Published FR Notice

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(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
Department of State.
Interim final rule.

AGENCY:
ACTION:

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.

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SUMMARY:

Interested parties may
submit comments within 45 days of the
date of publication by one of the
following methods:

ADDRESSES:

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• 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

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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

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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

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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
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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

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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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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.

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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

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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

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• 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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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

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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.

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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

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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

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52685

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.

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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:

■

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§ 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

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(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:

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§ 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

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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,

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52687

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:

■

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§ 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

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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:

■

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§ 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,
abet, counsel, demand, induce, procure,

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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
facts.

Misrepresentation and omission of

*

*
*
*
*
(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:

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§ 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

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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

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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:

■

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§ 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

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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;

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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

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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

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(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

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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.

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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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(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

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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:

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52693

(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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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.

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

40. Newly redesignated § 129.10 is
revised to read as follows:

Coast Guard

§ 129.10

33 CFR Part 117

■

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:

■

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brokering activities in accordance with
§ 122.5 of this subchapter.

§ 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

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[Docket No. USCG–2013–0771]

Drawbridge Operation Regulation;
Trent River, New Bern, NC
Coast Guard, DHS.
Notice of deviation from
drawbridge regulation.

AGENCY:
ACTION:

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.
SUMMARY:

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
ADDRESSES:

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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
Postal Regulatory Commission.
Final rule.

AGENCY:
ACTION:

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