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[Federal Register Volume 89, Number 237 (Tuesday, December 10, 2024)]
[Rules and Regulations]
[Pages 99081-99085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29032]

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DEPARTMENT OF STATE

22 CFR Parts 122 and 129

[Public Notice: 12542]
RIN 1400-AF78

International Traffic in Arms Regulations: Registration Fees

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: The Department of State published a proposed rule on April 24, 
2024, requesting comment on proposals to amend the International 
Traffic in Arms Regulations (ITAR) by increasing and specifying the 
fees required for registration with the Directorate of Defense Trade 
Controls (DDTC). The Department now responds to the public comments 
received in response to that proposed rule and issues this final rule.

DATES: This rule is effective January 9, 2025.

FOR FURTHER INFORMATION CONTACT: Allison Smith, Director, Office of 
Defense Trade Controls Management, Department of State, telephone (202) 
663-1282; email [email protected]. ATTN: Registration Fee 
Change.

SUPPLEMENTARY INFORMATION:

Overview

    This final rule implements a change and increase in registration 
fees for certain persons required under 22 U.S.C. 2778(b) to register 
with the Department of State's Directorate of Defense Trade Controls 
(DDTC) and pay a registration fee. It also returns the amount of fees 
registrants must pay to the International Traffic in Arms Regulations 
(ITAR) (22 CFR parts 120 through 130) and makes clarifying revisions to 
part 122 of the ITAR. This final rule follows a proposed rule (89 FR 
31119), published on April 24, 2024, which included the proposed 
revisions to DDTC's registration fees and corresponding amendments to 
the ITAR.
    As noted in its proposed rule, for the first time in fifteen years, 
the Department proposed to revise and increase the registration fees 
(also referred to as ``fees'') charged to those required to register 
with DDTC. This increase is necessary because DDTC operations are 
primarily funded by fees. Without a sufficient increase to meet 
operational costs that have significantly risen since 2008, DDTC would 
be faced with untenable budget deficits and would be forced to reduce 
its services.
    In accordance with section 38(b) of the Arms Export Control Act 
(AECA) (22 U.S.C. 2778(b)) and ITAR Sec.  122.1 (22 CFR 122.1), every 
person who engages in the business of manufacturing, exporting, 
temporarily importing, or brokering any defense articles or defense 
services is required to register with DDTC, the agency charged with 
administering the relevant sections of the AECA. Section 38(b) of the 
AECA also requires that every person required to register pay a 
registration fee. As the ITAR implements section 38 of the AECA, and as 
its parts 122 and 129 (22 CFR parts 122 and 129) address registration, 
the Department proposed to revise those provisions to restate 
registration requirements without substantive change, to revise the 
Department's methodology for determining the fees paid by certain 
registrants, to increase registration fees, and to reinsert the actual 
amount of fees within the ITAR itself. The Department now provides 
responses to comments received on the proposed rule and amends the ITAR 
as of the effective date of this rule, with one correction from the 
proposed rule.

Summary of Changes From the Proposed Rule

    In this final rule, the Department makes the changes it previously 
proposed, with one minor change. Due to a typographical error, the Tier 
3 fee multiplier for favorable determinations was misidentified in two 
places as $1,110 instead of the correct amount of $1,100. The Tier 3 
fee multiplier was correctly introduced in the preamble as $1,100 (89 
FR 31121), but a subsequent preamble reference to the Tier 3 fee 
multiplier was misidentified as $1,110 (89 FR 31122). In addition, the 
incorrect reference was carried forward to amendatory instruction 3 of 
the proposed rule and identified the Tier 3 fee multiplier at proposed 
Sec.  122.3(a)(3) as $1,110 (89 FR 31124). This final rule adopts the 
correct Tier 3 fee multiplier of $1,100 at ITAR Sec.  122.3(a)(3).

