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This rule describes how articles currently United States Munitions List (USML) Category I--Firearms, Close Assault Weapons and Combat Shotguns; Category II--Guns and Armament; and Category III--Ammunition/Ordnance the President determines no longer warrant control on that list would be controlled on the Commerce Control List (CCL). This rule will be published simultaneously with a proposed rule by the Department of State that would revise Categories I, II and III of the USML to describe more precisely the articles warranting continued control on that list. This rule also would reorganize and renumber entries currently on the CCL that control shotguns and certain firearms related items to place all firearms related entries close to each other that list.

Statement of Need:

This Department of Commerce proposed rule is needed to ensure appropriate controls would be in place on firearms and related items determined to no longer warrant control under the United States Munitions List that would be moved to the Commerce Control List (CCL). This proposed rule describes how articles the President determines no longer warrant control under United States Munitions List (USML) Category I Firearms, Close Assault Weapons and Combat Shotguns; Category II Guns and Armament; and Category III Ammunition/Ordnance, would be controlled on the Commerce Control List (CCL) and by the Export Administration Regulations (EAR). This proposed rule is being published in conjunction with a proposed rule from the Department of State, Directorate of Defense Trade Controls, which would amend the list of articles controlled by USML Category I (Firearms, Close Assault Weapons and Combat Shotguns), Category II (Guns and Armament), and Category III (Ammunition/Ordnance) of the USML to describe more precisely items warranting continued control on that list.

The changes described in this proposed rule and in the State Department’s companion proposed rule on Categories I, II, and III of the USML are based on a review of those categories by the Department of Defense, which worked with the Departments of State and Commerce in preparing the amendments. The review was focused on identifying the types of articles that are now controlled on the USML that are either (i) inherently military and otherwise warrant control on the USML or (ii) if of a type common to non-military firearms applications, possess parameters or characteristics that provide a critical military or intelligence advantage to the United States, and are almost exclusively available from the United States. If an article satisfies one or both of those criteria, the article remains on the USML. If an article does not satisfy either criterion, it has been identified in the new Export Control Classification Numbers (ECCNs) included in this proposed rule. Thus, the scope of the items described in this proposed rule is essentially commercial items widely available in retail outlets and less sensitive military items.

Summary of the Legal Basis:

Alternatives:

Anticipated Costs and Benefits:

This proposed regulation involves three collections currently approved by OMB under these BIS collections and control numbers: Simplified Network Application Processing System (control number 0694-0088), which includes, among other things, license applications; License Exceptions and Exclusions (control number 0694-0137); and Import Certificates and End-User Certificates (control number 0694-0093).

This proposed rule would affect the information collection, under control number 0694-0088, associated with the multi-purpose application for export licenses. (See the description under anticipated Benefits for an explanation for the anticipated reduction in burden).

This proposed rule would also affect the information collection under control number 0694-0137, addressing the use of license exceptions and exclusions. BIS believes that the increased use of License Exception STA resulting from the combined effect of all rules to be published adding items removed from the ITAR to the EAR would increase the burden associated with control number 0694-0137 by about 23,858 hours (20,450 transactions at 1 hour and 10 minutes each). BIS expects that this increase in burden as a result of the increased use of License Exception STA would be more than offset by a reduction in burden hours associated with approved collections related to the ITAR.

This proposed rule would have a minimal effect on the information collection under control number 0694-0093, import certificates and end-user certificates.

The movement of a substantial number of items from the USML determined to no longer warrant ITAR control to the CCL would result in a significant reduction of regulatory burden for exporters and other persons involved with such items that were previously subject to the ITAR. The EAR is a more flexible regulatory structure whereby the items can still be controlled appropriately, but in a much more efficient way that would significantly reduce the burdens on exporters and other parties compared to the regulatory burdens they faced when the item were subject to the ITAR.

For those items in USML Categories I, II and III that would move by this rule to the CCL, BIS would be collecting the necessary information using the form associated with OMB Control No. 0694-0088. BIS estimates that this form takes approximately 43.8 minutes for a manual or electronic submission. Using the State Department's estimate that 10,000 applicants annually would move from the USML to the CCL and BIS’s estimate that 6,000 of the 10,000 applicants would require licenses under the EAR, that constitutes a burden of 4,380 hours for this collection under the EAR. Those companies are currently using the State Department’s forms associated with OMB Control No. 1405-0003 for which the burden estimate is 1 hour per submission, which for 10,000 applications results in a burden of 10,000 hours. Thus subtracting the BIS burden hours of 4,380 from the State Department burden hours of 10,000, the burden is reduced by 5,620 hours. The other 4,000 applicants may use license exceptions under the EAR or the no license required designation, so these applicants would not be required to submit license applications under the EAR. There may also be other State Department forms that will no longer need to be submitted and that may further reduce the burden hours for applicants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

In addition to the reduced burden hours of 5,620 hours, there would also be direct cost savings that would result from the 10,000 license applications no longer being required under the ITAR once these items are moved to the EAR. The Department of State charges a registration fee to apply for a license under the ITAR. The Department of Commerce does not charge a registration fee to apply for a license under the EAR. Therefore, in addition to the reduced burden hours of 5,620 hours, the movement of these items from the ITAR would result in a direct cost savings of $2,500,000 per year to the exporting public because there is no fee charged by the Department of Commerce to apply for a license.  

Risks: