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[Federal Register Volume 76, Number 214 (Friday, November 4, 2011)]
[Rules and Regulations]
[Pages 68311-68313]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28548]

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DEPARTMENT OF STATE

22 CFR Part 123

RIN 1400-AC91
[Public Notice 7674]

Amendment to the International Traffic in Arms Regulations: 
Filing, Retention, and Return of Export Licenses and Filing of Export 
Information

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: The Department of State is amending the International Traffic 
in Arms Regulations (ITAR) to reflect changes in the requirements for 
the return of licenses. Applicants are no longer required to return 
certain expired DSP-5s. This change will reduce the administrative 
burden on applicants.

DATES: Effective Date: This rule is effective November 4, 2011.

FOR FURTHER INFORMATION CONTACT: Nicholas Memos, Office of Defense 
Trade Controls Policy, Bureau of Political-Military Affairs, Department 
of State, (202) 663-2829 or FAX (202) 261-8199; Email 
memosni@state.gov, Attn: ITAR Amendment--License Return.

SUPPLEMENTARY INFORMATION: The Department of State is amending Sec.  
123.22(c) to institute changes in the requirements for the return of 
licenses. With this change, applicants with DSP-5 licenses that have 
been issued electronically by the Directorate of Defense Trade Controls 
(DDTC) and decremented electronically by the U.S. Customs and Border 
Protection (CBP) through the Automated Export System (AES) are no 
longer required to return them to DDTC when they expire, to include 
when the total authorized value or quantity has been shipped. The 
return of these licenses is redundant and unnecessary as all of the 
export information has been captured and saved electronically. If a 
DSP-5 license issued electronically is decremented physically in one or 
more instance the license must be returned to the Department of State.
    All other DSP-5 licenses that do not meet the criteria described 
above, and all DSP-61, DSP-73, and DSP-85 licenses, and DSP-94 
authorizations, must be returned by the applicant, or the government 
agency with which the license or authorization was filed, to DDTC, as 
these licenses and authorizations are not decremented electronically, 
even if an Electronic Export Information is filed via AES.
    New Sec.  123.22(c)(3) addresses the return of the DSP-94 
authorization.
    New Sec.  123.22(c)(4) provides that licenses issued but not used 
by the applicant do not need to be returned to DDTC.
    New Sec.  123.22(c)(5) provides that licenses which have been 
revoked by DDTC are considered expired.
    Section 123.21(b) is amended to conform to the changes to Sec.  
123.22(c).
    This rule was first presented as a proposed rule for public comment 
on July 14, 2011. That comment period ended August 29, 2011. Three 
comments were received. The Department's evaluation of the written 
comments and recommendations are as follows.
    One commenting party recommended the Department revise the 
provision regarding the return of the DSP-85, as the issued license is 
not held by the applicant, but by an officer of the Defense Security 
Service. The Department accepted this recommendation, and has revised 
Sec.  123.22(c)(2) to provide that ``the government agency with which 
the license or authorization was filed'' may also return an expired 
license or authorization to the Department.
    One commenting party recommended revising the sentence in Sec.  
123.22(c)(1) addressing the maintenance of records. The commenting 
party correctly pointed out that, as drafted in the proposed rule, the 
requirement to maintain records of an electronically issued and 
decremented DSP-5 pertained only when the license was fully decremented 
or expired, when in fact the requirement, per ITAR Sec.  122.5, is for 
record maintenance on an ongoing basis. Section (c)(1) is revised 
accordingly.
    One commenting party recommended revising a section of the ITAR not 
the subject of this rule. The Department,

[[Page 68312]]

though, takes this opportunity to address the recommendation. The 
commenting party recommended revising ITAR Sec.  123.22(a)(1) to allow 
the exporter to present to CBP an electronically issued DSP-5 license 
at the time of permanent export, and not prior to filing the license in 
the Automated Export System. This procedure is a requirement set by 
CBP, for enforcement purposes, and not by the Department.
    One commenting party recommended the elimination of the requirement 
to return any expired license to the Department, stating that it is 
inefficient, redundant of other recordkeeping requirements, and not in 
keeping with the Department's initiative to provide end-to-end 
electronic licensing. The Department observes that while it has 
instituted electronic processes for the majority of defense trade 
licensing transactions, it has not completed this initiative. 
Therefore, certain requirements cannot be completed electronically by 
the public. This includes providing the Department with a record of 
certain expired licenses. As an alternative, the commenting party 
suggested providing D-Trade, the Department's electronic licensing 
system, as a means of returning certain expired licenses, but D-Trade 
is currently not configured to support this function. The Department 
also observes that the recordkeeping requirement of ITAR Sec.  122.5 
pertains to registrants; for enforcement purposes, the Department also 
must have record of which exports were completed from approved 
authorizations. For the foregoing reasons, the Department did not 
accept this commenting party's recommendation.
    Having thoroughly reviewed and evaluated the written comments and 
recommended changes, the Department has determined that it will accept, 
and hereby does adopt with the noted changes, the proposed rule as a 
final rule.

