State Dept. Issues Proposed Rule to Increase ITAR Registration Fees, Etc.
The State Department has issued a proposed rule to amend the International Traffic in Arms Regulations to increase the registration fees charged to those persons required to register with the Directorate of Defense Trade Controls (DDTC) in accordance with Section 38 of the Arms Export Control Act (AECA), to change the registration renewal period,1 and to make other minor administrative changes.
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(ITAR registration fees are set forth at 22 CFR 122.3 and were last adjusted in 2004. Currently under 22 CFR 122.3, a person who is required to register may do so for a period of 1 year upon submission of a completed Form DS-2032, transmittal letter and payment of $1,750.)
Comments are due August 27, 2008.
Three Tier Fee Schedule Proposed to Better Cover Cost of Licensing/Compliance
To better align registration fees with the cost of licensing, compliance and other related activities, the State Department is proposing a three-tier registration fee schedule.
Specifically, the proposed rule would amend 22 CFR 122.3 (registration fees for manufacturers and exporters) to state that a person who is required to register must do so on an annual basis upon submission of a completed Form DS-2032, transmittal letter, and payment of a fee as follows:
Tier 1: A set fee of $2,250 per year would be required for new registrants or registrants who have not submitted any applications2 during a 12-month period ending 90 days prior to expiration of the current registration.
Tier 2: A set fee of $2,750 per year would be required for registrants who have submitted ten or fewer applications during a 12-month period ending 90 days prior to expiration of the current registration.
Tier 3: The third tier would be for registrants who have submitted more than ten applications during a 12-month period ending 90 days prior to expiration of the current registration. For this tier, registrants would pay a fee of $2,750 plus an additional fee based on the number of applications submitted. The additional fee would be determined by multiplying $250 times the number of applications over ten submitted during a 12-month period ending 90 days prior to expiration of the current registration.
3% or $2,750 ceiling. The fee for registrants whose total registration fee is greater than 3% of the total value of applications submitted during the 12-month period ending 90 days prior to expiration of the current registration would be reduced to 3% of such total application value or $2,750, whichever is greater.
Notice of following year's fee. For those renewing a registration, notice of the fee due for the next year's registration would be sent to the Senior Officer signing the previous DS-2032 at least 60 days prior to its expiration date.
(The proposed rule would also amend 22 CFR 122.3(a) to implement reduced (Tier 1) rates for universities, etc., and would amend 22 CFR 129.4(a) (regarding fees/statement for registration and licensing of brokers) to reflect the new registration fee schedule.)
DDTC Would Advise Registrant if Package Is Incomplete, Etc.
The proposed rule would add new language to 22 CFR 122.2(a) and 129.4(a) stating that the DDTC would 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 Would Not be Able to Establish New Entities to Reduce Fees
In addition, the proposed rule would amend 22 CFR 122.2(a) and 129.4(a) to state that registrants would not be able to establish new entities for the purpose of reducing registration fees.
1DDTC sources explain that while the proposed rule states it is changing the registration renewal period, this was an oversight as the issue was already addressed in a July 18 final rule. (See ITT's Online Archives or 07/22/08 news, 08072230, for BP summary of the final rule limiting the registration renewal period from up to two years to one year.)
2For purposes of revised 22 CFR 122.3, ''applications'' refers to the actions enumerated within Sections 123 through 125 of the ITAR that require DDTC to review, adjudicate and issue responses to.
(See ITT's Online Archives or 06/18/08 news, 08061850, for BP summary of the Defense Trade Advisory Group (DTAG) announcing a meeting to discuss, among other things, a draft proposal to increase registration fees under ITAR.)
DDTC contact - Patricia Slygh (202) 663-2830
State Dept. proposed rule (Public Notice 6246, FR Pub 07/28/08) available at http://edocket.access.gpo.gov/2008/pdf/E8-17232.pdf