52680 Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Rules and Regulations 

(ii) It has a Customs Valuation or exfactory price under $2.00, as adjusted 

every 5 years, to the nearest $0.25, in 

accordance with the percentage changes 

in the appropriate monthly Producer 

Price Index (Producer Price Index for 

Miscellaneous Fabricated Products) 

from June 1993. The adjusted figure, 

based on the change in that Index since 

June 1993, as finalized July 2013, is 

$2.50. 

* * * * * 

Dated: August 21, 2013. 

Todd A. Stevenson, 

Secretary, Consumer Product Safety 

Commission. 

[FR Doc. 2013–20747 Filed 8–23–13; 8:45 am] 

BILLING CODE 6355–01–P 

DEPARTMENT OF STATE 

22 CFR Parts 120, 122, 126, 127, 128, 

and 129 

RIN 1400–AC37 

[Public Notice 8437] 

Amendment to the International Traffic 

in Arms Regulations: Registration and 

Licensing of Brokers, Brokering 

Activities, and Related Provisions 

AGENCY: Department of State. 

ACTION: Interim final rule. 

SUMMARY: The Department of State is 

issuing this interim final rule amending 

the International Traffic in Arms 

Regulations (ITAR) relating to brokers 

and brokering activities and to related 

provisions of the ITAR. These 

amendments clarify registration 

requirements, the scope of brokering 

activities, prior approval requirements 

and exemptions, procedures for 

obtaining prior approval and guidance, 

and reporting and recordkeeping of such 

activities. Conforming and technical 

changes are made to other parts of the 

ITAR that affect export as well as 

brokering activities. 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. 

DATES: This rule is effective October 25, 

2013. Interested parties may submit 

comments on this rule by October 10, 

2013. The Department will publish a 

final rule notifying of any changes to the 

rule pursuant to public comment 

assessment. 

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, 

‘‘Brokering Rule.’’ 

• Internet: At www.regulations.gov, 

search for this document by using this 

document’s RIN (1400–AC37). 

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. 

Sarah J. Heidema, Acting Director, 

Office of Defense Trade Controls Policy, 

U.S. Department of State, telephone 

(202) 663–2809, or email 

DDTCResponseTeam@state.gov. ATTN: 

Brokering Rule. The Department of 

State’s full retrospective plan can be 

accessed at http://www.state.gov/

documents/organization/181028.pdf. 

SUPPLEMENTARY INFORMATION: This rule 

makes changes to part 129 and related 

sections of the ITAR that regulate 

brokers and brokering activities and 

implement the brokering amendment to 

the Arms Export Control Act (AECA) 

(section 38(b)(1)(A)(ii) of the AECA, 22 

U.S.C. 2778(b)(1)(A)(ii)). 

The AECA was amended in 1996 

(Pub. L. 104–164) to provide for the 

regulation of brokering activities. The 

following year, implementing 

regulations were added to the ITAR in 

part 129. These regulations have 

remained unchanged except for two 

minor technical changes. 

In 2003, in a report to Congress, the 

Department of State noted that it was 

beginning a review of the brokering 

regulations. The purpose of the review 

was to assess the need to modify the 

regulations in light of the experience 

gained in administering them. Based on 

this experience as well as comments 

received from other agencies and 

industry, including the Defense Trade 

Advisory Group, a Department of State 

Federal advisory committee, the 

Department published a proposed rule 

on December 19, 2011 (see 

‘‘Amendment to the International 

Traffic in Arms Regulations: 

Registration and Licensing of Brokers, 

Brokering Activities, and Related 

Provisions,’’ 76 FR 78578) modifying 

the provisions relating to brokering and 

brokering activities. The comment 

period ended February 17, 2012. Thirtyone parties filed comments 

recommending changes, which were 

reviewed and considered by the 

Department and other agencies. The 

Department’s evaluation of the written 

comments and recommendations 

follows. 

The Department received numerous 

comments and recommendations 

regarding the definitions for terms and 

provisions set forth in ITAR part 129. 

The Department reviewed and 

considered these comments, and where 

the recommendations were in 

conformance with the requirements for 

brokering as set forth in the AECA, and 

clarified the regulation, the Department 

has made amendments accordingly. 

Twenty-seven commenting parties 

expressed concerns regarding the scope 

of ‘‘broker’’ and ‘‘brokering activities,’’ 

and that the revised definition of 

‘‘broker’’ in conjunction with the 

revised definition of ‘‘brokering 

activities’’ would result in a greatly 

increased number of persons requiring 

to register as brokers. In conformance 

with the statutory requirements for the 

brokering of defense articles and 

services, the Department has revised the 

proposed changes to these definitions to 

clarify their scope. In particular, the 

Department has clarified that foreign 

persons that are required to register as 

brokers are those that are in the United 

States and those foreign persons outside 

the United States that are owned/

controlled by a U.S. person. And the 

Department has removed from the 

definition of ‘‘brokering activities’’ the 

activities of any foreign person located 

outside the United States acting on 

behalf of a U.S. person. 

One commenting party requested 

clarification on whether the addition of 

‘‘or are otherwise charged’’ to ITAR 

§ 120.1(c)(2) would preclude any person 

charged with any export violation from 

applying for, obtaining, or using export 

control documents, and recommended 

the Department identify such ineligible 

parties to prevent applicants from 

including the ineligible parties on 

export license applications and other 

submissions. The Department confirms 

that any person charged with a violation 

of the U.S. criminal statutes enumerated 

in ITAR § 120.27 is generally ineligible 


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to be involved in ITAR-regulated 

activities. 

One commenting party noted that the 

addition of ‘‘source or manufacturer’’ to 

the list of ineligible persons in ITAR 

§ 120.1(d) could add a significant 

burden to applicants. The Department 

notes that applicants already should be 

screening all parties to their transaction, 

including screening the source or 

manufacturer. The addition of the 

phrase ‘‘source or manufacturer’’ is not 

a new requirement, but a clarification of 

requirements. 

Two commenting parties 

recommended reconsideration of the 

inclusion of reference to ‘‘foreign 

criminal statutes dealing with subject 

matter similar to that in the U.S. 

criminal statutes enumerated in ITAR 

§ 120.27,’’ as the reference is imprecise 

and may lead to confusion and 

misapplication, and that it would be an 

undue burden to supply this 

information. The Department has 

revised this provision to apply to the 

more specific circumstances of a person 

violating a foreign criminal law on 

exportation of defense articles where 

conviction of such law carries a 

minimum term of imprisonment of 

greater than one year. 

One commenting party recommended 

that the Department allow U.S. 

exporters registered pursuant to ITAR 

part 122 to include U.S. and foreign 

person third parties to be listed and 

identified as brokers in their Statements 

of Registration. The new ITAR 

§ 129.3(d) allows U.S. and foreign 

subsidiaries and affiliates owned or 

otherwise controlled by a registrant to 

be listed as brokers on the registrant’s 

manufacturer/exporter registration. The 

Department notes that while these 

entities, under these circumstances, are 

not required to submit a separate broker 

registration or pay a separate broker 

registration fee, all other requirements 

of ITAR part 129 apply to such brokers 

and their brokering activities. 

One commenting party recommended 

that revised ITAR § 122.2 be changed to 

impose notification requirements on 

foreign brokers, and not on the 

registrants. The inclusion of foreign 

affiliates or brokers in a registrant’s 

Statement of Registration may occur 

where the registrant owns or otherwise 

controls such foreign subsidiaries and 

affiliates who may be listed as brokers. 

As the registrant is the responsible party 

in this regard, the Department did not 

accept this recommendation. 

Several parties commented that the 

brokering prior approval requirement 

effectively results in multiple 

authorizations for the same transaction. 

These parties recommended that the 

logic of the removal of the former ITAR 

§ 126.8 requirement for prior approval 

of certain export activities be adopted in 

this instance, and require prior 

brokering approval only when no other 

U.S. export authorization would be 

applicable for regulation. Because the 

export or retransfer of U.S. origin 

defense articles, defense services, and 

technical data stemming from brokering 

activities still requires prior written 

authorization, the Department’s review 

or enforcement authority will not be 

diminished. The Department agrees 

with this assessment in part. Rather 

than requiring prior approval for 

brokering activities related to all U.S. 

Munitions List (USML) items, the new 

ITAR § 129.4 specifies which of these 

items requires prior approval for 

brokering generally consistent with U.S. 

international commitments or 

obligations. 

Seven parties expressed concerns 

regarding the proposed requirement in 

ITAR § 126.13 to identify brokers and 

brokering activities in all authorization 

requests. The parties stated this 

requirement would be burdensome, 

would supersede any prior approval 

exemption, would result in registrant 

liability for the actions of non-employee 

brokers, and could result in multiple 

license requirements for the same 

activity. The Department has removed 

this provision from the revised 

regulation. 

Two commenting parties 

recommended that the Department 

remove the proposed inclusion of 

brokers and brokering activities from the 

liabilities of the registrant in ITAR 

§ 127.1. The Department notes that this 

is not a new provision, but a 

clarification of existing requirements. 

One commenting party recommended 

the Department clarify that activities 

undertaken within the corporate family 

of a single registrant do not qualify as 

brokering under ITAR part 129. Section 

129.2 provides that brokering activity 

does not include activities performed by 

an affiliate on behalf of another affiliate. 

Two commenting parties 

recommended reconsideration of 

including ‘‘financing, insuring, 

transporting, and freight forwarding’’ 

and ‘‘soliciting’’ and ‘‘promoting’’ 

within the scope of ‘‘brokering 

activities.’’ The Department has 

provided an exemption for persons 

whose business is exclusively financing, 

insuring, transporting, or freight 

forwarding, as distinct from those who 

engage in these activities as part of their 

direct involvement in arranging 

transactions for defense articles or 

defense services or hold title to defense 

articles, even when no physical custody 

of defense articles is involved. In 

addition, the Department believes that 

‘‘soliciting’’ or ‘‘promoting’’ the 

purchase, sale, transfer, loan, or lease of 

a defense article or defense service is an 

integral aspect of a broker’s brokering 

activities, and therefore did not accept 

the recommendation to remove these 

activities from the definition of 

‘‘brokering activities.’’ 

Three commenting parties 

recommended clarification of the 

services a broker may receive from an 

attorney, to specifically provide that any 

kind of legal advice or any export 

compliance services provided by an 

attorney to a client is not within the 

definition of ‘‘brokering activities.’’ The 

Department has clarified that ‘‘activities 

by an attorney that do not extend 

beyond the provision of legal advice to 

clients’’ is not within the definition, and 

notes that ‘‘legal advice’’ includes the 

provision of export compliance advice 

by an attorney to a client. 

One commenting party recommended 

the removal of the requirement to 

provide information on what if any 

consideration is expected to be received 

with regard to a brokering activity, as it 

would be a duplication of reporting 

given the requirement to provide similar 

information pursuant to ITAR part 130. 

While the Department has removed this 

provision with regard to procedures for 

obtaining prior approval, it has not 

removed this requirement from the 

annual reporting of brokering activities. 

The part 130 requirement has reporting 

limitations that the brokering 

requirement does not have. 

One commenting party recommended 

the provision of an exhaustive list for 

the definition of brokering activities, 

which would obviate the need for the 

regulatory provision enabling 

Department guidance to industry upon 

request. The Department does not 

believe it is practicable to provide such 

a listing, and therefore did not accept 

this recommendation. 

While the Department agrees with one 

commenting party that the new 

reporting provision of the regulation 

does expand the list of required 

elements to report to the Department, it 

disagrees that this would be an undue 

burden on industry, as the requested 

information should be readily available 

to the broker, and would assist the 

Department in its statutory requirement 

to monitor this activity. 

One commenting party requested an 

expanded implementation period (12 

months) for the new brokering 

regulation, given the numerous changes 

involved. The Department notes that the 

proposed rule was published in 

December 2011, and an updated version 


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of the regulation has been available on 

the Department’s Directorate of Defense 

Trade Controls Web site since 

November 2012. The Department 

believes the affected public has had the 

opportunity to become informed of the 

impending changes, and therefore does 

not agree that a prolonged 

implementation period is necessary. 

One commenting party recommended 

the Department adopt a form DS–2032 

amendment process to enable persons to 

add brokering to their existing 

registrations once the new rule is 

implemented. The Department has 

added a provision to the regulations 

instructing registrants to apply for a 

consolidated registration covering 

manufacturers/exporters and brokers, as 

applicable, during their registration 

renewal rather than upon the effective 

date of this rule. The Department has 

added a similar provision to the 

regulations regarding the listing of firms 

on a Statement of Registration that are 

wholly owned or otherwise controlled, 

providing that registrants should notify 

the Department of these changes during 

their registration renewal, rather than 

within five days of the effective date of 

this rule (see ITAR § 129.8(d) and note 

to paragraph (d)). 

Other Changes 

Section 120.1 is amended to revise the 

section heading and make editorial 

changes in all paragraphs. Section 

120.20 is revised to provide a definition 

for ‘‘other approval.’’ Section 

120.25(a)(4) is revised to include 

‘‘brokering activity.’’ Section 120.27 is 

revised to update and clarify the 

definition for ‘‘U.S. criminal statutes.’’ 

Section 120.40 is added to provide a 

definition for ‘‘affiliate.’’ Section 120.44 

is added to provide a definition for 

‘‘foreign defense article or defense 

service.’’ 

Section 122.1 is revised to provide 

clarifications and editorial changes. 

Section 122.2 is revised by removing 

provisions regarding submission of 

registration fee payment, adding a 

provision regarding the reporting of 

affiliates on the Statement of 

Registration, and providing other 

clarifications and editorial changes. 

Section 122.3(a) is revised by removing 

the paragraphs describing the 

registration fee, and providing a 

reference to the DDTC Web site for this 

information. Section 122.4(a) is revised 

to provide clarifications and editorial 

changes, and to add provisions 

instructing registrants to apply for a 

consolidated registration covering 

manufacturers/exporters and brokers, as 

applicable, and to notify the Department 

of changes to their registrations 

regarding the listing of firms that are 

wholly owned or otherwise controlled, 

during their registration renewal rather 

than upon the effective date of this rule. 

Section 126.1 is revised to provide 

clarification and editorial changes, and 

to provide a definition for terms used in 

paragraph (e). Section 126.13 is revised 

to provide updated process information, 

as well clarifications and editorial 

changes. 

Part 127 is revised to reorganize, 

clarify, and provide editorial changes to 

sections 1, 2, and 7, and remove section 

8 (regarding interim suspensions). 

Additionally, ITAR §§ 127.9, 128.2, 

128.3, 128.15, and 128.17 are amended 

to remove references to interim 

suspension, given removal of ITAR 

§ 127.8. 

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 

has published this rule as a proposed 

rule (76 FR 78578) with a 60-day 

provision for public comment and 

without prejudice to its determination 

that controlling the import and export, 

and brokering thereof, of defense 

articles and defense services is a foreign 

affairs function. 

Regulatory Flexibility Act 

Since the Department is of the 

opinion that this rule is exempt from the 

provisions of 5 U.S.C. 553, there is no 

requirement for an analysis under the 

Regulatory Flexibility Act. 

Unfunded Mandates Reform Act of 1995 

This rulemaking does not involve a 

mandate that will result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any year and it will not significantly 

or uniquely affect small governments. 

Therefore, no actions were deemed 

necessary under the provisions of the 

Unfunded Mandates Reform Act of 

1995. 

Small Business Regulatory Enforcement 

Fairness Act of 1996 

Based on the criteria of 5 U.S.C. 

804(2), the Department does not believe 

this rulemaking will have an annual 

effect on the economy of $100,000,000 

or more. The Department estimates that 

approximately 1,300 of the currentlyregistered brokers will not need to 

maintain registration following 

implementation of this rule, and that 

approximately 300 brokers will be 

eligible to consolidate into their 

manufacturer/exporter registration and 

no longer be required to pay a broker 

registration fee. This estimate is based 

on internal data on the number of 

foreign person brokers who are now 

registered but will not need to be so 

after implementation of the revised 

brokering regulation in the first 

instance, and the number of registered 

manufacturers/exporters who are also 

registered as brokers in the second 

instance. The submission of 1,600 fewer 

brokering-only registration applications 

would result in an annual time burden 

reduction of 3,200 hours for the public, 

based on the revised burden of two 

hours to complete a Statement of 

Registration. In addition, this would 

result in the elimination of 

approximately $3,600,000 in registration 

fees that otherwise would have been 

collected by the Department. 

A rule is also considered ‘‘major’’ if it 

will result in a major increase in costs 

or prices for consumers, individual 

industries, Federal, state, or local 

government agencies, or geographic 

regions. The Department does not 

anticipate major increases in any of 

those categories. As described in the 

preceding paragraph, this rule, among 

other things, clarifies who is required to 

register as a broker of defense articles 

and services. The clarification will 

result in fewer persons registering as 

brokers. These brokers will no longer 

have the expense of registering as 

brokers with the Department. 

Finally, a rule is considered major if 

it will have significant adverse effects 

on competition, employment, 

investment, productivity, innovation, or 

on the ability of United States-based 

enterprises to compete with foreignbased enterprises in domestic and 

foreign markets. To the extent that a 

clarification of regulatory scope that 

leads to the decrease in the types of 

regulated persons and types of regulated 

activities results in an economic 

competitive advantage, the Department 

anticipates that this rule will not have 

an adverse effect in these categories. 

This rulemaking has been found not 

to be a major rule within the meaning 

of the 5 U.S.C. 804. 

Executive Orders 13132 and 12372 

This rulemaking will not have 

substantial direct effects on the States, 

on the relationship between the national 


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Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Rules and Regulations 52683 

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 rulemaking 

does not have sufficient federalism 

implications to require consultations or 

warrant the preparation of a federalism 

summary impact statement. The 

regulations implementing Executive 

Order 12372 regarding 

intergovernmental consultation on 

Federal programs and activities do not 

apply to this rulemaking. 

Executive Orders 12866 and 13563 

Executive Orders 12866 and 13563 

direct agencies to assess 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). 

These executive orders stress 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, 

this rule has been reviewed by the 

Office of Management and Budget 

(OMB). 

Executive Order 12988 

The Department of State has reviewed 

this rulemaking 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 pre-empt tribal law. 

Accordingly, the provisions of 

Executive Order 13175 do not apply to 

this rulemaking. 

Paperwork Reduction Act 

The Paperwork Reduction Act 

(‘‘PRA,’’ 44 U.S.C. 3501 et seq.) requires 

all Federal agencies to analyze proposed 

regulations for potential burdens on the 

regulated community created by 

provisions in the proposed regulations 

that require the submission or retention 

of information. As part of its continuing 

effort to reduce paperwork and 

respondent burden, and to conform with 

the requirements as set forth in this rule, 

the Department of State has submitted 

the following approved information 

collections to the Office of Management 

and Budget (OMB) for re-approval, in 

light of the changes to these collections: 

DS–2032, Statement of Registration 

(approved by OMB under control 

number 1405–0002); the Annual 

Brokering Report (OMB control number 

1405–0141); and Brokering Prior 

Approval (OMB control number 1405– 

0142). 

Information Collection 

• Title of Information Collection: DS– 

2032 Statement of Registration 

• OMB Control Number: 1405–0002 

• Type of Request: Revision of Currently 

Approved 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: 

11,500 

• Estimated Number of Responses: 

11,500 

• Average Hours per Response: 2 hours 

• Total Estimated Burden: 23,000 hours 

• Frequency: Annually and On 

Occasion 

• Obligation to Respond: Mandatory 

• Title of Information Collection: 

Annual Brokering Report 

• OMB Control Number: 1405–0141 

• Type of Request: Revision of 

Currently Approved Collection 

• Originating Office: Bureau of 

Political-Military Affairs, Directorate 

of Defense Trade Controls, PM/DDTC 

• Form Number: None 

• Respondents: Business and Nonprofit 

Organizations 

• Estimated Number of Respondents: 

760 

• Estimated Number of Responses: 760 

• Average Hours per Response: 2 hours 

• Total Estimated Burden: 1,520 hours 

• Frequency: Annually 

• Obligation to Respond: Mandatory 

• Title of Information Collection: 

Brokering Prior Approval (License) 

• OMB Control Number: 1405–0142 

• Type of Request: Revision of 

Currently Approved Collection 

• Originating Office: Bureau of 

Political-Military Affairs, Directorate 

of Defense Trade Controls, PM/DDTC 

• Form Number: None 

• Respondents: Business and Nonprofit 

Organizations 

• Estimated Number of Respondents: 

760 

• Estimated Number of Responses: 150 

• Average Hours Per Response: 2 hours 

• Total Estimated Burden: 300 hours 

• Frequency: On Occasion 

• Obligation to Respond: Required to 

Obtain Benefits 

We are soliciting public comments to 

permit the Department to: 

• Evaluate whether the proposed 

collections of information is necessary 

for the proper functions of the 

Department. 

• Evaluate the accuracy of our 

estimate of the burden of the proposed 

collections, 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. 

Please note that comments submitted 

in response to this document are public 

record. Before including any detailed 

personal information, you should be 

aware that your comments as submitted, 

including your personal information, 

will be available for public review. 

Submit comments on these 

information collections (and not the rule 

within which notice of these collections 

is provided) to OMB up to 30 days from 

date of publication in the Federal 

Register. 

Direct comments on these information 

collections to the Department of State 

Desk Officer in the Office of Information 

and Regulatory Affairs at the Office of 

Management and Budget (OMB). You 

may submit comments by the following 

methods: 

• Email: 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. 

Comments and questions regarding 

the collections listed in this document 

should be directed to Daniel L. Cook, 

Chief, Compliance and Registration 

Division, Office of Defense Trade 

Controls Compliance, Directorate of 

Defense Trade Controls, Department of 

State, 12th Floor, SA–1, 2401 E Street 

NW., Washington, DC 20037; or email 

DDTCResponseTeam@state.gov, with 

the subject line ‘‘Brokering Rule 

Information Collections.’’ 

Abstract of Proposed Collections: The 

export, temporary import, temporary 

export, and brokering of defense 

articles, defense services, and related 

technical data are licensed by the 

Department of State in accordance with 

the International Traffic in Arms 

Regulations (22 CFR parts 120–130) and 


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52684 Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Rules and Regulations 

Section 38 of the Arms Export Control 

Act. Those of the public who 

manufacture or export defense articles, 

defense services, and related technical 

data, or the brokering thereof, must 

register with the Department of State. 

Persons desiring to engage in brokering 

activities must submit an application or 

written request to conduct the 

transaction to the Department to obtain 

a decision whether it is in the interests 

of U.S. foreign policy and national 

security to approve the transaction. 

Also, registered brokers must submit 

annual reports regarding all brokering 

activity that was transacted, and 

registered manufacturers and exporters 

must maintain records of defense trade 

activities for five years. 

Methodology: These forms/

information collections may be sent to 

the Directorate of Defense Trade 

Controls via email, regular mail, or 

personal delivery. 

Summary of Proposed Changes to the 

Information Collections: The proposed 

changes to the DS–2032, Statement of 

Registration, follow the changes to ITAR 

parts 122 and 129. One change would 

allow manufacturers/exporters to 

register as brokers on the same form, 

with one registration fee. In addition, 

the form asks for more information 

regarding company structure, 

specifically for information on 

intermediary and ultimate parents of the 

registering party, if applicable. Finally, 

the form requests further clarification 

when the registrant is foreign (non-U.S.) 

owned or controlled. 

