, a few of the controls in 
the proposed revision nonetheless use the term ``specially designed.'' 
It is, therefore, necessary for the Department to define the term. Two 
proposed definitions have been published to date.
    The Department first provided a draft definition for ``specially 
designed'' in the December 2010 ANPRM (75 FR 76935) and noted the term 
would be used minimally in the USML, and then only to remain consistent 
with the Wassenaar Arrangement or other multilateral regime obligations 
or when no other reasonable option exists to describe the control 
without using the term. The definition provided at that time is as 
follows: ``For the purposes of this Subchapter, the term `specially 
designed' means that the end-item, equipment, accessory, attachment, 
system, component, or part (see ITAR Sec.  121.8) has properties that 
(i) distinguish it for certain predetermined purposes, (ii) are 
directly related to the functioning of a defense article, and (iii) are 
used exclusively or predominantly in or with a defense article 
identified on the USML.''
    The Department of Commerce subsequently published on July 15, 2011, 
for public comment, (see ``Proposed Revisions to the Export 
Administration Regulations (EAR): Control of Items the President 
Determines No Longer Warrant Control under the United States Munitions 
List (USML),'' 76 FR 41958), the Administration's proposed definition 
of ``specially designed'' that would be common to the CCL and the USML. 
The public provided more than 40 comments on that proposed definition 
on or before the September 13, 2011, submission deadline. The 
Departments of State, Commerce, and Defense have reviewed those 
comments and related issues. The Department of State's Defense Trade 
Advisory Group and the Department of Commerce's Technical Advisory 
Committees participated in the review. The revised definition provided 
in this proposed rule is, but for a few modifications, identical to the 
definition published separately by the Department of Commerce (see 
elsewhere in this issue of the Federal Register). The overall goal of 
the definition is to differentiate between those articles 
``enumerated'' on the USML and those articles not enumerated but 
captured in ``catch-all'' paragraphs.
    The July 15 rule referenced above identified nine objectives for 
the revised ``specially designed'' definition. These objectives have 
not changed and the U.S. Government is committed to adopting a 
``specially designed'' definition under the ITAR and EAR that would 
achieve these nine objectives. The nine objectives are to:
    (1) Preclude multiple or overlapping controls of similar items 
within and across the two control lists;
    (2) Be easily understood and applied by exporters, prosecutors, 
juries, and the U.S. Government--e.g., by using objective, knowable, 
and clear requirements that do not rely upon a need to investigate and 
divine the intentions of the original designer of a part or the 
predominant market applications for such items;
    (3) Be consistent with definitions used by the international export 
control regimes;
    (4) Not include any item specifically enumerated on either the USML 
or the CCL and, in order to avoid a definitional loop, do not use 
``specially designed'' as a control criterion;
    (5) Be capable of excluding from control simple or multi-use parts 
such as springs, bolts, and rivets, and other types of items the U.S. 
Government determines do not warrant significant export controls;
    (6) Apply to both descriptions of end items that are ``specially 
designed'' to have particular characteristics and to parts and 
components that were ``specially designed'' for particular end items;
    (7) Apply to materials and software because they are ``specially 
designed'' to have a particular characteristic or for a particular type 
of end item;
    (8) Not increase the current control level to ``600 series'' 
control or other higher end controls of items (i.e., not moving items 
currently subject to a lower control status to a higher level control 
status), particularly current EAR99 items, that are now controlled at 
lower levels; and
    (9) Not, merely as a result of the definition, cause historically 
EAR controlled items to become ITAR controlled.
    The revised ``specially designed'' definition provided in this 
notice

[[Page 36430]]

proposes a simplified two paragraph structure. Paragraph (a) is to 
identify what commodities, as a result of development, are ``specially 
designed,'' and paragraph (b) is to identify what parts, components, 
accessories, and attachments are excluded from ``specially designed.''
    Paragraph (a) begins with the phrase, ``Except for commodities 
described in (b), a commodity is `specially designed' if, as a result 
of development, it [is within the scope of any one of three 
subparagraphs discussed below].'' It is the beginning of the ``catch'' 
in the ``catch and release'' structure of the definition. For U.S. 
Munitions List paragraphs containing the term ``specially designed,'' a 
defense article is ``caught''--it is ``specially designed''--if any of 
the three elements of paragraph (a) apply and none of the elements of 
paragraph (b) apply.