Response to Comments

    During the 45-day public comment period (April 24, 2024, through 
June 10, 2024) DDTC received 19 separate submissions from individuals, 
corporations, and industry associations in response to the notice of 
proposed rulemaking, some of which discussed more than one aspect of 
the proposed rule. All relevant comments addressed only ITAR Sec.  
122.3, which included proposed changes to the registration fees. The 
Department received no questions or comments on other changes in the 
proposed rule.
    Several commenters expressed a view that the proposed increase is 
an unjust burden on small business and may be a barrier to entry for 
new small business registrants. One commenter in particular claimed 
that the increase in registration fees would be especially difficult 
for manufacturers who do not export but are required by large 
corporations to be registered with DDTC to do business with them and 
advised the new registration fee would subject their company to paying 
1 percent of their gross revenue to be able to sell products 
domestically for DoD end-use. As a threshold matter, the Department is 
aware that some private sector businesses elect to have their own 
separate requirement for businesses with which they contract to be 
registered with DDTC, even when those contracting businesses are not 
legally required to register with DDTC under ITAR Sec.  122.1. Such 
varying requirements by some private sector businesses are outside of 
the scope of ITAR Sec.  122.1. Pursuant to ITAR Sec.  122.1, persons 
who are not engaged in the business of manufacturing, exporting, or 
temporarily importing defense articles are not required by ITAR Sec.  
122.1 to register with DDTC. With respect to the fee amount, the 
Department notes that registrants who do not export fall within Tier 1 
and pay the base fee of $3,000. That base fee represents a 33.1 percent 
increase from the prior Tier 1 fee, which is approximately 12 percent 
less than the increase for Tier 2 and is slightly less than it would 
have been had the Department used the 40.1 percent inflation adjustment 
based on 2008 dollars, when the registration fees were last amended.
    The Department acknowledges and understands the commenters' 
concerns regarding small businesses. In response,

[[Page 99082]]