As a result of the changes to the 

brokering regulations, the Department 

estimates there will be time burden and 

cost reductions to the public with regard 

to the Statement of Registration 

collection. The Department estimates 

that approximately 1,300 of the 

currently-registered brokers will not 

need to maintain registration following 

implementation of this rule, and that 

approximately 300 brokers will be 

eligible to consolidate into their 

manufacturer/exporter registration and 

no longer be required to pay a broker 

registration fee. This estimate is based 

on Department data on the number of 

foreign person brokers who are now 

registered but will not need to be so 

after implementation of the revised 

brokering regulation in the first 

instance, and the number of registered 

exporters who are also registered as 

brokers in the second instance. The 

submission of 1,600 fewer brokeringonly registration applications would 

result in an annual time burden 

reduction of 3,200 hours for the public, 

based on the revised burden of two 

hours to complete a Statement of 

Registration. In addition, this would 

result in the elimination of 

approximately $3,600,000 in registration 

fees that otherwise would have been 

collected by the Department. 

The revised regulations provide that 

the Annual Brokering Report collection 

be submitted with the DS–2032, as an 

attachment. New information that is 

required on the report includes the 

following: Brokering registration code; 

signature and certification of the report 

by an empowered official; identification 

of all parties involved in the brokering 

transaction (formerly, the regulations 

required only the identification of 

purchasers and recipients); and 

identification of the source of any 

consideration paid for the brokering 

transaction. 

As a result of the changes to the 

brokering regulations, the Department 

estimates there will be time burden 

reductions to the public with regard to 

the Annual Brokering Report collection. 

The Department estimates that the 

reduction in the number of responses 

and the annual time burden for this 

collection will reflect the reduction in 

the number of brokers who need to 

register: 1,300 fewer responses, with a 

burden reduction of 2,600 hours 

annually. Those who would no longer 

need to register as brokers as a result of 

the changes to the brokering regulation 

will no longer be required to submit a 

brokering report. 

Clarification of the requirements for 

obtaining Brokering Prior Approval 

result in the applicant providing 

additional information, to include the 

following: categorization of the types of 

defense articles and services to be 

brokered, including whether the defense 

articles are significant military 

equipment; identification of the type of 

sale that is to be brokered (commercial 

or under the Foreign Military Sales 

program); listing of any consideration 

expected to be received; and signature 

of an empowered official certifying the 

information provided is complete and 

accurate. The Department does not 

anticipate any time burden changes or 

change in number of responses for this 

information collection at this time. 

List of Subjects 

22 CFR Part 120 

Arms and munitions, Classified 

information, Exports. 

22 CFR Part 122 

Arms and munitions, Exports, 

Reporting and recordkeeping 

requirements. 

22 CFR Part 126 

Arms and munitions, Exports. 

22 CFR Part 127 

Arms and munitions, Crime, Exports, 

Penalties, Seizures and forfeitures. 

22 CFR Part 128 

Administrative practice and 

procedure, Arms and munitions, 

Exports. 

22 CFR Part 129 

Arms and munitions, Brokers, 

Exports, Technical assistance. 

Accordingly, for the reasons set forth 

above, Title 22, Chapter I, Subchapter 

M, parts 120, 122, 126, 127, 128, and 

129 are 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; 22 U.S.C. 2651a; Pub. 

L. 105–261, 112 Stat. 1920; Pub. L. 111–266; 

Section 1261, Pub. L. 112–239; E.O. 13637, 

78 FR 16129. 

■ 2. Section 120.1 is revised to read as 

follows: 

§ 120.1 General authorities, receipt of 

licenses, and ineligibility. 

(a) Section 38 of the Arms Export 

Control Act (22 U.S.C. 2778), as 

amended, authorizes the President to 

control the export and import of defense 

articles and defense services. The 

statutory authority of the President to 

promulgate regulations with respect to 

exports of defense articles and defense 

services is delegated to the Secretary of 

State by Executive Order 13637. This 

subchapter implements that authority, 

as well as other relevant authorities in 

the Arms Export Control Act (22 U.S.C. 

2751 et seq.). By virtue of delegations of 

authority by the Secretary of State, these 

regulations are primarily administered 

by the Deputy Assistant Secretary of 

State for Defense Trade Controls and the 

Managing Director of the Directorate of 

Defense Trade Controls, Bureau of 

Political-Military Affairs. 

(b)(1) Authorized officials. All 

authorities conferred upon the Deputy 

Assistant Secretary of State for Defense 

Trade Controls or the Managing Director 

for the Directorate of Defense Trade 

Controls by this subchapter may be 

exercised at any time by the Under 

Secretary of State for Arms Control and 

International Security or the Assistant 

Secretary of State for Political-Military 

Affairs unless the Legal Adviser or the 

Assistant Legal Adviser for PoliticalMilitary Affairs of the Department of 

State determines that any specific 


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exercise of this authority under this 

paragraph may be inappropriate. 

(2) In the Bureau of Political-Military 

Affairs, there is a Deputy Assistant 

Secretary of State for Defense Trade 

Controls and a Managing Director for 

the Directorate of Defense Trade 

Controls. The Deputy Assistant 

Secretary of State for Defense Trade 

Controls and Managing Director for the 

Directorate of Defense Trade Controls 

are responsible for exercising the 

authorities conferred under this 

subchapter. The Deputy Assistant 

Secretary of State for Defense Trade 

Controls is responsible for oversight of 

the defense trade controls function. The 

Managing Director for the Directorate of 

Defense Trade Controls is responsible 

for the Directorate of Defense Trade 

Controls, which oversees the 

subordinate offices described in 

paragraphs (b)(2)(ii) through (b)(2)(iv) of 

this section. 

(i) The Managing Director will have 

responsibilities related to the 

management of defense trade controls 

operations, to include the exercise of 

general authorities in this part 120, and 

the design, development, and 

refinement of processes, activities, and 

functional tools for the export licensing 

regime and to effect export compliance/ 

enforcement activities. 

(ii) The Office of Defense Trade 

Controls Licensing and the Director, 

Office of Defense Trade Controls 

Licensing, which have responsibilities 

related to licensing or other 

authorization of defense trade, 

including references under parts 120, 

123, 124, 125, 126, 129, and 130 of this 

subchapter. 

(iii) The Office of Defense Trade 

Controls Compliance and the Director, 

Office of Defense Trade Controls 

Compliance, which have 

responsibilities related to violations of 

law or regulation and compliance 

therewith, including references 

contained in parts 122, 126, 127, 128, 

and 130 of this subchapter, and that 

portion under part 129 of this 

subchapter pertaining to registration. 

(iv) The Office of Defense Trade 

Controls Policy and the Director, Office 

of Defense Trade Controls Policy, which 

have responsibilities related to the 

general policies of defense trade, 

including references under this part 120 

and part 126 of this subchapter, and the 

commodity jurisdiction procedure 

under this subchapter, including under 

this part 120. 

(c) Receipt of licenses and eligibility. 

(1) A U.S. person may receive a license 

or other approval pursuant to this 

subchapter. A foreign person may not 

receive such a license or other approval, 

except as follows: 

(i) A foreign governmental entity in 

the U.S. may receive a license or other 

approval; 

(ii) A foreign person may receive a 

reexport or retransfer approval; or 

(iii) A foreign person may receive a 

prior approval for brokering activities. 

A request for a license or other 

approval by a U.S. person or by a person 

referred to in paragraphs (c)(1)(i) and 

(c)(1)(iii) of this section will be 

considered only if the applicant has 

registered with the Directorate of 

Defense Trade Controls pursuant to part 

122 or 129 of this subchapter, as 

appropriate. 

(2) Persons who have been convicted 

of violating the U.S. criminal statutes 

enumerated in § 120.27, who have been 

debarred pursuant to part 127 or 128 of 

this subchapter, who are subject to 

indictment or are otherwise charged 

(e.g., charged by criminal information in 

lieu of indictment) with violating the 

U.S. criminal statutes enumerated in 

§ 120.27, who are ineligible to contract 

with or to receive a license or other form 

of authorization to import defense 

articles or defense services from any 

agency of the U.S. Government, who are 

ineligible to receive an export license or 

other approval from any other agency of 

the U.S. Government, or who are subject 

to a Department of State policy of 

denial, suspension, or revocation under 

§ 126.7(a) of this subchapter, are 

generally ineligible to be involved in 

activities regulated under the 

subchapter. 

(d) The exemptions provided in this 

subchapter do not apply to transactions 

in which the exporter, any party to the 

export (see § 126.7(e) of this 

subchapter), any source or 

manufacturer, broker or other 

participant in the brokering activities, is 

generally ineligible as set forth in 

paragraph (c)(2) of this section, unless 

prior written authorization has been 

granted by the Directorate of Defense 

Trade Controls. 

■ 3. Section 120.20 is revised to read as 

follows: 

§ 120.20 License or other approval. 

License means a document bearing 

the word ‘‘license’’ issued by the 

Managing Director, Directorate of 

Defense Trade Controls, or his 

authorized designee that permits the 

export, temporary import, or brokering 

of a specific defense article or defense 

service controlled by this subchapter. 

Other approval means a document 

issued by the Managing Director, 

Directorate of Defense Trade Controls, 

or his authorized designee, that 

approves an activity regulated by this 

subchapter (e.g., approvals for brokering 

activities or retransfer authorizations), 

or the use of an exemption to the license 

requirements as described in this 

subchapter. 

■ 4. Section 120.25 is amended by 

revising paragraph (a)(4)(i) and adding 

paragraph (b), to read as follows: 

§ 120.25 Empowered official. 

(a) * * * 

(4) * * * 

(i) Inquire into any aspect of a 

proposed export, temporary import, or 

brokering activity by the applicant; 

* * * * * 

(b) For the purposes of a broker who 

is a foreign person, the empowered 

official may be a foreign person who 

otherwise meets the criteria for an 

empowered official in paragraph (a) of 

this section. 

■ 5. Section 120.27 is amended by 

revising paragraphs (a)(3), (a)(6), (a)(8), 

(a)(12), and (a)(13), removing and 

reserving paragraph (a)(11), and adding 

paragraphs (a)(14) through (a)(18), to 

read as follows: 

§ 120.27 U.S. criminal statutes. 

(a) * * * 

(3) Section 793, 794, or 798 of title 18, 

United States Code (relating to 

espionage involving defense or 

classified information) or section 2332d, 

2339A, 2339B, 2339C, or 2339D of such 

title (relating to financial transactions 

with the government of a country 

designated as a country supporting 

international terrorism, providing 

material support to terrorists or terrorist 

organizations, financing of terrorism, or 

receiving military-type training from a 

foreign terrorist organization); 

* * * * * 

(6) Section 30A of the Securities 

Exchange Act of 1934 (15 U.S.C. 78dd– 

1) or section 104 of the Foreign Corrupt 

Practices Act (15 U.S.C. 78dd–2 or 

78dd–3); 

* * * * * 

(8) Section 4(b) of the Internal 

Security Act of 1950 (relating to 

communication of classified 

information; 50 U.S.C. 783(a)); 

* * * * * 

(11) [Reserved] 

(12) Section 371 of title 18, United 

States Code (when it involves 

conspiracy to violate any of the statutes 

listed in this section); 

(13) Sections 3, 4, 5, and 6 of the 

Intelligence Reform and Terrorism 

Prevention Act of 2004, Public Law 

108–458 sections 6903–6906, relating to 

missile systems designed to destroy 

aircraft (18 U.S.C. 2332g), prohibitions 


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governing atomic weapons (42 U.S.C. 

2122), radiological dispersal services (18 

U.S.C. 2332h), and variola virus (18 

U.S.C. 175c); 

(14) Sections 2779 and 2780 of title 

22, United States Code (relating to fees 

of military sales agents and other 

payments, and transactions with 

countries supporting acts of 

international terrorism); 

(15) Section 542 of title 18, United 

States Code (relating to the entry of 

goods by means of false statements), 

where the underlying offense involves a 

defense article, including technical data, 

or violations related to the Arms Export 

Control Act or International Traffic in 

Arms Regulations; 

(16) Section 545 of title 18, United 

States Code (relating to smuggling goods 

into the United States), where the 

underlying offense involves a defense 

article, including technical data, or 

violations related to the Arms Export 

Control Act or International Traffic in 

Arms Regulations; 

(17) Section 554 of title 18, United 

States Code (relating to smuggling goods 

from the United States), where the 

underlying offense involves a defense 

article, including technical data, or 

violations related to the Arms Export 

Control Act or International Traffic in 

Arms Regulations; and 

(18) Section 1001 of title 18, United 

States Code (relating to false statements 

or entries generally), Section 1831 of 

title 18, United States Code (relating to 

economic espionage), and Section 1832 

of title 18, United States Code (relating 

to theft of trade secrets) where the 

underlying offense involves a defense 

article, including technical data, or 

violations related to the Arms Export 

Control Act or International Traffic in 

Arms Regulations. 

* * * * * 

■ 6. Section 120.40 is added to read as 

follows: 

§ 120.40 Affiliate. 

An affiliate of a registrant is a person 

that directly, or indirectly through one 

or more intermediaries, controls, or is 

controlled by, or is under common 

control with, such registrant. 

Note to § 120.40: For purposes of this 

section, ‘‘control’’ means having the 

authority or ability to establish or direct the 

general policies or day-to-day operations of 

the firm. Control is rebuttably presumed to 

exist where there is ownership of 25 percent 

or more of the outstanding voting securities 

if no other person controls an equal or larger 

percentage. 

■ 7. Section 120.43 is added and 

reserved, as follows: 

§ 120.43 [Reserved] 

■ 8. Section 120.44 is added to read as 

follows: 

§ 120.44 Foreign defense article or 

defense service. 

Foreign defense article or defense 

service means any article or service 

described on the U.S. Munitions List of 

non-U.S. origin. Unless otherwise 

provided in this subchapter, the terms 

defense article and defense service refer 

to both U.S. and foreign origin defense 

articles and defense services described 

on the U.S. Munitions List. A defense 

article or defense service is determined 

exclusively in accordance with the 

Arms Export Control Act and this 

subchapter, regardless of any 

designation (either affirming or 

contrary) that may be attributed to the 

same article or service by any foreign 

government or international 

organization. 

PART 122—REGISTRATION OF 

MANUFACTURERS AND EXPORTERS 

■ 9. The authority citation for part 122 

is revised to read as follows: 

Authority: Sections 2 and 38, Pub. L. 90– 

629, 90 Stat. 744 (22 U.S.C. 2752, 2778); 22 

U.S.C. 2651a; E.O. 13637, 78 FR 16129. 

■ 10. Section 122.1 is revised to read as 

follows: 

§ 122.1 Registration requirements. 

(a) Any person who engages in the 

United States in the business of 

manufacturing or exporting or 

temporarily importing defense articles, 

or furnishing defense services, is 

required to register with the Directorate 

of Defense Trade Controls under § 122.2. 

For the purpose of this subchapter, 

engaging in such a business requires 

only one occasion of manufacturing or 

exporting or temporarily importing a 

defense article or furnishing a defense 

service. A manufacturer who does not 

engage in exporting must nevertheless 

register. (See part 129 of this subchapter 

for requirements for registration of 

persons who engage in brokering 

activities.) 

(b) Exemptions. The registration 

requirements of paragraph (a) of this 

section do not apply to: 

(1) Officers and employees of the U.S. 

Government acting in an official 

capacity; 

(2) Persons whose pertinent business 

activity is confined to the production of 

unclassified technical data only; 

(3) Persons all of whose 

manufacturing and export activities are 

licensed under the Atomic Energy Act 

of 1954, as amended; or 

(4) Persons who engage in the 

fabrication of articles solely for 

experimental or scientific purposes, 

including research and development. 

Note to paragraph (b): Persons who qualify 

for the exemptions in paragraphs (b)(2) or 

(b)(4) of this section remain subject to the 

requirements for licenses or other approvals 

for exports of defense articles and defense 

services and may not receive an export 

license or approval unless registered under 

§ 122.2. 

(c) Purpose. Registration is primarily 

a means to provide the U.S. Government 

with necessary information on who is 

involved in certain manufacturing and 

exporting activities. Registration does 

not confer any export rights or 

privileges. It is generally a precondition 

to the issuance of any license or other 

approval under this subchapter, unless 

an exception is granted by the 

Directorate of Defense Trade Controls. 

■ 11. Section 122.2 is amended by 

revising paragraphs (a), (b)(1), and 

(b)(2), to read as follows: 

§ 122.2 Submission of registration 

statement. 

(a) General. An intended registrant 

must submit a Statement of Registration 

(Department of State form DS–2032) to 

the Office of Defense Trade Controls 

Compliance by following the 

submission guidelines available on the 

Directorate of Defense Trade Controls 

Web site at www.pmddtc.state.gov. The 

Statement of Registration must be 

signed by a U.S. person senior officer 

(e.g., chief executive officer, president, 

secretary, partner, member, treasurer, 

general counsel) who has been 

empowered by the intended registrant to 

sign such documents. The Statement of 

Registration may include subsidiaries 

and affiliates when more than 50 

percent of the voting securities are 

owned by the registrant or the 

subsidiaries and affiliates are otherwise 

controlled by the registrant (see § 120.40 

of this subchapter). The intended 

registrant also shall submit 

documentation that demonstrates that it 

is incorporated or otherwise authorized 

to do business in the U.S. 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) * * * 

(1) Whether the intended registrant or 

its parent, subsidiary, or other affiliate 

listed in the Statement of Registration, 

or any of its chief executive officers, 


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presidents, vice presidents, secretaries, 

partners, members, other senior officers 

or officials (e.g., comptroller, treasurer, 

general counsel), or any member of the 

board of directors of the intended 

registrant, or of any parent, subsidiary, 

or other affiliate listed in the Statement 

of Registration: 

(i) Has ever been indicted or 

otherwise charged (e.g., charged by 

criminal information in lieu of 

indictment) for or has been convicted of 

violating any U.S. criminal statutes 

enumerated in § 120.27 of this 

subchapter or violating a foreign 

criminal law on exportation of defense 

articles where conviction of such law 

carries a minimum term of 

imprisonment of greater than 1 year; or 

(ii) Is ineligible to contract with, or to 

receive a license or other approval to 

import defense articles or defense 

services from, or to receive an export 

license or other approval from, any 

agency of the U.S. Government; and 

(2) Whether the intended registrant is 

foreign owned or foreign controlled (see 

§ 120.37 of this subchapter). If the 

intended registrant is foreign owned or 

foreign controlled, the certification shall 

include an explanation of such 

ownership or control, including the 

identities of the foreign person or 

persons who ultimately own or control 

the registrant. This requirement applies 

to a registrant who is a U.S. person and 

is owned or controlled by a foreign 

person. It also applies to a registrant 

who is a foreign person and is owned or 

controlled by a foreign person from the 

same country or a foreign person from 

another country. 

■ 12. Section 122.3 is amended by 

revising paragraph (a) to read as follows: 

§ 122.3 Registration fees. 

(a) Frequency of registration and fee. 

A person who is required to register 

must do so on an annual basis by 

submitting a completed Statement of 

Registration (form DS–2032) and 

payment of a fee following the payment 

guidelines available on the Directorate 

of Defense Trade Controls Web site at 

www.pmddtc.state.gov. For those 

renewing a registration, notice of the fee 

due for the next year’s registration will 

be sent to the registrant of record at least 

60 days prior to its expiration date. 

* * * * * 

■ 13. Section 122.4 is amended by 

revising paragraph (a), and adding notes 

to paragraph (a), to read as follows: 

§ 122.4 Notification of changes in 

information furnished by registrants. 

(a) A registrant must, within five days 

of the event, provide to the Directorate 

of Defense Trade Controls a written 

notification, signed by a senior officer 

(e.g., chief executive officer, president, 

secretary, partner, member, treasurer, 

general counsel), if: 

(1) Any of the persons referred to in 

§ 122.2(b) is indicted or otherwise 

charged (e.g., by criminal information in 

lieu of indictment) for or convicted of 

violating any of the U.S. criminal 

statutes enumerated in § 120.27 of this 

subchapter or violating a foreign 

criminal law on exportation of defense 

articles where conviction of such law 

carries a minimum term of 

imprisonment of greater than 1 year, or 

becomes ineligible to contract with, or 

to receive a license or other approval to 

export or temporarily import defense 

articles or defense services from any 

agency of the U.S. Government; or 

(2) There is a change in the following 

information contained in the Statement 

of Registration: 

(i) Registrant’s name; 

(ii) Registrant’s address; 

(iii) Registrant’s legal organization 

structure; 

(iv) Ownership or control; 

(v) The establishment, acquisition, or 

divestment of a U.S. or foreign 

subsidiary or other affiliate who is 

engaged in manufacturing defense 

articles, exporting defense articles or 

defense services; or 

(vi) Board of directors, senior officers, 

partners, or owners. 

Note 1 to paragraph (a): All other changes 

in the Statement of Registration must be 

provided as part of annual registration 

renewal. 

Note 2 to paragraph (a): For one year from 

the effective date of the rule, ‘‘Amendment to 

the International Traffic in Arms Regulations: 

Registration and Licensing of Brokers, 

Brokering Activities, and Related 

Provisions,’’ RIN 1400–AC37, the following 

changes must be provided as part of the 

annual registration renewal: Pursuant to 

§ 129.3(d) of this subchapter, changes to 

combine an existing broker registration with 

an existing manufacturer/exporter 

registration; and pursuant to § 122.2(a) of this 

subchapter, changes to an existing 

registration to remove partially owned and 

not otherwise controlled subsidiaries or 

affiliates, which are not the subject of an 

internal reorganization, merger, acquisition, 

or divestiture. 

* * * * * 

PART 126—GENERAL POLICIES AND 

PROVISIONS 

■ 14. The authority citation for part 126 

continues to read as follows: 

Authority: Secs. 2, 38, 40, 42, and 71, Pub. 

L. 90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 

2780, 2791, and 2797); 22 U.S.C. 2651a; 22 

U.S.C. 287c; E.O. 12918, 59 FR 28205; 3 CFR, 

1994 Comp., p. 899; Sec. 1225, Pub. L. 108– 

375; Sec. 7089, Pub. L. 111–117; Pub. L. 111– 

266; Sections 7045 and 7046, Pub. L. 112–74; 

E.O. 13637, 78 FR 16129. 

* * * * * 

■ 15. Section 126.1 is amended by 

revising paragraphs (a), (b), and (e), and 

adding a note to paragraph (e), to read 

as follows: 

§ 126.1 Prohibited exports, imports, and 

sales to or from certain countries. 

(a) General. It is the policy of the 

United States to deny licenses and other 

approvals for exports and imports of 

defense articles and defense services, 

destined for or originating in certain 

countries. This policy applies to 

Belarus, Cuba, Eritrea, Iran, North 

Korea, Syria, and Venezuela. This 

policy also applies to countries with 

respect to which the United States 

maintains an arms embargo (e.g., Burma, 

China, and the Republic of the Sudan) 

or whenever an export would not 

otherwise be in furtherance of world 

peace and the security and foreign 

policy of the United States. Information 

regarding certain other embargoes 

appears elsewhere in this section. 

Comprehensive arms embargoes are 

normally the subject of a Department of 

State notice published in the Federal 

Register. The exemptions provided in 

this subchapter, except §§ 123.17, 126.4, 

and 126.6 of this subchapter or when 

the recipient is a U.S. Government 

department or agency, do not apply 

with respect to defense articles or 

defense services originating in or for 

export to any proscribed countries, 

areas, or persons identified in this 

section or to brokering activities 

involving such countries, areas, or 

persons. (See § 129.7 of this subchapter, 

which imposes restrictions on brokering 

activities similar to those in this 

section.) 

(b) Shipments. A defense article 

licensed or otherwise authorized for 

export, temporary import, reexport, or 

retransfer under this subchapter may 

not be shipped on a vessel, aircraft, 

spacecraft, or other means of 

conveyance that is owned by, operated 

by, leased to, or leased from any of the 

proscribed countries, areas, or other 

persons referred to in this section. 

* * * * * 

(e)(1) Proposed and final sales. No 

sale, export, transfer, reexport, or 

retransfer of, and no proposal or 

presentation to sell, export, transfer, 

reexport, or retransfer, any defense 

articles or defense services subject to 

this subchapter may be made to any 

country referred to in this section 

(including the embassies or consulates 

of such a country), or to any person 


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acting on its behalf, whether in the 

United States or abroad, without first 

obtaining a license or written approval 

of the Directorate of Defense Trade 

Controls. However, in accordance with 

paragraph (a) of this section, it is the 

policy of the Department of State to 

deny licenses and approvals in such 

cases. 

(2) Duty to notify. Any person who 

knows or has reason to know of a 

proposed, final, or actual sale, export, 

transfer, reexport, or retransfer of 

articles, services, or data as described in 

paragraph (e)(1) of this section must 

immediately inform the Directorate of 

Defense Trade Controls. Such 

notifications should be submitted to the 

Office of Defense Trade Controls 

Compliance, Directorate of Defense 

Trade Controls. 

Note to paragraph (e): ‘‘Proposal’’ and 

‘‘presentation’’ mean the communication of 

information in sufficient detail that it would 

permit an intended purchaser to decide to 

acquire the article in question or to enter into 

an agreement as described in part 124 of this 

subchapter. For example, communicating 

information on the equipment’s performance 

characteristics, price, and probable 

availability for delivery would be a proposal 

or presentation requiring a license or other 

approval. 

* * * * * 

■ 16. Section 126.13 is amended by 

revising paragraphs (a)(1) through (a)(4), 

(b), and (c), to read as follows: 

§ 126.13 Required information. 

(a) * * * 

(1) The applicant or the chief 

executive officer, president, vicepresidents, secretary, partner, member, 

other senior officers or officials (e.g., 

comptroller, treasurer, general counsel) 

or any member of the board of directors 

is the subject of an indictment or has 

been otherwise charged (e.g., by 

criminal information in lieu of 

indictment) for, or has been convicted 

of, violating any of the U.S. criminal 

statutes enumerated in § 120.27 of this 

subchapter; 

(2) The applicant or the chief 

executive officer, president, vicepresidents, secretary, partner, member, 

other senior officers or officials (e.g., 

comptroller, treasurer, general counsel) 

or any member of the board of directors 

is ineligible to contract with, or to 

receive a license or other approval to 

temporarily import or export defense 

articles or defense services from any 

agency of the U.S. Government; 

(3) To the best of the applicant’s 

knowledge, any party to the export as 

defined in § 126.7(e) has been convicted 

of violating any of the U.S. criminal 

statutes enumerated in § 120.27 of this 

subchapter, or is ineligible to contract 

with, or to receive a license or other 

approval to temporarily import or 

export defense articles or defense 

services from any agency of the U.S. 

government; and 

(4) The natural person signing the 

application, notification, or other 

request for approval (including the 

statement required by this subchapter) 

is a citizen or national of the United 

States, has been lawfully admitted to the 

United States for permanent residence 

(and maintains such lawful permanent 

residence status) under the Immigration 

and Nationality Act, as amended (8 

U.S.C. 1101(a)(20), 66 Stat. 163), or is an 

official of a foreign government entity in 

the United States, or is a foreign person 

making a request pursuant to § 123.9 of 

this subchapter. 

(b) In addition, all applications for 

licenses must include the complete 

names and addresses of all U.S. 

consignors and freight forwarders, and 

all foreign consignees and foreign 

intermediate consignees involved in the 

transaction. Port Directors of U.S. 

Customs and Border Protection and 

Department of Defense transmittal 

authorities will permit only those U.S. 

consignors or freight forwarders listed 

on the license to make shipments under 

the license, and only to those foreign 

consignees and foreign intermediate 

consignees listed on the license. 

Applicants should list all freight 

forwarders who may be involved with 

shipments under the license to ensure 

that the list is complete and to avoid the 

need for amendments after the license 

has been approved. If there are unusual 

or extraordinary circumstances that 

preclude the specific identification of 

all the U.S. consignors and freight 

forwarders and all foreign consignees 

and foreign intermediate consignees, the 

applicant must provide a letter of 

explanation with each application. 

(c) In cases when natural foreign 

persons are employed at or assigned to 

security-cleared facilities, provision by 

the applicant of a technology control 

plan will facilitate processing. 

PART 127—VIOLATIONS AND 

PENALTIES 

■ 17. The authority citation for part 127 

is revised to read as follows: 

Authority: Sections 2, 38, and 42, Pub. L. 

90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 

2791); 22 U.S.C. 401; 22 U.S.C. 2651a; 22 

U.S.C. 2779a; 22 U.S.C. 2780; E.O. 13637, 78 

FR 16129. 

■ 18. Section 127.1 is amended by 

adding paragraph (a)(5), and revising 

paragraphs (a)(3), (a)(4), (c), (d), and (e), 

to read as follows: 

§ 127.1 Violations. 

(a) * * * 

(3) To import or attempt to import any 

defense article whenever a license is 

required by this subchapter; 

(4) To conspire to export, import, 

reexport, retransfer, furnish or cause to 

be exported, imported, reexported, 

retransferred or furnished, any defense 

article, technical data, or defense service 

for which a license or written approval 

is required by this subchapter; or 

(5) To possess or attempt to possess 

any defense article with intent to export 

or transfer such defense article in 

violation of 22 U.S.C. 2778 and 2779, or 

any regulation, license, approval, or 

order issued thereunder. 

* * * * * 

(c) Any person who is granted a 

license or other approval or acts 

pursuant to an exemption under this 

subchapter is responsible for the acts of 

employees, agents, brokers, and all 

authorized persons to whom possession 

of the defense article, which includes 

technical data, has been entrusted 

regarding the operation, use, possession, 

transportation, and handling of such 

defense article abroad. All persons 

abroad subject to U.S. jurisdiction who 

obtain custody of a defense article 

exported from the United States or 

produced under an agreement described 

in part 124 of this subchapter, and 

regardless of the number of intermediate 

transfers, are bound by the regulations 

of this subchapter in the same manner 

and to the same extent as the original 

owner or transferor. 

(d) A person who is ineligible 

pursuant to § 120.1(c)(2) of this 

subchapter, or a person with knowledge 

that another person is ineligible 

pursuant to § 120.1(c)(2) of this 

subchapter, may not, directly or 

indirectly, in any manner or capacity, 

without prior disclosure of the facts to 

and written authorization from the 

Directorate of Defense Trade Controls: 

(1) Apply for, obtain, or use any 

export control document as defined in 

§ 127.2(b) for such ineligible person; or 

(2) Order, buy, receive, use, sell, 

deliver, store, dispose of, forward, 

transport, finance, or otherwise service 

or participate in any manner in any 

transaction that may involve any 

defense article, which includes 

technical data, defense services, or 

brokering activities subject to this 

subchapter, where such ineligible 

person may obtain any benefit therefrom 

or have any direct or indirect interest 

therein. 

(e) No person may knowingly or 

willfully attempt, solicit, cause, or aid, 

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or permit the commission of any act 

prohibited by, or the omission of any act 

required by 22 U.S.C. 2778, 22 U.S.C. 

2779, or any regulation, license, 

approval, or order issued thereunder. 

■ 19. Section 127.2 is amended by 

revising paragraph (b)(13) to read as 

follows: 

§ 127.2 Misrepresentation and omission of 

facts. 

* * * * * 

(b) * * * 

(13) Any other document used in the 

regulation or control of a defense article, 

defense service, or brokering activity 

regulated by this subchapter. 

* * * * * 

■ 20. Section 127.7 is revised to read as 

follows: 

§ 127.7 Debarment. 

(a) Administrative debarment. In 

implementing section 38 of the Arms 

Export Control Act, the Assistant 

Secretary of State for Political-Military 

Affairs may debar and thereby prohibit 

any person from participating directly 

or indirectly in any activities that are 

subject to this subchapter for any of the 

reasons listed below. Any such 

prohibition is referred to as an 

administrative debarment for purposes 

of this subchapter. The Assistant 

Secretary of State for Political-Military 

Affairs shall determine the appropriate 

period of time for administrative 

debarment, which generally shall be for 

a period of three years. Reinstatement is 

not automatic, however, and in all cases 

the debarred persons must submit a 

request for reinstatement and be 

approved for reinstatement before 

engaging in any activities subject to this 

subchapter. (See part 128 of this 

subchapter for administrative 

procedures.) 

(b) Statutory debarment. Section 

38(g)(4) of the Arms Export Control Act 

prohibits the issuance of licenses to 

persons who have been convicted of 

violating the U.S. criminal statutes 

enumerated in section 38(g)(1) of the 

Arms Export Control Act. Discretionary 

authority to issue licenses is provided, 

but only if certain statutory 

requirements are met. It is the policy of 

the Department of State not to consider 

applications for licenses or requests for 

approvals involving any person who has 

been convicted of violating the Arms 

Export Control Act or convicted of 

conspiracy to violate that Act for a three 

year period following conviction. Such 

individuals shall be notified in writing 

that they are statutorily debarred 

pursuant to this policy. A list of persons 

who have been convicted of such 

offenses and debarred for this reason 

shall be published periodically in the 

Federal Register. Statutory debarment 

in such cases is based solely upon the 

outcome of a criminal proceeding, 

conducted by a court of the United 

States, that established guilt beyond a 

reasonable doubt in accordance with 

due process. The procedures of part 128 

of this subchapter are not applicable in 

such cases. 

(c) Grounds. (1) The basis for statutory 

debarment, as described in paragraph 

(b) of this section, is any conviction for 

violating the Arms Export Control Act 

(see § 127.3) or any conspiracy to violate 

the Arms Export Control Act. 

(2) The basis for administrative 

debarment, as described in paragraph (a) 

of this section and in part 128 of this 

subchapter, is any violation of 22 U.S.C. 

2778 or any rule or regulation issued 

thereunder when such a violation is of 

such a character as to provide a 

reasonable basis for the Directorate of 

Defense Trade Controls to believe that 

the violator cannot be relied upon to 

comply with the statute or these rules or 

regulations in the future, and when such 

violation is established in accordance 

with part 128 of this subchapter. 

(d) Appeals. Any person who is 

ineligible pursuant to paragraph (b) of 

this section may appeal to the Under 

Secretary of State for Arms Control and 

International Security for 

reconsideration of the ineligibility 

determination. The procedures specified 

in § 128.13 of this subchapter will be 

used in submitting a reconsideration 

appeal. 