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 Sec.  553 (Rulemaking) and Sec.  554 
(Adjudications) of the Administrative Procedure Act. Although the 
Department is of the opinion that this rule is exempt from the 
rulemaking provisions of the APA, the Department published 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.

Regulatory Flexibility Act

    Since this 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 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 rule 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 Executive Order 13175 do not apply to 
this rule.

Small Business Regulatory Enforcement Fairness Act of 1996

    This 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 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 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 Department of State does not consider this rule to be a 
``significant regulatory action'' under Executive Order 12866, section 
3(f), Regulatory Planning and Review. The Department 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 governing the conduct of this function are exempt from the 
requirements of Executive Order 12866.

Executive Order 13563

    The Department of State has considered this rule in light of 
Executive Order 13563, dated January 18, 2011, and affirms that this 
regulation is consistent with the guidance therein.

Executive Order 12988

    The Department of State has reviewed the 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

    This rule does not impose any new reporting or recordkeeping 
requirements subject to the Paperwork Reduction Act, 44 U.S.C. chapter 
35.

List of Subjects in 22 CFR Part 123

    Arms and munitions, Exports.

    Accordingly, for the reasons set forth above, Title 22, Chapter I, 
Subchapter M, part 123 is amended as follows:

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

0
1. 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.

0
2. Section 123.21 is amended by revising the section heading and 
paragraph (b) to read as follows:

Sec.  123.21  Duration, renewal, and disposition of licenses.

* * * * *
    (b) Unused, expired, suspended, or revoked licenses must be handled 
in accordance with Sec.  123.22(c) of this subchapter.

0
3. Section 123.22 is amended by revising paragraph (c) to read as 
follows:

Sec.  123.22  Filing, retention, and return of export licenses and 
filing of export information.

* * * * *
    (c) Return of licenses. Per Sec.  123.21 of this subchapter, all 
DSP licenses issued by the Directorate of Defense Trade Controls (DDTC) 
must be disposed of in accordance with the following:

[[Page 68313]]

    (1) A DSP-5 license issued electronically by DDTC and decremented 
electronically by the U.S. Customs and Border Protection through the 
Automated Export System (AES) is not required to be returned to DDTC. 
If a DSP-5 license issued electronically is decremented physically in 
one or more instance the license must be returned DDTC. A copy of the 
DSP-5 license must be maintained by the applicant in accordance with 
Sec.  122.5 of this subchapter.
    (2) DSP-5, DSP-61, DSP-73, and DSP-85 licenses issued by DDTC but 
not decremented electronically by the U.S. Customs and Border 
Protection through AES (e.g., oral or visual technical data releases or 
temporary import and export licenses retained in accordance with 
paragraph (a)(2) of this section), must be returned by the applicant, 
or the government agency with which the license was filed, to DDTC upon 
expiration, to include when the total authorized value or quantity has 
been shipped. A copy of the license must be maintained by the applicant 
in accordance with Sec.  122.5 of this subchapter. AES does not 
decrement the DSP-61, DSP-73, and DSP-85 licenses. Submitting the 
Electronic Export Information is not considered to be decremented 
electronically for these licenses.
    (3) A DSP-94 authorization filed with the U.S. Customs and Border 
Protection must be returned by the applicant, or the government agency 
with which the authorization was filed, to DDTC upon expiration, to 
include when the total authorized value or quantity has been shipped, 
or when all shipments against the Letter of Offer and Acceptance have 
been completed. AES does not decrement the DSP-94 authorization. 
Submitting the Electronic Export Information is not considered to be 
decremented electronically for the DSP-94. A copy of the DSP-94 must be 
maintained by the applicant in accordance with Sec.  122.5 of this 
subchapter.
    (4) A license issued by DDTC but not used by the applicant does not 
need to be returned to DDTC, even when expired.
    (5) A license revoked by DDTC is considered expired and must be 
handled in accordance with paragraphs (c)(1) and (c)(2) of this 
section.

    Dated: October 27, 2011.
 Ellen O. Tauscher,
 Under Secretary, Arms Control and International Security, Department 
of State.
[FR Doc. 2011-28548 Filed 11-3-11; 8:45 am]
BILLING CODE 4710-25-P
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