27 August 2010

[Federal Register: August 27, 2010 (Volume 75, Number 166)]
[Rules and Regulations]               
[Page 52625-52626]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27au10-7]                         

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

DEPARTMENT OF STATE

22 CFR Part 125

[Public Notice: 7135]
RIN 1400-AC59

 
Amendment to the International Traffic in Arms Regulations: 
Export Exemption for Technical Data

AGENCY: Department of State.

ACTION: Final rule.

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

SUMMARY: The Department of State is amending the International Traffic 
in Arms Regulations (ITAR) to clarify an exemption for technical data. 
The clarification is that the exemption covers technical data, 
regardless of media or format, sent or taken by a U.S. person who is an 
employee of a U.S. corporation or a U.S. Government agency to a U.S. 
person employed by that U.S. corporation or to a U.S. Government agency 
outside the United States.

DATES: Effective Date: This rule is effective August 27, 2010.

FOR FURTHER INFORMATION CONTACT: Director Charles Shotwell, Office of 
Defense Trade Controls Policy, Department of State, Telephone (202) 
663-2792 or Fax (202) 261-8199; E-mail DDTCResponseTeam@state.gov. 
ATTN: Regulatory Change, Section 125.4.

SUPPLEMENTARY INFORMATION: On November 24, 2009, the Department 
published a Notice of Proposed Rulemaking (NPRM) to add language 
clarifying 22 CFR 125.4(b)(9) to allow technical data, including 
classified information, and regardless of media or format, sent or 
taken by a U.S. person who is an employee of a U.S. corporation or a 
U.S. Government agency, to a U.S. person employed by that U.S. 
corporation or to a U.S. Government agency outside the United States 
under certain specified circumstances reflected in 22 CFR 
125.4(b)(9)(i) through (iii) (74 FR 61292). This amendment will add 
after the word ``information'' the words ``and regardless of media or 
format.'' Also, the words ``sent by a U.S. corporation to a U.S. person 
employed by that corporation overseas or to a U.S. Government agency'' 
has been replaced by ``sent or taken by a U.S. person who is an 
employee of a U.S. corporation or a U.S. Government agency to a U.S. 
person employed by that corporation or to a U.S. Government agency 
outside the United States.'' Thus, the exemption will explicitly allow 
hand carrying technical data by a U.S. person employed by a U.S. 
corporation or a U.S. Government agency to a U.S. person employed by 
that U.S. corporation or to a U.S. Government agency outside the United 
States, as long as certain criteria in Sec. Sec.  125.4(b)(9) and 
125.4(b)(9)(i)-(iii) are met. The word ``overseas'' will be replaced by 
``outside the United States'' at Sec. Sec.  125.4(b)(9), 
125.4(b)(9)(i), 125.4(b)(9)(ii), and 125.4(b)(9)(iii). Also, Sec.  
125.4(b)(9)(iii) will be amended to add the words ``or taken'' after 
the word ``sent.'' As stated in 22 CFR 125.4(a), this exemption does 
not apply to exports to proscribed destinations under 22 CFR 126.1.
    The Proposed Rule had a comment period ending January 25, 2010. 
Nine parties filed comments by January 25 recommending changes. Having 
thoroughly reviewed and evaluated the comments and the recommended 
changes, the Department has determined that it will, and hereby does, 
adopt the Proposed Rule, with minor edits, and promulgates it as a 
Final Rule. The Department's evaluation of the written comments and 
recommendations follows:

Comment Analysis

    One commenting party recommended that ``sent or taken'' be changed 
to ``sent, taken or accessed.'' This recommendation was deemed not 
necessary since it is implied the U.S. person who is an employee of a 
U.S. corporation or the U.S. person who is an employee of a U.S. 
Government agency taking the technical data outside of the United 
States may access the technical data.
    One commenting party inquired whether a U.S. corporation 
(manufacturer) could use the exemption to send (orally or via e-mail) 
technical data to an employee of a U.S. Government agency outside the 
United States, as well as what steps the U.S. manufacturer would take 
to ensure that 22 CFR 125.4(b)(9)(i)-(ii) are met. The U.S. corporation 
(in compliance with 22 CFR part 122) is able to use the exemption to 
send (orally or via e-mail) technical data to a U.S. person employed by 
a U.S. Government agency outside the United States, so long as the U.S. 
company takes reasonable precautions to ensure that conditions in 22 
CFR 125.4(b)(9)(i) through (ii) are met:
    1. The technical data will be used outside of the United States 
solely by U.S. persons; and
    2. The U.S. person outside of the United States is employed by a 
U.S. Government agency.
    Two commenting parties recommended that it be explicit that the 
technical data could be for ``personal use'' by the U.S. person 
claiming the exemption. That recommendation was not adopted since it 
introduced uncertainty about uses beyond those related to employment.
    One commenting party pointed out that when technical data is 
exported from a U.S. port using an exemption, the ITAR does not require 
the report of such an export using the Automated Export System (AES); 
instead, the exporter is to provide electronic notification directly to 
the Directorate of Defense Trade Controls (DDTC) (see 22 CFR 
123.22(b)(3)(iii)). The commenting party recommended that if the system 
to electronically file directly to DDTC is not going to be implemented, 
then DDTC should arrange for AES to be the reporting mechanism. The 
commenting party also recommended that if classified technical data is 
being exported under the provisions of the Department of Defense 
National Industrial Security Program Operating Manual, an Electronic 
Export Information should be filed within AES. For exports of technical 
data using exemptions, there is no system to electronically file 
directly to DDTC. DDTC is reviewing carefully the possibility of having 
all exports of technical data using an exemption be reported using an 
Electronic Export Information within Census Bureau's Automated Export 
System.
    Two commenting parties recommended the exemption at Sec.  
125.4(b)(9) be expanded so the exporter would be a U.S. person who is 
an employee of any entity, organization, or group incorporated or 
organized to do business in the United States. Also, the recipient 
would be a U.S. person employed by that entity, organization,