■ 21. Section 127.8 is removed and 

reserved, as follows: 

§ 127.8 [Reserved] 

■ 22. Section 127.9 is revised to read as 

follows: 

§ 127.9 Applicability of orders. 

For the purpose of preventing 

evasion, orders of the Assistant 

Secretary of State for Political-Military 

Affairs debarring a person under § 127.7 

may be made applicable to any other 

person who may then or thereafter 

(during the term of the order) be related 

to the debarred person by affiliation, 

ownership, control, position of 

responsibility, or other commercial 

connection. Appropriate notice and 

opportunity to respond to the basis for 

the suspension will be given. 

PART 128—ADMINISTRATIVE 

PROCEDURES 

■ 23. The authority citation for part 128 

is revised to read as follows: 

Authority: Sections. 2, 38, 40, 42, and 71, 

Arms Export Control Act. 90 Stat. 744 (22 

U.S.C. 2752, 2778, 2780, 2791, and 2797); 22 

U.S.C. 2651a; E.O. 12291, 46 FR 1981; E.O. 

13637, 78 FR 16129. 

■ 24. Section 128.2 is revised to read as 

follows: 

§ 128.2 Administrative Law Judge. 

The Administrative Law Judge 

referred to in this part is an 

Administrative Law Judge appointed by 

the Department of State. The 

Administrative Law Judge is authorized 

to exercise the powers and perform the 

duties provided for in §§ 127.7 and 

128.3 through 128.16 of this subchapter. 

■ 25. Section 128.3 is amended by 

revising paragraph (a) to read as follows: 

§ 128.3 Institution of Administrative 

Proceedings. 

(a) Charging letters. The Deputy 

Assistant Secretary of State for Defense 

Trade Controls or the Director, Office of 

Defense Trade Controls Compliance, 

with the concurrence of the Office of the 

Legal Adviser, Department of State, may 

initiate proceedings to impose 

debarment or civil penalties in 

accordance with § 127.7 or § 127.10 of 

this subchapter, respectively. 

Administrative proceedings shall be 

initiated by means of a charging letter. 

The charging letter will state the 

essential facts constituting the alleged 

violation and refer to the regulatory or 

other provision involved. It will give 

notice to the respondent to answer the 

charges within 30 days, as provided in 

§ 128.5(a), and indicate that a failure to 

answer will be taken as an admission of 

the truth of the charges. It will inform 

the respondent that he or she is entitled 

to an oral hearing if a written demand 

for one is filed with the answer or 

within seven days after service of the 

answer. The respondent will also be 

informed that he or she may, if so 

desired, be represented by counsel of 

his or her choosing. Charging letters 

may be amended from time to time, 

upon reasonable notice. 

■ 26. Section 128.15 is amended by 

revising paragraph (a) to read as follows: 

§ 128.15 Orders containing probationary 

periods. 

(a) Revocation of probationary 

periods. A debarment order may set a 

probationary period during which the 

order may be held in abeyance for all or 

part of the debarment period, subject to 

the conditions stated therein. The 

Managing Director, Directorate of 

Defense Trade Controls, may apply, 

without notice to any person to be 

affected thereby, to the Administrative 

Law Judge for a recommendation on the 

appropriateness of revoking probation 

when it appears that the conditions of 


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the probation have been breached. The 

facts in support of the application will 

be presented to the Administrative Law 

Judge, who will report thereon and 

make a recommendation to the Assistant 

Secretary of State for Political-Military 

Affairs. The latter will make a 

determination whether to revoke 

probation and will issue an appropriate 

order. The party affected by this action 

may request the Assistant Secretary of 

State for Political-Military Affairs to 

reconsider the decision by submitting a 

request within 10 days of the date of the 

order. 

* * * * * 

■ 27. Section 128.17 is revised to read 

as follows: 

§ 128.17 Availability of orders. 

All charging letters, debarment orders, 

and orders imposing civil penalties and 

probationary periods are available for 

public inspection in the Public Reading 

Room of the Department of State. 

PART 129—REGISTRATION AND 

LICENSING OF BROKERS 

■ 28. The authority citation for part 129 

is revised to read as follows: 

Authority: Section 38, Pub. L. 104–164, 

110 Stat. 1437, (22 U.S.C. 2778); E.O. 13637, 

78 FR 16129. 

■ 29. The table of contents for part 129 

is revised to read as follows: 

Sec. 

129.1 Purpose. 

129.2 Definitions. 

129.3 Requirement to register. 

129.4 Requirement for approval. 

129.5 Exemption from requirement for 

approval. 

129.6 Procedures for obtaining approval. 

129.7 Policy on embargoes and other 

proscriptions. 

129.8 Submission of Statement of 

Registration, registration fees, and 

notification of changes in information 

furnished by registrants. 

129.9 Guidance. 

129.10 Reports. 

129.11 Maintenance of brokering records by 

registrants. 

■ 30. Section 129.1 is revised to read as 

follows: 

§ 129.1 Purpose. 

(a) Section 38(b)(1)(A)(ii) of the Arms 

Export Control Act (22 U.S.C. 2778) 

provides that persons engaged in the 

business of brokering activities shall 

register and pay a registration fee as 

prescribed in regulations, and that no 

person may engage in the business of 

brokering activities without a license 

issued in accordance with the Act. 

(b) The brokering activities identified 

in this subchapter apply to those 

defense articles and defense services 

controlled for purposes of export on the 

U.S. Munitions List (see part 121 of this 

subchapter) or for purposes of 

permanent import on the U.S. 

Munitions Import List (see 27 CFR part 

447). 

■ 31. Section 129.2 is revised to read as 

follows: 

§ 129.2 Definitions. 

As used in this part: 

(a) Broker means any person (see 

§ 120.14 of this subchapter) described 

below who engages in the business of 

brokering activities: 

(1) Any U.S. person (see § 120.15 of 

this subchapter) wherever located; 

(2) Any foreign person (see § 120.16 of 

this subchapter) located in the United 

States; or 

(3) Any foreign person located outside 

the United States where the foreign 

person is owned or controlled by a U.S. 

person. 

Note to paragraph (a)(3): For purposes of 

this paragraph, ‘‘owned by a U.S. person’’ 

means more than 50 percent of the 

outstanding voting securities of the firm are 

owned by a U.S. person, and ‘‘controlled by 

a U.S. person’’ means one or more U.S. 

persons have the authority or ability to 

establish or direct the general policies or dayto-day operations of the firm. U.S. person 

control is rebuttably presumed to exist where 

U.S. persons own 25 percent or more of the 

outstanding voting securities unless one 

foreign person controls an equal or larger 

percentage. 

(b) Brokering activities means any 

action on behalf of another to facilitate 

the manufacture, export, permanent 

import, transfer, reexport, or retransfer 

of a U.S. or foreign defense article or 

defense service, regardless of its origin. 

(1) Such action includes, but is not 

limited to: 

(i) Financing, insuring, transporting, 

or freight forwarding defense articles 

and defense services; or 

(ii) Soliciting, promoting, negotiating, 

contracting for, arranging, or otherwise 

assisting in the purchase, sale, transfer, 

loan, or lease of a defense article or 

defense service. 

(2) Such action does not include: 

(i) Activities by a U.S. person in the 

United States that are limited 

exclusively to U.S. domestic sales or 

transfers (e.g., not for export); 

(ii) Activities by employees of the 

U.S. Government acting in an official 

capacity; 

(iii) Activities by regular employees 

(see § 120.39 of this subchapter) acting 

on behalf of their employer, including 

those regular employees who are dual 

nationals or third-country nationals that 

satisfy the requirements of § 126.18 of 

this subchapter; 

Note to paragraph (b)(2)(iii): The exclusion 

does not apply to persons subject to U.S. 

jurisdiction with respect to activities 

involving a defense article or defense service 

originating in or destined for any proscribed 

country, area, or person identified in § 126.1 

of this subchapter. 

(iv) Activities that do not extend 

beyond administrative services, such as 

providing or arranging office space and 

equipment, hospitality, advertising, or 

clerical, visa, or translation services, 

collecting product and pricing 

information to prepare a response to 

Request for Proposal, generally 

promoting company goodwill at trade 

shows, or activities by an attorney that 

do not extend beyond the provision of 

legal advice to clients; 

(v) Activities performed by an 

affiliate, as defined in § 120.40 of this 

subchapter, on behalf of another 

affiliate; or 

(vi) Activities by persons, including 

their regular employees (see § 120.39 of 

this subchapter), that do not extend 

beyond acting as an end-user of a 

defense article or defense service 

exported pursuant to a license or other 

approval under parts 123, 124, or 125 of 

this subchapter, or subsequently acting 

as a reexporter or retransferor of such 

article or service under such license or 

other approval, or under an approval 

pursuant to § 123.9 of this subchapter. 

(c) For the purposes of this 

subchapter, engaging in the business of 

brokering activities requires only one 

occasion of brokering as described in 

paragraph (b) of this section. 

■ 32. Section 129.3 is revised to read as 

follows: 

§ 129.3 Requirement to register. 

(a) Except as provided in paragraph 

(b) of this section, any person who 

engages in brokering activities (see 

§ 129.2) is required to register with the 

Directorate of Defense Trade Controls. 

Registration under this section is 

generally a precondition for the 

issuance of approval for brokering 

activities required under this part 129 or 

the use of exemptions. 

(b) Exemptions. Registration, 

approval, recordkeeping, and reporting 

under this section are not required for: 

(1) Foreign governments or 

international organizations, including 

their employees, acting in an official 

capacity; or 

(2) Persons exclusively in the 

business of financing, insuring, 

transporting, customs brokering, or 

freight forwarding, whose activities do 

not extend beyond financing, insuring, 

transporting, customs brokering, or 

freight forwarding. Examples include air 

carriers or freight forwarders that merely 


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transport or arrange transportation for 

licensed defense articles, and banks or 

credit companies who merely provide 

commercially available lines or letters of 

credit to persons registered or required 

to register in accordance with parts 122 

or 129 of this subchapter. However, 

banks, firms, or other persons providing 

financing for defense articles or defense 

services are required to register under 

certain circumstances, such as when the 

bank or its employees are directly 

involved in arranging transactions 

involving defense articles or defense 

services or hold title to defense articles, 

even when no physical custody of 

defense articles is involved. In such 

circumstances, the banks, firms, or other 

persons providing financing for defense 

articles or defense services are not 

exempt. 

(c) Persons exempt from registration, 

approval, recordkeeping, and reporting 

as provided in § 129.3(b) are subject to 

the policy on embargoes and other 

proscriptions as outlined in § 129.7. 

(d) U.S. persons who are registered as 

a manufacturer or exporter in 

accordance with part 122 of this 

subchapter, including their U.S. or 

foreign subsidiaries and other affiliates 

listed on their Statement of Registration 

who are required to register under this 

part, are not required to submit a 

separate broker registration or pay a 

separate broker registration fee when 

more than 50 percent of the voting 

securities are owned by the registrant or 

such subsidiaries and affiliates are 

otherwise controlled by the registrant 

(see § 120.40 of this subchapter), and 

they are listed and identified as brokers 

within their manufacturer or exporter 

Statement of Registration. All other 

requirements of this part apply to such 

brokers and their brokering activities. 

(e) Registration under this section is a 

precondition for the issuance of 

approval for brokering activities 

required under this section or the use of 

exemptions, unless an exception is 

granted by the Directorate of Defense 

Trade Controls. 

■ 33. Sections 129.6, 129.7, 129.8, 

129.5, 129.4, 129.10, and 129.9 are 

redesignated as §§ 129.4, 129.5, 129.6, 

129.7, 129.8, 129.9, and 129.10 

respectively. 

■ 34. Newly redesignated § 129.4 is 

revised to read as follows: 

§ 129.4 Requirement for approval. 