the Department is instituting a planned one-year initiative for 
qualifying Tier 1 registrants, during which the Department will assess 
impact and consider extension. Tier 1 registrants may petition DDTC for 
consideration of a $500 discount (for a total registration fee of 
$2,500). To qualify, registrants must provide some form of proof that 
$3,000 was 1 percent or more of their total revenue for the last 
calendar year. ``Total revenue'' is the total amount of income and is 
not limited to sales of items controlled on the U.S. Munitions List 
(USML). Applicants must submit a complete request for special 
consideration to DDTC at least 30 calendar days prior to expiration of 
their current registration term. More information is available on the 
DDTC website, by searching ``registration fee.'' Moreover, as a result 
of the feedback received, the Department will review its registration 
fee structure more regularly to avoid large-percentage changes to 
registration fees.
    In addition, the Department continues to have a process for 
registrants where they may address registration fee concerns. Tier 2 
and Tier 3 registrants whose registration fees are greater than $3,500 
may petition DDTC for a pre-set alternate payment schedule. To be 
considered for an alternate payment schedule, registrants must provide 
some form of proof that their registration fee is greater than 1 
percent of their total sales in the given year. Total sales include 
domestic and international sales and are not limited to sales of items 
described on the USML. Additionally, the Department continues to have 
discounts available for Tier 3 renewals. To ensure fairness to those 
registrants in Tier 3, if the registrant timely shows that their total 
registration fee is greater than 3 percent of the total value of 
favorable determinations on license applications or other requests for 
authorization during the 12-month period ending 90 days prior to 
expiration of the current registration, the registration fee may be 
reduced to 3 percent of the value of such authorizations, or $4,000, 
whichever is greater. The Department also has discounts for exporters 
and temporary importers of low-value authorizations who fall under Tier 
3, as described on the DDTC website (https://www.pmddtc.state.gov; 
under Support > Review FAQs > DECCS--Registration > ``Understanding the 
Renewal Fee Download File''). Registrants who are wholly exempt from 
income taxation pursuant to 26 U.S.C. 501(c)(3) also qualify for the 
Tier 1 registration fee of $3,000.
    One commenter agreed the proposal is fair for Tier 3 registrants to 
pay more than Tier 1 and Tier 2 registrants as they consume more 
services from DDTC, while expressing overall concern about the higher 
registration fees for all tiers.
    Multiple commenters stated that the Tier 1 and Tier 2 inflationary 
adjustments are difficult for small businesses, citing negative 
economic impacts for their companies and that the registration fee 
increase is more than the rate of inflation increase since 2008. The 
Department appreciates that any increase in registration fees may cause 
difficulties for businesses, particularly small businesses. However, 
the Department assessed that after fifteen years of inflation, 
increasing technological improvements, and improved services, that an 
increase in the amount of registration fees is necessary for the 
continued and modernized operations of DDTC. Reflecting considerations 
such as those in the comments it expected to receive, DDTC set the Tier 
1 and Tier 2 registration fee amounts to reflect an increase fairly 
consistent with inflation over the last fifteen years. Several 
commenters expressed concern that the Tier 3 proposed registration fee 
is significantly above the inflation rate when the additional fee 
multiplier for favorable determinations is factored in. The Department 
acknowledges this is accurate. The proposed registration fee structure 
allows DDTC to fund a large share of the many critical functions it 
provides to exporters, importers, brokers, manufacturers, and the 
public--such as the DDTC Response Team, Help Desk, commodity 
jurisdiction determinations, advisory opinions, guidance on brokering, 
and support for registration--all of which offer services for the 
approximately 14,500 current DDTC registrants and also for the general 
public. The Department has concluded that Tier 3 registrants have 
benefited the most from DDTC's improvements, specifically the Defense 
Export Control and Compliance System (DECCS) and customer service 
improvements, and that they are best positioned to contribute from 
their export-derived revenue to continue and improve DDTC's services. 
Additionally, Tier 3 registrants have more frequent interactions with 
DDTC and thus require more DDTC services. Because these improvements 
primarily benefit Tier 3 registrants, it is those registrants that will 
be asked to contribute more. Finally, the Department again notes the 
availability of discounted registration fees for high-volume, low-value 
Tier 3 registrants.
    One commenter asked for clarification of how favorable 
determinations are classified and defined, and whether the scope of 
other requests for authorization encompasses application amendments and 
proviso reconsiderations. The commenter also asked the following 
questions: Are proviso reconsiderations included in the total? Are 
agreement amendments included in the total? The Department acknowledges 
this comment and clarifies that a favorable determination is an 
approval, an approval with provisos (sometimes also referred to as an 
approval with conditions), or written authorization from DDTC to 
conduct an activity regulated by the ITAR. An application that is 
returned without action or denied is not a type of favorable 
determination. That said, amendment requests and requests for proviso 
reconsiderations are considered in the registration fee calculation 
when they are positively adjudicated.
    One commenter inquired how DDTC was able to temporarily reduce its 
Tier 1 and Tier 2 registration fees to $500 for 1 year due to the 
coronavirus (COVID-19) pandemic, yet the agency needs to increase its 
registration fees now. Given the extraordinary impact of COVID-19 on 
the national economy and Defense Industrial Base, DDTC temporarily 
reduced registration fees for registrants in Tier 1 and Tier 2 to $500 
to help mitigate against the uncertain economic impact of the COVID-19 
public health emergency. The temporary reduction in registration fees 
that occurred four years ago was a special circumstance and is 
unrelated to the current proposed registration fee changes.
    One commenter suggested that DDTC consider implementing pricing 
scales for different types of licenses or consider additional streams 
of revenue available outside of registration fees. For example, the 
commenter suggested that DSP-6, DSP-74, and DSP-62 may be billed at a 
lower rate due to the limited time and resources needed to review and 
approve applications. Further, the same commenter also suggested 
limited fee structures may be explored for foreign entities that 
request DSP-6004 for reexports or retransfers. The Department notes 
that under the Arms Export Control Act, DDTC is authorized to charge 
for registration fees, not a fee per license.
    One commenter noted that as a risk mitigation practice, companies 
often apply for a license when the regulatory language or environment 
is unclear. DDTC's proposed license fee increases may disincentivize 
companies from submitting licenses when the regulatory requirements are 
ambiguous. The

[[Page 99083]]