[[Page 52626]]

or group. Consequently, another recommendation is to revise Sec.  
125.4(b)(9)(ii) to state ``the U.S. person outside the United States is 
an employee of the U.S. Government or is directly employed by the same 
U.S. entity, organization, or group and not by a foreign subsidiary; 
and * * *.'' The commenting party recommended that the exemption 
include accredited institutions of higher learning in the United States 
in order to facilitate research. This recommendation was not adopted 
because the Department prefers narrowing this exemption to an exporter 
that is a U.S. person who is an employee of a U.S. corporation or a 
U.S. Government agency, and a recipient outside the United States that 
is a U.S. person employed by that U.S. corporation or U.S. Government 
agency. The narrowing of this exemption affords more control of the 
technical data.
    One commenting party recommended the exemption be expanded at Sec.  
125.4(b)(9) to include recipients that are a U.S. prime contractor or 
U.S. subcontractor of that U.S. corporation. Consequently, another 
recommendation is to revise Sec.  125.4(b)(9)(ii) to state, ``If the 
U.S. person outside the United States is an employee of the U.S. 
Government or is directly employed by the U.S. corporation and not by a 
foreign subsidiary, or is directly employed by the U.S. corporation's 
U.S. prime contractor or U.S. subcontractor, and not a foreign 
subsidiary, provided the U.S. prime contractor's or U.S. 
subcontractor's employee is a U.S. person.'' Expanding the recipients 
to a U.S. person employed by the U.S. corporation's U.S. prime 
contractor or U.S. subcontractor allows the exemption to become 
unwieldy as to the recipient responsible for the technical data.
    One commenting party recommended the proposed amendment without any 
changes because it explicitly addressed technical data that is hand 
carried outside of the United States.

Regulatory Analysis and Notices

Administrative Procedure Act

    This amendment involves a foreign affairs function of the United 
States and, therefore, is not subject to the procedures contained in 5 
U.S.C. 553 and 554.

Regulatory Flexibility Act

    Since this amendment is not subject to 5 U.S.C. 553, it does not 
require analysis under the Regulatory Flexibility Act.

Unfunded Mandates Reform Act of 1995

    This amendment does not involve a mandate that will result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any year and it 
will not significantly or uniquely affect small governments. Therefore, 
no actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

Small Business Regulatory Enforcement Fairness Act of 1996

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

Executive Orders 12372 and 13132

    This proposed amendment will not have substantial direct effects on 
the States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 13132, it is determined that this amendment does not have 
sufficient federalism implications to require consultations or warrant 
the preparation of a federalism summary impact statement. The 
regulations implementing Executive Order 12372 regarding 
intergovernmental consultation on Federal programs and activities do 
not apply to this amendment.

Executive Order 12866

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

Executive Order 12988

    The Department of State has reviewed the proposed amendments 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 requirement of Section 5 of Executive 
Order 13175 does not apply to this rulemaking.

Paperwork Reduction Act

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

List of Subjects in 22 CFR Part 125

    Arms and munitions, Classified information, Exports.

0
Accordingly, for the reasons set forth above, Title 22, Chapter I, 
Subchapter M, part 125 is amended as follows:

PART 125--LICENSES FOR THE EXPORT OF TECHNICAL DATA AND CLASSIFIED 
DEFENSE ARTICLES

0
1. The authority citation for part 125 is revised to read as follows:

    Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311; 3 CFR, 1977 Comp. p.79; 
22 U.S.C. 2651a.


0
2. Section 125.4 is amended by revising paragraphs (b)(9) to read as 
follows:


Sec.  125.4  Exemptions of general applicability.

* * * * *
    (b) * * *
    (9) Technical data, including classified information, and 
regardless of media or format, sent or taken by a U.S. person who is an 
employee of a U.S. corporation or a U.S. Government agency to a U.S. 
person employed by that U.S. corporation or to a U.S. Government agency 
outside the United States. This exemption is subject to the limitations 
of Sec.  125.1(b) of this subchapter and may be used only if:
    (i) The technical data is to be used outside the United States 
solely by a U.S. person;
    (ii) The U.S. person outside the United States is an employee of 
the U.S. Government or is directly employed by the U.S. corporation and 
not by a foreign subsidiary; and
    (iii) The classified information is sent or taken outside the 
United States in accordance with the requirements of the Department of 
Defense National Industrial Security Program Operating Manual (unless 
such requirements are in direct conflict with guidance provided by the 
Directorate of Defense Trade Controls, in which case the latter 
guidance must be followed).
* * * * *

    Dated: August 18, 2010.
Ellen O. Tauscher,
Under Secretary, Arms Control and International Security, Department of 
State.
[FR Doc. 2010-21450 Filed 8-26-10; 8:45 am]
BILLING CODE 4710-25-P