    Paragraph (a) is limited by the phrase, ``if, as a result of 
development.'' The definition would also include a note to paragraph 
(b)(3) that contains the following definition of development for 
purposes of the proposed ``specially designed'' definition: 
```Development' is related to all stages prior to serial production, 
such as: design, design research, design analyses, design concepts, 
assembly and testing of prototypes, pilot production schemes, design 
data, process of transforming design data into a product, configuration 
design, integration design, layouts.'' Thus, a defense article is 
caught by the threshold requirement of paragraph (a) only if someone is 
engaged in any of these ``development'' activities with respect to the 
article at issue. Three questions one may ask to determine if a defense 
article is within the scope of paragraph (a) are as follows: (1) Does 
the commodity, as a result of development, have properties peculiarly 
responsible for achieving or exceeding the controlled performance 
levels, characteristics, or functions described in the relevant USML 
paragraph?; (2) Is the part or component, as a result of development, 
necessary for an enumerated defense article to function as designed?; 
and (3) Is the accessory or attachment, as a result of development, 
used with an enumerated defense article to enhance its usefulness or 
effectiveness? If the answer to all three questions is ``no,'' then the 
commodity is not ``specially designed'' and further analysis pursuant 
to paragraph (b) is not necessary. If the answer to any one of the 
questions is ``yes,'' then the exporter or reexporter must determine 
whether any one of the five parts of paragraph (b) of the definition 
applies. If any one of the five paragraph (b) exclusions apply, then 
the commodity is not ``specially designed.'' If none do, then the 
commodity is ``specially designed.''
    Paragraph (a)(1) would capture a commodity if it, as a result of 
``development,'' ``has properties peculiarly responsible for achieving 
or exceeding the controlled performance levels, characteristics, or 
functions described in the relevant U.S. Munitions List paragraph.'' 
This criterion is essentially the same as was proposed in the July 15 
proposed definition. Based on the comments, the public found this part 
of the definition clear. As an example, even if a commodity is capable 
of use with a controlled defense article, it is not captured by this 
part of paragraph (a) unless someone did something during the 
commodity's development so that it would achieve or exceed the 
performance levels, characteristics, or functions described in a 
referenced USML paragraph.
    Paragraph (a)(2) would capture a part or component if it, as a 
result of ``development,'' ``is necessary for an enumerated defense 
article to function as designed.'' The Department realizes that this 
element is similar to paragraph (a)(1), but believes that it needs to 
be listed separately because not all descriptions of parts and 
components on the USML include performance levels, characteristics, or 
functions as a basis for control. Paragraph (a)(2) thus will capture 
parts and components that are necessary for another article on the USML 
to function ``as designed.'' If an article will function ``as 
designed'' without the part or component at issue, then that part or 
component is not captured by paragraph (a)(2).
    Paragraph (a)(3) would capture an accessory or attachment if it, as 
a result of ``development,'' ``is used with an enumerated defense 
article to enhance its usefulness or effectiveness.'' This phrase is 
from the ITAR's current and the EAR's proposed definitions of 
``accessory,'' ``attachment,'' and ``equipment.''
    The July 15 proposed ``specially designed'' definition included two 
exclusion paragraphs (paragraphs (c) and (d)) that identified what 
items would not be ``specially designed.'' Many commenting parties 
requested the July 15 definition be simplified and shortened, including 
the exclusion paragraphs. The Department has addressed these concerns 
by adopting a simplified structure for the exclusion paragraph (b) 
included in this proposed rule. Specifically, any part, component, 
accessory, or attachment that is described in an exclusion paragraph 
under (b)(1), (b)(2), (b)(3), (b)(4), or (b)(5), would not be 
controlled by a USML ``catch-all'' paragraph.
    These five exclusions under paragraph (b) would play an important 
role in this proposed ``specially designed'' definition. Paragraphs 
(a)(2) and (a)(3) are broad enough to capture all the defense articles 
that would be potentially ``specially designed,'' but in practice would 
capture a larger set of parts, components, accessories, and attachments 
than is intended. Paragraph (b) would work to release from inclusion 
under ``specially designed'' specific and non-specific parts, 
components, accessories, and attachments, consistent with existing U.S. 
export control and international commitments. The exclusions under 
paragraph (b) as proposed in this rule would refine the set of parts, 
components, accessories, and attachments that would be subject to the 
``catch-all'' controls on the USML. In this way, paragraphs (a) and (b) 
are inextricably linked and are intended to work together to identify 
the parts, components, accessories, and attachments that need to be 
treated as ``specially designed'' for purposes of the ``catch-all'' 
provisions on the USML.
    Paragraph (b) codifies the principle in ITAR Sec.  120.3 that, in 
general, a commodity should not be ITAR controlled if has a predominant 
civil application or has performance equivalent (defined by form, fit, 
and function) to a commodity used for civil applications. If such a 
commodity warrants control under the ITAR because it provides the 
United States with a critical military or intelligence advantage or for 
another reason, then it is or should be enumerated on the USML, as 
described in the ``bright line,'' ``positive list'' objectives in the 
December 2010 ANPRM (75 FR 76935).
    An example of an article that would not be ``specially designed'' 
as a result of proposed paragraph (b)(4) is one that was or is being 
developed to be interchangeable between an aircraft enumerated in USML 
Category VIII and also an aircraft controlled by ECCN 9A610.a. Such a 
conclusion for a particular article does not necessarily mean that the 
article is not subject to export controls. The article may, for 
example, be enumerated on the USML and, thus, ITAR controlled. In 
addition, if it is not enumerated on the USML, it might fall with the 
scope of the controls at ECCN 9A610.x. The jurisdiction of an article 
must be determined on a case-by-case basis. Proposed paragraph (b)(4) 
merely states that such an article would not be within the scope of a 
``catch-all'' paragraph of the USML in light of its

[[Page 36431]]

commonality with non-ITAR controlled articles.
    Paragraph (a) would create more objective tests for what defense 
articles, as a result of development, would be ``specially designed'' 
based on the criteria identified in (a)(1), (a)(2), or (a)(3). 
Paragraph (b) would create more objective tests for what parts, 
components, accessories, and attachments are excluded from ``specially 
designed'' under the exclusion criteria identified in (b)(1), (b)(2), 
(b)(3), (b)(4) or (b)(5). The objective criteria identified in 
paragraph (a) working with the objective exclusion criteria identified 
in paragraph (b) would allow this proposed ``specially designed'' 
definition to achieve the nine stated objectives identified above for 
the definition.

Request for Comments

    As the U.S. Government works through the proposed revisions to the 
USML, some solutions have been adopted that were determined to be the 
best of available options. With the thought that multiple perspectives 
would be beneficial to the USML revision process, the Department 
welcomes the assistance of users of the lists and requests input on the 
following:
    (1) The key goal of this rulemaking is to establish a definition of 
``specially designed'' that provides a ``bright line'' between the 
commodities controlled by the USML and the CCL. The public is asked to 
provide comment on the clarity and understanding of the proposed 
definition.
    (2) The key goal of this rulemaking is to establish a definition of 
``specially designed'' that is applicable to all USML categories. The 
public is asked to provide comments on the use of ``specially 
designed'' in proposed rules for USML revision where the comment period 
has already closed, as well those proposed rules with open comment 
periods.

Regulatory Analysis and Notices

Administrative Procedure Act

    The Department of State is of the opinion that controlling the 
import and export of defense articles and services is a foreign affairs 
function of the United States Government and that rules implementing 
this function are exempt from sections 553 (Rulemaking) and 554 
(Adjudications) of the Administrative Procedure Act (APA). Although the 
Department is of the opinion that this rule is exempt from the 
rulemaking provisions of the APA, the Department is publishing this 
rule with a 45-day provision for public comment and without prejudice 
to its determination that controlling the import and export of defense 
services is a foreign affairs function. As noted above, and also 
without prejudice to the Department position that this proposed 
rulemaking is not subject to the APA, the Department previously 
published a related Advance Notice of Proposed Rulemaking (RIN 1400-
AC78) on December 10, 2010 (75 FR 76935), and accepted comments for 60 
days.

Regulatory Flexibility Act

    Since the Department is of the opinion that this proposed rule is 
exempt from the 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 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.

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 proposed amendment.

Executive Orders 12866 and 13563

    Executive Orders 13563 and 12866 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 a ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget (OMB).

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.

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, Executive Order 13175 does not apply to this 
rulemaking.

Paperwork Reduction Act

    Notwithstanding any other provision of law, no person is required 
to respond to, nor is subject to a penalty for failure to comply with, 
a collection of information, subject to the requirements of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless 
that collection of information displays a currently valid OMB control 
number. This proposed rule would affect the following approved 
collections: (1) Statement of Registration, DS-2032, OMB No. 1405-0002; 
(2) Application/License for Permanent Export of Unclassified Defense 
Articles and Related Unclassified Technical Data, DSP-5, OMB No. 1405-
0003; (3) Application/License for Temporary Import of Unclassified 
Defense Articles, DSP-61, OMB No. 1405-0013; (4) Nontransfer and Use 
Certificate, DSP-83, OMB No. 1405-0021; (5) Application/License for 
Permanent/Temporary Export or Temporary Import of Classified Defense 
Articles and Classified Technical Data, DSP-85, OMB No. 1405-0022; (6) 
Application/License for Temporary Export of Unclassified Defense 
Articles, DSP-73, OMB No. 1405-0023; (7) Statement of Political 
Contributions, Fees, or Commissions in Connection with the Sale of 
Defense Articles or Services,

[[Page 36432]]

OMB No. 1405-0025; (8) Authority to Export Defense Articles and 
Services Sold Under the Foreign Military Sales (FMS) Program, DSP-94, 
OMB No. 1405-0051; (9) Application for Amendment to License for Export 
or Import of Classified or Unclassified Defense Articles and Related 
Technical Data, DSP-6, -62, -74, -119, OMB No. 1405-0092; (10) Request 
for Approval of Manufacturing License Agreements, Technical Assistance 
Agreements, and Other Agreements, DSP-5, OMB No. 1405-0093; (11) 
Maintenance of Records by Registrants, OMB No. 1405-0111; (12) Annual 
Brokering Report, DS-4142, OMB No. 1405-0141; (13) Brokering Prior 
Approval (License), DS-4143, OMB No. 1405-0142; (14) Projected Sale of 
Major Weapons in Support of Section 25(a)(1) of the Arms Export Control 
Act, DS-4048, OMB No. 1405-0156; (15) Export Declaration of Defense 
Technical Data or Services, DS-4071, OMB No. 1405-0157; (16) Request 
for Commodity Jurisdiction Determination, DS-4076, OMB No. 1405-0163; 
(17) Request to Change End-User, End-Use, and/or Destination of 
Hardware, DS-6004, OMB No. 1405-0173; (18) Request for Advisory 
Opinion, DS-6001, OMB No. 1405-0174; (19) Voluntary Disclosure, OMB No. 
1405-0179; and (20) Technology Security/Clearance Plans, Screening 
Records, and Non-Disclosure Agreements Pursuant to 22 CFR 126.18, OMB 
No. 1405-0195. The Department of State believes there will be minimal 
changes to these collections. The Department of State believes the 
combined effect of all rules to be published moving commodities from 
the USML to the EAR as part of the Administration's Export Control 
Reform would decrease the number of license applications by 
approximately 30,000 annually. The Department of State is looking for 
comments on the potential reduction in burden.

List of Subjects in 22 CFR Part 120

    Arms and munitions, Exports.

    Accordingly, for the reasons set forth above, Title 22, Chapter I, 
Subchapter M, part 120 is proposed to be amended as follows:

PART 120--PURPOSE AND DEFINITIONS

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

    Authority:  Sections 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 CFR 4075, 3 CFR, 1977 Comp. p. 79; 22 U.S.C. 
2658; Pub. L. 105-261, 112 Stat. 1920.

    2. Add Sec.  120.41 to read as follows:

Sec.  120.41  Specially designed.

    When applying this definition, follow this sequential analysis: 
Begin with paragraph (a)(1) of this section and proceed through each 
subsequent paragraph. If a commodity would not be controlled as a 
result of the application of the standards in paragraph (a) of this 
section, then it is not necessary to work through paragraph (b) of this 
section. If a commodity would be controlled as a result of paragraph 
(a), then it is necessary to work through each of the elements of 
paragraph (b). Commodities described in any of paragraphs (b)(1) 
through (5) of this section are not ``specially designed'' commodities 
controlled on the U.S. Munitions List but may be subject to the 
jurisdiction of another U.S. Government regulatory agency (see Sec.  
120.5 of this subchapter).
    (a) Except for commodities described in (b) of this section, a 
commodity is ``specially designed'' if, as a result of development, it:
    (1) Has properties peculiarly responsible for achieving or 
exceeding the controlled performance levels, characteristics, or 
functions described in the relevant U.S. Munitions List paragraph;
    (2) Is a part (see Sec.  121.8(d) of this subchapter) or component 
(see Sec.  121.8(b) of this subchapter) necessary for an enumerated 
defense article to function as designed; or
    (3) Is an accessory or attachment (see Sec.  121.8(c) of this 
subchapter) used with an enumerated defense article to enhance its 
usefulness or effectiveness.