Department notes the ITAR requires a license for the export, temporary 
import, or furnishing of defense services. Industry may submit a 
request for an Advisory Opinion to get more information on regulatory 
language. The ``Advisory Opinions (AO)'' application in DECCS allows 
industry users to electronically submit inquiries pursuant to ITAR 
Sec. Sec.  120.22(a) (for preliminary authorization determinations) and 
(c) (for interpretations of ITAR requirements other than brokering) and 
129.9(a) (for guidance whether an activity is a brokering activity) and 
(c) (for guidance on other areas of brokering).
    One commenter inquired how the new registration fees will increase 
the investments in DECCS and technology. The Department provides that 
DDTC plans include continuing to update DECCS with user-requested and 
other enhancements, specifically as it applies to the DECCS-Licensing 
application and its integrations with other external applications 
(e.g., USXports, Automated Export System). The DDTC IT Modernization 
Team is tracking these enhancements for continued improvements and 
meets periodically with the DECCS User Group (DUG) and the Defense 
Trade Advisory Group (DTAG) regarding information technology (IT) user 
matters and responds to feedback from both. The DDTC IT Modernization 
Team will continue to share periodic updates with and solicit feedback 
from both the DTAG and the DUG.
    One commenter suggested that DDTC take a phased approach to 
increasing its registration fees so that registrants may account for 
budgeting while mitigating their financial risks. The Department 
understands the need for entities to budget for this proposed increase 
and is therefore delaying the effective date and implementation of this 
new rule until January 2025. DDTC will continue to socialize the new 
registration fee structure so that registrants are aware of the new 
registration fees ahead of the implementation. All registrants will 
continue to receive a letter in DECCS that states their new 
registration fee 90 days ahead of their due date. Additionally, DDTC 
plans to conduct registration fee analyses every two-years, which 
should mitigate the need for a similarly significant increase in the 
future. DDTC will continue to solicit public comment to gather 
industry's point of view.
    The Department received a few comments asking for additional detail 
about how the Department determined the new registration fee costs. One 
commenter suggested that DDTC should disclose a budget for these 
increased estimated funds ``and then justify that spend in how it will 
continue to serve and improve industry.'' Based on the Department's 
analysis, the proposed increase in registration fees allows DDTC to 
adjust for inflation, to continue to make IT and other internal 
improvements, and to efficiently address industry's needs, as stated 
above. The increased registration fees are necessary to maintain the 
high level of service of the statutorily required export control 
system. DDTC will continue to engage with industry (via the DTAG, DUG, 
and industry events) to provide insights into how the organization 
serves the regulated community.
    In addition to the comments addressed above, the Department 
received several comments outside the scope of this rulemaking. The 
Department takes note of these comments but is not entertaining 
substantive revisions to other existing text of the ITAR in this 
rulemaking.

Regulatory Analysis and Notices

Administrative Procedure Act

    The Department has historically determined that rulemakings 
implementing the Arms Export Control Act or amending the ITAR involve a 
military or foreign affairs function of the United States under 5 
U.S.C. 553(a). However, due to Department's interest in seeking public 
comment on this rule, the Department solicited comments during a 45-day 
comment period, to which it is now responding in this final rule.

Regulatory Flexibility Act

    Since this rule is exempt from the notice-and-comment rulemaking 
provisions of 5 U.S.C. 553, it does not require analysis under the 
Regulatory Flexibility Act.

Unfunded Mandates Reform Act of 1995

    This 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.

Executive Orders 12372 and 13132

    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.

Congressional Review Act

    The Department does not believe that this rulemaking is a major 
rule, as defined by the Congressional Review Act, 5 U.S.C. 800 et seq.

Executive Orders 12866, 14094, and 13563

    Executive Orders 12866 (as amended by Executive Order 14094) and 
13563 direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributed 
impacts, and equity). Executive Order 13563 emphasizes the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility. This final rule has 
not been designated as a significant regulatory action by the Office of 
Information and Regulatory Affairs under Executive Order 12866, as 
amended.
    As noted in the proposed rule, roughly 14,500 registrants in fiscal 
year (FY) 2023 contributed registration fees to DDTC's FY 2023 
collections amounting to $33.8 million. Based on projections made from 
registrant data from recent years, the new registration fee structure, 
which presumes roughly the same number of registrants, is expected to 
bring in an overall total of roughly $67.2 million per year, which 
would be an overall increase of $33.4 million per year. Although this 
is a 99 percent projected increase in collections overall from current 
registration fees for FY 2025, DDTC's projected operational budget will 
be nearly $60 million, and that amount is expected to continue to 
increase based on inflation and other increases in expenses. DDTC's $60 
million budget includes (but is not limited to) contract labor support, 
IT services, personnel salaries, outreach, and travel. Accordingly, the 
revised registration fee structure is necessary for DDTC to continue 
operating to meet its mission. No action or an insufficient increase 
would cause budget deficits or a cut in necessary services. Further to 
a qualitative benefit-cost analysis, the registration fee structure 
finalized here benefits DDTC by meeting its budget demands in a way 
that also reasonably accounts for unknown variables such as changes in 
the number of registrants, or potential exemptions that would not