(a) Except as provided in § 129.5, no 

person who is required to register as a 

broker pursuant to § 129.3 of this 

subchapter may engage in the business 

of brokering activities pursuant to 

§ 129.2(b) without first obtaining the 

approval of the Directorate of Defense 

Trade Controls for the brokering of any 

of the following: 

(1) Any foreign defense article or 

defense service (see § 120.44 of this 

subchapter, and § 129.5 for exemptions); 

or 

(2) Any of the following U.S. origin 

defense articles or defense services: 

(i) Firearms and other weapons of a 

nature described by Category I(a) 

through (d), Category II(a) and (d), and 

Category III(a) of § 121.1 of this 

subchapter; 

(ii) Rockets, bombs, and grenades as 

well as launchers for such defense 

articles of a nature described by 

Category IV(a), and launch vehicles and 

missile and anti-missile systems of a 

nature described by Category IV(b) of 

§ 121.1 of this subchapter (including 

man-portable air-defense systems); 

(iii) Vessels of war described by 

Category VI of § 121.1 of this 

subchapter; 

(iv) Tanks and military vehicles 

described by Category VII of § 121.1 of 

this subchapter; 

(v) Aircraft and unmanned aerial 

vehicles described by Category VIII of 

§ 121.1 of this subchapter; 

(vi) Night vision-related defense 

articles and inertial platform, sensor, 

and guidance-related systems of a 

nature described by Category XII(c) and 

(d) of § 121.1 of this subchapter; 

(vii) Chemical agents and precursors 

described by Category XIV(a), (c), and 

(e) of § 121.1 of this subchapter, 

biological agents and biologically 

derived substances described by 

Category XIV(b) of § 121.1 of this 

subchapter, and equipment described by 

Category XIV(f) of § 121.1 of this 

subchapter for dissemination of the 

chemical agents and biological agents 

described by Category XIV(a), (b), and 

(e) of § 121.1 of this subchapter; 

(viii) Submersible vessels described 

by Category XX of § 121.1 of this 

subchapter; and 

(ix) Miscellaneous articles of a nature 

described by Category XXI of § 121.1 of 

this subchapter. 

■ 35. Newly redesignated § 129.5 is 

revised to read as follows: 

§ 129.5 Exemption from requirement for 

approval. 

(a) Unless paragraph (c) of this section 

applies, brokering activities undertaken 

for an agency of the U.S. Government 

pursuant to a contract between the 

broker and that agency are exempt from 

the requirement for approval provided 

that: 

(1) The brokering activities concern 

defense articles or defense services 

solely for the use of the agency; or 

(2) The brokering activities are 

undertaken for carrying out a foreign 

assistance or sales program authorized 

by law and subject to control by the 

President by other means, as 

demonstrated by one of the following 

conditions being met: 

(i) The U.S. Government agency 

contract with the broker contains an 

explicit provision stating the contract 

supports a foreign assistance or sales 

program authorized by law and the 

contracting agency has established 

control of the activity covered by the 

contract by other means equivalent to 

that established under this subchapter; 

or 

(ii) The Directorate of Defense Trade 

Controls provides written concurrence 

in advance that the condition is met. 

(b) Unless paragraph (c) of this section 

applies, brokering activities regarding a 

foreign defense article or defense service 

(see § 120.44 of this subchapter) are 

exempt from the requirement for 

approval when arranged wholly within 

and destined exclusively for the North 

Atlantic Treaty Organization, any 

member country of that organization, 

Australia, Israel, Japan, New Zealand, or 

the Republic of Korea, except in the case 

of the defense articles or defense 

services specified in § 129.4(a)(2), for 

which approval is required. 

(c) Brokers engaging in brokering 

activities described in paragraph (a) or 

(b) of this section are not exempt from 

obtaining approval from the Directorate 

of Defense Trade Controls if: 

(1) The broker is not registered as 

required by § 129.3; 

(2) The broker or any person who has 

a direct or indirect interest in or may 

benefit from the brokering activities, 

including any related defense article or 

defense service transaction, is ineligible 

as defined in § 120.1(c)(2) of this 

subchapter; or 

(3) A country or person referred to in 

§ 126.1 of this subchapter is involved in 

the brokering activities or such activities 

are otherwise subject to § 129.7. 

(d) Brokers who use the exemptions 

in this section must comply with all 

other provisions of this part 129. 

■ 36. Newly redesignated § 129.6 is 

revised to read as follows: 

§ 129.6 Procedures for obtaining approval. 

(a) All requests for approval of 

brokering activities must be made to the 

Directorate of Defense Trade Controls, 

be signed by an empowered official, and 

include the following information: 

(1) The applicant’s name, address and 

registration code; 

(2) A certification on whether: 

(i) The applicant or the chief 

executive officer, president, vice 


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presidents, secretary, partner, member, 

other senior officers or officials (e.g., 

comptroller, treasurer, general counsel), 

or any member of the board of directors 

is the subject of an indictment or has 

been otherwise charged (e.g., by 

criminal information in lieu of 

indictment) for, or has been convicted 

of, violating any of the U.S. criminal 

statutes enumerated in § 120.27 of this 

subchapter; 

(ii) The applicant or the chief 

executive officer, president, vice 

presidents, secretary, partner, member, 

other senior officers or officials (e.g., 

comptroller, treasurer, general counsel), 

or any member of the board of directors 

is ineligible to contract with, or to 

receive a license or other approval to 

import defense articles or defense 

services from, or to receive an export 

license or other approval from, any 

agency of the U.S. Government; and 

(iii) To the best of the applicant’s 

knowledge, any other person involved 

in the brokering activities enumerated 

in the request for approval as defined in 

§ 129.2 is the subject of an indictment 

or has been otherwise charged (e.g., 

charged by criminal information in lieu 

of indictment) for or has been convicted 

of violating any of the U.S. criminal 

statutes enumerated in § 120.27 of this 

subchapter, or 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. 

(b) The request for approval shall 

describe fully the brokering activities 

that will be undertaken, including: 

(1) The action to be taken by the 

applicant to facilitate the manufacture, 

export, import, or transfer of a defense 

article or defense service (which may be 

referred to as a ‘‘defense article or 

defense service transaction’’); 

(2) The name, nationality, address, 

and place of business of all persons who 

may participate in the brokering 

activities; 

(3) A description of each defense 

article or defense service that may be 

involved, including: 

(i) The U.S. Munitions List category 

and sub-category for each article; 

(ii) The name or military 

nomenclature of each defense article; 

(iii) Whether the defense article is 

significant military equipment; 

(iv) Estimated quantity of each 

defense article; 

(v) Estimated U.S. dollar value of 

defense articles and defense services; 

(vi) Security classification; and 

(vii) End-user and end-use; and 

(4) A statement whether the brokering 

activities are related to a sale through 

direct commercial sale or under the U.S. 

Foreign Military Sales program or other 

activity in support of the U.S. 

Government. 

(c) The empowered official signing 

the request for approval shall include a 

certification that the request is complete 

and accurate. 

(d) If at the time of submission certain 

information required by paragraph (b) of 

this section is not yet available, this fact 

must be stated and explained in the 

certification required by paragraph (c) of 

this section. The Directorate of Defense 

Trade Controls will take any such 

explanation into account in deciding 

whether to approve the request. 

(e) The period of validity for an 

approval may not exceed four years. 

■ 37. Newly redesignated § 129.7 is 

revised to read as follows: 

§ 129.7 Policy on embargoes and other 

proscriptions. 

(a) This section applies to brokering 

activities defined in § 129.2, regardless 

of whether the person involved in such 

activities has registered or is exempt 

from registration under § 129.3. The 

exemptions in § 129.5 from the 

requirement for approval are not 

applicable to brokering activities subject 

to this section. 

(b) No person may engage in or make 

a proposal to engage in brokering 

activities that involve any country, area, 

or person referred to in § 126.1 of this 

subchapter without first obtaining the 

approval of the Directorate of Defense 

Trade Controls. 

(c) No person may engage in or make 

a proposal to engage in brokering 

activities without first obtaining 

approval of the Directorate of Defense 

Trade Controls if such activities involve 

countries or persons identified by the 

Department of State through notice in 

the Federal Register, with respect to 

which certain limitations on defense 

articles or defense services are imposed 

for reasons of U.S. national security, 

foreign policy, or law enforcement 

interests (e.g., an individual subject to 

debarment pursuant to § 127.7 of this 

subchapter). (See § 127.1(c) of this 

subchapter for additional disclosure and 

approval requirements applicable to 

brokering activities.) 

(d) It is the policy of the Department 

of State to deny requests for approval of 

brokering activities or proposals to 

engage in brokering activities involving 

the countries or persons referred to in 

paragraph (b) or (c) of this section. Any 

person who knows or has reason to 

know of brokering activities involving 

such countries or persons must 

immediately inform the Directorate of 

Defense Trade Controls. 

■ 38. Section 129.4 is redesignated as 

§ 129.8 revised to read as follows: 

§ 129.8 Submission of Statement of 

Registration, registration fees, and 

notification of changes in information 

furnished by registrants. 

(a) An intended registrant must 

submit a Department of State form DS– 

2032 (Statement of Registration) to the 

Office of Defense Trade Controls 

Compliance by following the 

submission guidelines available on the 

Directorate of Defense Trade Controls 

Web site at www.pmddtc.state.gov. The 

Statement of Registration must be 

signed by a U.S. person senior officer 

(e.g., chief executive officer, president, 

secretary, partner, member, treasurer, 

general counsel) who has been 

empowered by the intended registrant to 

sign such documents, with the 

exception that a foreign senior officer 

may sign the Statement of Registration 

if the intended registrant seeks only to 

register as a foreign broker. The 

Statement of Registration may include 

subsidiaries and affiliates when more 

than 50 percent of the voting securities 

are owned by the registrant or the 

subsidiaries and affiliates are otherwise 

controlled by the registrant (see § 120.40 

of this subchapter). 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 (form DS– 

2032) is incomplete either by notifying 

the registrant of what information is 

required or through the return of the 

entire registration package. 

(b)(1) Frequency of registration and 

fee. A person who is required to register 

must do so on an annual basis by 

submitting a completed Statement of 

Registration (form DS–2032) and a fee 

following the fee guidelines available on 

the Directorate of Defense Trade 

Controls Web site at 

www.pmddtc.state.gov. Registrants are 

not required to submit a separate 

statement of registration and pay an 

additional fee when provisions in 

§ 129.3(d) are met. 

(2) Expiration of registration. A 

registrant must submit its request for 

registration renewal at least 30 days, but 

no earlier than 60 days, prior to the 

expiration date. 


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Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Rules and Regulations 52693 

(3) Lapse in registration. A registrant 

who fails to renew a registration and, 

after an intervening period, seeks to 

register again must pay registration fees 

for any part of such intervening period 

during which the registrant engaged in 

the business of brokering defense 

articles or defense services. 

(c) Statement of Registration 

Certification. The Statement of 

Registration (form DS–2032) of the 

intended registrant shall include a 

certification by an authorized senior 

officer of the following: 

(1) Whether the intended registrant or 

its parent, subsidiary, or other affiliate 

listed in the Statement of Registration, 

or any of its chief executive officers, 

presidents, vice presidents, secretaries, 

partners, members, other senior officers 

or officials (e.g., comptroller, treasurer, 

general counsel), or any member of the 

board of directors of the intended 

registrant, or of any parent, subsidiary, 

or other affiliate listed in the Statement 

of Registration: 

(i) Has ever been indicted or 

otherwise charged (e.g., charged by 

criminal information in lieu of 

indictment) for or has been convicted of 

violating any U.S. criminal statutes 

enumerated in § 120.27 of this 

subchapter or violating a foreign 

criminal law on exportation of defense 

articles where conviction of such law 

carries a minimum term of 

imprisonment of greater than 1 year; or 

(ii) Is ineligible to contract with, or to 

receive a license or other approval to 

import defense articles or defense 

services from, or to receive an export 

license or other approval from, any 

agency of the U.S. Government; and 

(2) Whether the intended registrant is 

foreign owned or foreign controlled (see 

§ 120.37 of this subchapter). If the 

intended registrant is foreign owned or 

foreign controlled, the certification shall 

include an explanation of such 

ownership or control, including the 

identities of the foreign person or 

persons who ultimately own or control 

the registrant. This requirement applies 

to a registrant who is a U.S. person and 

is owned or controlled by a foreign 

person. It also applies to a registrant 

who is a foreign person and is owned or 

controlled by a foreign person from the 

same country or a foreign person from 

another country. 