    (b) A part, component, accessory, or attachment is not controlled 
by a U.S. Munitions List ``catch-all'' paragraph if it:
    (1) Is enumerated in a U.S. Munitions List paragraph;
    (2) Is a single unassembled part that is of a type commonly used in 
multiple types of commodities not enumerated on the U.S. Munitions List 
or the Commerce Control List, such as threaded fasteners (e.g., screws, 
bolts, nuts, nut plates, studs, inserts), other fasteners (e.g., clips, 
rivets, pins), basic hardware (e.g., washers, spacers, insulators, 
grommets, bushings, springs), wire, and solder;
    (3) Has the same form, fit, and performance capabilities as a part, 
component, accessory, or attachment used in or with a commodity that:
    (i) Is or was in production (i.e., not in development); and
    (ii) Is not enumerated on the U.S. Munitions List;
    (4) Was or is being developed with a reasonable expectation of use 
in or with defense articles enumerated on the U.S. Munitions List and 
commodities not on the U.S. Munitions List; or
    (5) Was or is being developed with no reasonable expectation of use 
for a particular application.

    Note 1: The term ``enumerated'' refers to any article which is 
identified on the U.S. Munitions List or the Commerce Control List.

    Note 2:  The term ``commodity'' refers to any article, material, 
or supply, except technology/technical data or software.

    Note to paragraph (a)(1):  An example of a commodity that, as a 
result of development has properties peculiarly responsible for 
achieving or exceeding the controlled performance levels, functions, 
or characteristics in a U.S. Munitions List category would be a 
swimmer delivery vehicle ``specially designed'' to dock with a 
submarine to provide submerged transport for swimmers or divers from 
submarines.

    Note to paragraph (b):  A ``catch-all'' paragraph is one that 
does not refer to specific types of parts, components, accessories, 
or attachments, but rather controls parts, components, accessories, 
or attachments if they were ``specially designed'' for an enumerated 
item. For the purposes of the U.S. Munitions List, a ``catch-all'' 
paragraph is delineated by the phrases ``and `specially designed' 
parts and components therefor,'' or ``parts, components, 
accessories, attachments, and associated equipment `specially 
designed' for.''

    Note 1 to paragraph (b)(3):  For the purposes of this 
definition, ``production'' means all production stages, such as 
product engineering, manufacture, integration, assembly (mounting), 
inspection, testing, and quality assurance. This includes ``serial 
production'' where commodities have passed production readiness 
testing (i.e., an approved, standardized design ready for large 
scale production) and have been or are capable of being produced on 
an assembly line using the approved, standardized design.

    Note 2 to paragraph (b)(3):  For the purposes of this 
definition, ``development'' is related to all stages prior to serial 
production, such as: Design, design research, design analyses, 
design concepts, assembly and testing of prototypes, pilot 
production schemes, design data, process of transforming design data 
into a product, configuration design, integration design, layouts.

    Note 3 to paragraph (b)(3):  Commodities in ``production'' that 
are subsequently subject to ``development'' activities, such as 
those pertaining to quality improvements, cost reductions, or 
feature enhancements, remain in ``production.'' However, any new 
models or versions of such commodities developed from such efforts 
that change the basic performance or capability of the commodity are 
in ``development'' until and unless they enter into ``production.''

    Note to paragraphs (b)(4) and (b)(5):  For a defense article not 
to be ``specially designed''

[[Page 36433]]

on the basis of (b)(4) or (b)(5), documents contemporaneous with its 
development, in their totality, must establish the elements of 
paragraph (b)(4) or (b)(5). Such documents may include concept 
design information, marketing plans, declarations in patent 
applications, or contracts. Absent such documents, the commodity may 
not to be excluded from being ``specially designed'' by either 
paragraph (b)(4) or (b)(5).

    Note to paragraph (b)(5):  If you have knowledge that the 
commodity was or is being developed for a particular application, 
you may not rely on paragraph (b)(5) to conclude that the commodity 
was or is not ``specially designed.''

    Dated: June 7, 2012.
Rose E. Gottemoeller,
Acting Under Secretary, Arms Control and International Security, 
Department of State.
[FR Doc. 2012-14471 Filed 6-15-12; 11:15 am]
BILLING CODE 4710-25-P
```