[[Page 99084]]

require specific license applications or approvals and therefore 
decreases the expected collections from Tiers 2 and 3. It also allows 
for benefits to the regulated community, enabling DDTC to address 
unexpected contingencies as it did in 2020, when it temporarily lowered 
registration fee amounts as a relief measure during the COVID-19 
pandemic.
    The largest increase, on a per-registrant basis, falls on Tier 3 
registrants. The Department believes this increase is justified for the 
reasons discussed previously, including that Tier 3 registrants derive 
greater benefits from engaging in regulated activities while also 
consuming a disproportionate amount of DDTC support services. As stated 
above, the Department continues to have discounts available for Tier 3 
renewals. To ensure fairness to those registrants in Tier 3, if they 
timely show that their total registration fee is greater than 3 percent 
of the total value of favorable determinations on license applications 
or other requests for authorization during the 12-month period ending 
90 days prior to expiration of the current registration, the 
registration fee may be reduced to 3 percent of the total license value 
of such authorizations, or $4,000, whichever is greater, as described 
on the DDTC website (https://www.pmddtc.state.gov) under Support > 
Review FAQs > DECCS--Registration > ``Understanding the Renewal Fee 
Download File.'' Because we project registrants in Tier 3 to account 
for over 22,000 of the roughly 26,000 applications expected to be 
adjudicated by DDTC, the Department believes that this is a more 
equitable distribution of financial costs. Tier 1 and Tier 2 
registrants, on the other hand, will see a 33 percent and 45 percent 
increase, respectively, not far from the near 40 percent inflation rate 
in the over fifteen years since the registration fees were last 
adjusted.
    As mentioned above, the Department is putting a new consideration 
in place for Tier 1 registrants. This was done both in response to 
comments received and due to a resulting benefit-cost analysis. 
Qualitatively, the Department does not aim to impose unnecessary costs 
on registrants, particularly small-business registrants. On the other 
hand, quantitatively, the Department does not know how many 
registrants, let alone how many Tiers 1 registrants, are small 
businesses. Nor does it know their average sales or revenues. The 
Department does not collect any of this information. Moreover, North 
American Industry Classification System (NAICS) codes do not provide 
suitable estimates as there are many industry codes that may have 
certain companies become registrants based on their activities, and not 
based on any one or several codes. Consequently, estimating the impact 
of lower registration fees for such entities on DDTC's necessary 
revenues and operating budget is not possible. Despite the quantitative 
uncertainty and risk, the qualitative benefits and the chance to assist 
some small businesses outweighed the costs to DDTC when the scope of 
that assistance could be reasonably targeted. To that end, the $500 
registration fee-discount petition process introduced above for Tier 1 
registrants whose fees equal 1 percent or more of their total revenue 
in a given year is a way that the Department could mitigate against the 
burdens that come from the registration fee increase. Tier 1 
registrants who receive this discount would end up with a registration 
fee increase of $250 more, or 11.1 percent more, than their current 
registration fee, which was last adjusted sixteen years ago in 
September 2008. The $500 registration fee discount would be 16.67 
percent less than the usual Tier 1 registration fee this rule 
establishes. Because of the unknown volume and effect of this discount, 
the Department will offer the petition process for one year; however, 
based on how it affects the budget, the Department will reevaluate 
whether it may continue the process in future years. Additionally, a 
further-out delayed effective date until January 2025 for the new 
registration fee structure was part of the Department's benefit-cost 
analysis and was done so as to give more lead time to entities to plan 
for new costs.

Executive Order 12988

    The Department of State has reviewed this rulemaking in light of 
Executive Order 12988 to eliminate ambiguity, minimize litigation, 
establish clear legal standards, and reduce burden.

Executive Order 13175

    The Department of State has determined that this rulemaking will 
not have tribal implications, will not impose substantial direct 
compliance costs on Indian Tribal governments, and will not preempt 
Tribal law. Accordingly, the requirements of Executive Order 13175 do 
not apply to this rulemaking.

Paperwork Reduction Act

    This rulemaking does not impose or revise any information 
collections subject to 44 U.S.C. chapter 35.

Signing Authority

    The Under Secretary, Arms Control and International Security, 
Bonnie D. Jenkins, having reviewed and approved this document, has 
delegated the authority to electronically sign this document to Stanley 
L. Brown, Acting Assistant Secretary, Bureau of Political-Military 
Affairs, for purposes of publication in the Federal Register.

List of Subjects

22 CFR Part 122

    Arms and munitions, Exports, Reporting and recordkeeping 
requirements.

22 CFR Part 129

    Arms and munitions, Brokers, Exports, Technical assistance.