(d) A registrant must, within five days 

of the event, provide to the Directorate 

of Defense Trade Controls a written 

notification, signed by a senior officer 

(e.g., chief executive officer, president, 

secretary, partner, member, treasurer, 

general counsel), if: 

(1) Any of the persons referred to in 

§ 129.8(c) is indicted or otherwise 

charged (e.g., charged by criminal 

information in lieu of indictment) for or 

convicted of violating any of the U.S. 

criminal statutes enumerated in § 120.27 

of this subchapter or violating a foreign 

criminal law on exportation of defense 

articles where conviction of such law 

carries a minimum term of 

imprisonment of greater than 1 year; or 

becomes ineligible to contract with, or 

to receive a license or other approval to 

export or import defense articles or 

defense services from, any agency of the 

U.S. government; or 

(2) There is a change in the following 

information contained in the Statement 

of Registration (form DS–2032): 

(i) Registrant’s name; 

(ii) Registrant’s address; 

(iii) Registrant’s legal organization 

structure; 

(iv) Ownership or control; 

(v) The establishment, acquisition or 

divestment of a U.S. or foreign 

subsidiary or other affiliate who is 

engaged in brokering activities or 

otherwise required to be listed in 

registrant’s Statement of Registration; or 

(vi) Board of directors, senior officers, 

partners and owners. 

Note 1 to paragraph (d): All other changes 

in the Statement of Registration must be 

provided as part of annual registration 

renewal. 

Note 2 to paragraph (d): For one year from 

October 25, 2013, ‘‘Amendment to the 

International Traffic in Arms Regulations: 

Registration and Licensing of Brokers, 

Brokering Activities, and Related 

Provisions,’’ RIN 1400–AC37, the following 

changes must be provided as part of the 

annual registration renewal: pursuant to 

§ 129.3(d), changes to combine an existing 

broker registration with an existing 

manufacturer/exporter registration, and 

pursuant to § 129.8(a), changes to an existing 

registration to remove partially owned and 

not otherwise controlled subsidiaries or 

affiliates, which are not the subject of an 

internal reorganization, merger, acquisition, 

or divestiture. 

(e) A U.S. or foreign registrant must 

provide written notification to the 

Directorate of Defense Trade Controls at 

least sixty (60) days in advance of any 

intended sale or transfer to a foreign 

person of ownership or control of the 

registrant or any parent, subsidiary, or 

other affiliate listed and covered in its 

Statement of Registration. Such notice 

does not relieve the registrant from 

obtaining any prior approval required 

under this subchapter. 

(f) The new entity formed when a 

registrant merges with another company 

or acquires, or is acquired by, another 

company or a subsidiary or division of 

another company, shall advise the 

Directorate of Defense Trade Controls of 

the following: 

(1) The new firm name and all 

previous firm names; 

(2) The registration number that will 

continue and those that are to be 

discontinued (if any); and 

(3) The numbers of all approvals for 

brokering activities under the 

continuing registration number, since 

any approval not the subject of 

notification will be considered invalid. 

(g) A registrant whose registration 

lapses because of failure to renew and, 

after an intervening period, seeks to 

register again must pay registration fees 

for any part of such intervening period 

during which the registrant engaged in 

the business of brokering activities. 

■ 39. Newly redesignated § 129.9 is 

revised to read as follows: 

§ 129.9 Guidance. 

(a) Any person desiring guidance on 

whether an activity constitutes a 

brokering activity within the scope of 

this part 129 may request in writing 

guidance from the Directorate of 

Defense Trade Controls. The request for 

guidance shall identify the applicant 

and registrant code (if applicable) and 

describe fully the activities that will be 

undertaken, including: 

(1) The specific activities to be 

undertaken by the applicant and any 

other U.S. or foreign person; 

(2) The name, nationality, and 

geographic location of all U.S. and 

foreign persons who may participate in 

the activities; 

(3) A description of each defense 

article or defense service that may be 

involved, including: 

(i) The U.S. Munitions List category 

and sub-category for each article; 

(ii) The name or military 

nomenclature of each defense article; 

(iii) Whether the defense article is 

significant military equipment; 

(iv) Estimated quantity of each 

defense article; 

(v) Estimated U.S. dollar value of 

defense articles and defense services; 

and 

(vi) Security classification; 

(4) End-user and end-use; and 

(5) A copy of any agreement or 

documentation, if available, between or 

among the requester and other persons 

who will be involved in the activity or 

related transactions that describes the 

activity to be taken by such persons. 

(b) If at the time of submission certain 

information is not yet available, this 

circumstance must be stated and 

explained. The Directorate of Defense 

Trade Controls will take the 

completeness of the information into 

account in providing guidance on 

whether the activities constitute 

brokering activities. The guidance will 


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52694 Federal Register / Vol. 78, No. 165 / Monday, August 26, 2013 / Rules and Regulations 

constitute an official determination by 

the Department of State. The guidance 

shall not substitute for approval when 

required under § 129.4. 

(c) Persons desiring guidance on other 

aspects of this part may also request 

guidance from the Directorate of 

Defense Trade Controls in a similar 

manner by submitting a description of 

the relevant facts or copies of relevant 

documentation. 

■ 40. Newly redesignated § 129.10 is 

revised to read as follows: 

§ 129.10 Reports. 

(a) Any person required to register 

under this part (including those 

registered in accordance with § 129.3(d)) 

shall provide to the Directorate of 

Defense Trade Controls on an annual 

basis a report of its brokering activities 

in the previous twelve months. Such 

report shall be submitted along with the 

registrant’s annual renewal submission 

or, if not renewing, within 30 days after 

expiration of registration. 

(b) The report shall include brokering 

activities that received or were exempt 

from approval as follows: 

(1) The report shall identify the 

broker’s name, address, and registration 

code and be signed by an empowered 

official who shall certify that the report 

is complete and accurate. The report 

shall describe each of the brokering 

activities, including the number 

assigned by the Directorate of Defense 

Trade Controls to the approval or the 

exemption claimed; and 

(2) For each of the brokering 

activities, the report shall identify all 

persons who participated in the 

activities, including each person’s 

name, address, nationality, and country 

where located and role or function; the 

quantity, description, and U.S. dollar 

value of the defense articles or defense 

services; the type and U.S. dollar value 

of any consideration received or 

expected to be received, directly or 

indirectly, by any person who 

participated in the brokering activities, 

and the source thereof. 

(c) If there were no brokering 

activities, the report shall certify that 

there were no such activities. 

■ 41. Section 129.11 is added to read as 

follows: 

§ 129.11 Maintenance of brokering records 

by registrants. 

A person who is required to register 

pursuant to this part (including those 

registered in accordance with § 129.3(d)) 

must maintain records concerning 

brokering activities in accordance with 

§ 122.5 of this subchapter. 

Rose E. Gottemoeller, 

Acting Under Secretary, Arms Control and 

International Security, Department of State. 

[FR Doc. 2013–20743 Filed 8–23–13; 8:45 am] 

BILLING CODE 4710–25–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 117 

[Docket No. USCG–2013–0771] 

Drawbridge Operation Regulation; 

Trent River, New Bern, NC 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of deviation from 

drawbridge regulation. 

SUMMARY: The Coast Guard has issued a 

temporary deviation from the operating 

schedule that governs the US 70/Alfred 

C. Cunningham Bridge across the Trent 

River, mile 0.0, at New Bern, NC. The 

deviation is necessary to allow the 

annual Neuse River Bridge Run 

participants to safely complete their 

race without interruptions from bridge 

openings. This deviation allows the 

bridge draw span to remain in the 

closed-to-navigation position for three 

hours to accommodate the race. 

DATES: This deviation is effective from 

6:30 a.m. to 9:30 a.m. on October 19, 

2013. 

ADDRESSES: The docket for this 

deviation, [USCG–2013–0771] is 

available at http://www.regulations.gov. 

Type the docket number in the 

‘‘SEARCH’’ box and click ‘‘SEARCH.’’ 

Click on Open Docket Folder on the line 

associated with this deviation. You may 

also visit the Docket Management 

Facility in Room W12–140 on the 

ground floor of the Department of 

Transportation West Building, 1200 

New Jersey Avenue SE., Washington, 

DC 20590, between 9 a.m. and 5 p.m., 

Monday through Friday, except Federal 

holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this temporary 

deviation, call or email Mrs. Jessica 

Shea, Coast Guard; telephone (757) 398– 

6422, email jessica.c.shea2@uscg.mil. If 

you have questions on viewing the 

docket, call Barbara Hairston, Program 

Manager, Docket Operations, telephone 

(202) 366–9826. 

SUPPLEMENTARY INFORMATION: The event 

director for the annual Neuse River 

Bridge Run, with approval from the 

North Carolina Department of 

Transportation, owner of the 

drawbridge, has requested a temporary 

deviation from the operating schedule to 

accommodate the Neuse River Bridge 

Run. 

The US 70/Alfred C. Cunningham 

Bridge operating regulations are set out 

in 33 CFR 117.843(a). The US 70/Alfred 

C. Cunningham Bridge across the Trent 

River, mile 0.0, a double bascule lift 

Bridge, in New Bern, NC, has a vertical 

clearance in the closed position of 14 

feet above mean high water. 

Under this temporary deviation, the 

drawbridge will be allowed to remain in 

the closed-to-navigation position from 

6:30 a.m. to 9:30 a.m. on Saturday, 

October 19, 2013 while race participants 

are competing in the annual Neuse 

River Bridge Run. 

Under the regular operating schedule 

where the bridge opens on signal during 

the timeframe for the race, the bridge 

opens several times every day for 

recreational vessels transiting to and 

from the local marinas located 

upstream. Although openings occur 

throughout the day, the morning hours 

have the fewest vessel transits. 

Vessels able to pass through the 

bridge in the closed position may do so 

at anytime and are advised to proceed 

with caution. The bridge will be able to 

open for emergencies and there is no 

alternate route for vessels to pass. The 

Coast Guard will also inform the users 

of the waterways through our Local and 

Broadcast Notices to Mariners of the 

change in operating schedule for the 

bridge so that vessels can arrange their 

transits to minimize any impact caused 

by the temporary deviation. 

In accordance with 33 CFR 117.35(e), 

the drawbridge must return to its regular 

operating schedule immediately at the 

end of the effective period of this 

temporary deviation. This deviation 

from the operating regulations is 

authorized under 33 CFR 117.35. 

Dated: August 12, 2013. 

Waverly W. Gregory, Jr., 

Bridge Program Manager, Fifth Coast Guard 

District. 

[FR Doc. 2013–20673 Filed 8–23–13; 8:45 am] 

BILLING CODE 9110–04–P 

POSTAL REGULATORY COMMISSION 

39 CFR Part 3010 

[Docket No. RM2013–2; Order No. 1786] 

Price Cap Rules for Certain Postal Rate 

Adjustments 

AGENCY: Postal Regulatory Commission. 

ACTION: Final rule. 


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