    For the reasons discussed in the preamble and under the authority 
of 22 U.S.C. 2778, the Department of State amends title 22, chapter I, 
subchapter M, parts 122 and 129 of the Code of Federal Regulations as 
follows:

PART 122--REGISTRATION OF MANUFACTURERS AND EXPORTERS

0
1. The authority citation for part 122 continues 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.

0
2. Amend Sec.  122.1 by revising the section heading and adding a 
heading to paragraph (a) to read as follows:

Sec.  122.1  Registration: requirements, exemptions, and purpose.

    (a) Requirement to register. * * *
* * * * *

0
3. Revise Sec.  122.2 to read as follows:

Sec.  122.2  Registration: submission of registration statement, 
certification, frequency, renewal, and lapse.

    (a) Submission of registration statement. 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 electronic filing instructions available on the Directorate of 
Defense Trade Controls website at www.pmddtc.state.gov. 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 Sec.  120.66 of this subchapter). Registrants may not establish 
new entities for the purpose of reducing registration fees. The 
Statement of Registration must:
    (1) Be signed by a U.S. person senior officer (e.g., chief 
executive officer,

[[Page 99085]]

president, secretary, partner, member, treasurer, general counsel) who 
has been empowered by the intended registrant to sign such documents; 
and
    (2) Include documentation that demonstrates the registrant is 
incorporated or otherwise authorized to do business in the United 
States.
    (b) Statement of Registration Certification. The Statement of 
Registration of the intended registrant shall include a certification 
by an authorized senior officer of the following:
    (1) Whether the intended registrant 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 Sec.  120.6 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 Sec.  120.65 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.
    (c) Incomplete registration submission. 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.
    (d) Frequency. A person who is required to register and pay a 
registration fee must renew the registration and pay a registration fee 
on an annual basis after initial registration.
    (e) Renewal 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. 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.
    (f) 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 manufacturing or 
exporting defense articles or defense services.

0
4. Revise Sec.  122.3 to read as follows:

Sec.  122.3  Registration fees.

    (a) Registration fee. A person who is required to register must 
submit payment of a fee following the payment guidelines available on 
the Directorate of Defense Trade Controls website at 
www.pmddtc.state.gov. The fee to be paid shall be one of the following:
    (1) Tier 1. The first tier is a set fee of $3,000 per year. This 
applies to new registrants. It also applies to those who are renewing 
their registrations and for whom the Department did not issue a 
favorable determination on a license application or other request for 
authorization during the 12-month period ending 90 days prior to the 
expiration of the current registration.
    (2) Tier 2. The second tier is a set fee of $4,000 for registrants 
renewing their registrations who have submitted license applications or 
other requests for authorization and received five or fewer favorable 
determinations during the 12-month period ending 90 days prior to the 
expiration of their current registration.
    (3) Tier 3. The third tier is a calculated fee for registrants who 
have submitted license applications or other requests for authorization 
and received more than five favorable determinations during the 12-
month period ending 90 days prior to the expiration of their current 
registration. For these registrants, the fee calculation is $4,000 plus 
$1,100 times the total number of favorable determinations over five.
    (b) Website, discounts, and further guidance. Information on 
certain discounts for registrants who are wholly exempt from income tax 
pursuant to 26 U.S.C. 501(c)(3), and for Tier 3 registrants who are 
low-value exporters or temporary importers are available on the 
Directorate of Defense Trade Controls website at www.pmddtc.state.gov 
by selecting ``Conduct Business'' on the top heading bar, then 
selecting ``Registration'' from the left menu bar, and finally 
selecting ``Payment of Registration'' from the subsequent left menu 
bar. Other guidance and information relevant to the payment of 
registration fees is also available on the website.

PART 129--REGISTRATION AND LICENSING OF BROKERS

0
5. The authority citation for part 129 continues 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.

Sec.  129.8  [Amended]

    6. Amend Sec.  129.8, in the first sentence of paragraph (b)(1), by 
removing the text ``and a fee following the fee guidelines available on 
the Directorate of Defense Trade Controls website at 
www.pmddtc.state.gov.'' and adding in its place ``and the Tier 1 fee 
specified in Sec.  122.3(a)(1) of this subchapter, regardless of how 
many favorable determinations the person received during the 12-month 
period ending 90 days prior to the expiration of their current 
registration.''

Stanley L. Brown,
Acting Assistant Secretary, Bureau of Political-Military Affairs, 
Department of State.
[FR Doc. 2024-29032 Filed 12-6-24; 4:15 pm]
BILLING CODE 4710-25-P
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