Comments due Nov. 30: State's ITAR proposal narrows submarine-part controls and the reach of catch-all rules

The money

The proposal carries no dollar estimate. The State Department wrote that because changes to the list turn on an item’s military utility “rather than its market prevalence or economic value, quantitative analyses cannot be usefully estimated and are not available” ^[1]. It assessed that the benefits outweigh the costs and that the rule “will result in a net reduction of the burden on the regulated community” ^[1]. The Office of Management and Budget deemed it a significant regulatory action ^[1].

The scale sits in the licensing data. In fiscal 2025, the value of privately contracted DCS authorizations licensed by the State Department reached $226.8 billion, a 13% increase from FY2024, according to the Congressional Research Service (CRS) ^[6]. Defense Daily, reporting the department’s annual figures in March, put total fiscal 2025 foreign defense sales at $331.2 billion, against $318.7 billion the year before, with DCS up from $200.8 billion ^[7]. That leaves about $104.4 billion for Foreign Military Sales (FMS), by this brief’s arithmetic ^[7].

DCS is the channel the ITAR governs directly. Companies register with the Directorate of Defense Trade Controls (DDTC) and file licenses through its DECCS portal: DSP-5 for permanent exports, DSP-73 for temporary exports of unclassified defense articles, and Part 124 agreements for defense services and technical data ^[6]. Every item that moves from the USML to the Commerce Department’s Export Administration Regulations (EAR) leaves that system ^[1, 6].

The programs

What would change for submarine parts under USML Category XX?

Category XX(c) today covers all specially designed parts, components, accessories, attachments and associated equipment for military submersibles, which the department calls “one of the broadest control paragraphs on the USML” ^[1]. The proposal splits it in three ^[1]:

• (c)(1): items specially designed for naval nuclear propulsion plants or facilities, newly designated Significant Military Equipment
• (c)(2): 11 named system types specially designed for military submersibles, among them habitability and life-support systems, hulls and superstructures, steering and dive-plane controls, weight and balance management, emergency and safety systems, power generation and storage, hydraulics, and equipment built to work below 600 meters
• (c)(3): parts and components specially designed for the (b)(2) and (c)(2) articles

The department says the longer list would still “significantly narrow the scope of controls” now in paragraph (c) ^[1]. For submarine suppliers, the practical test is whether a part falls outside those 11 system types ^[1].

Which other items come off the list?

Three narrower removals ^[1]:

• Category II(a)(4): smooth-bore, fixed-barrel canister launchers, described as “less-lethal and less-precise”; grenade launchers with rifled or removable barrels stay
• Category VIII(h)(10): removed and reserved, which would take most radar altimeters off the list
• Category X(a)(7): rewritten optical-density criteria for laser and flash-protective goggles, visors and filters, with the department asking for data on whether visible light transmission would draw a better line

How do the catch-all and “specially designed” changes work?

Proposed paragraph (b)(8) of section 120.41 would exclude, “regardless of form or fit,” a knob, tire, visible spectrum light bulb, light fixture, analog gauge or indicator, audio selector panel, nameplate, magnetic compass, rheostat, manual electrical switch, solenoid, thermal-magnetic circuit breaker, fuse, glass preform, latch, hinge, bracket, pneumatic hose or passenger seat ^[1]. Unlike the existing fastener carve-out, it has no counterpart in the EAR definition, so these items would drop out of USML catch-alls while the EAR’s own definition stays as it is ^[1].

A second change, paragraph (b)(7), targets a problem the department illustrates with an electronic support component. A part designed for a system on the Commerce list can become ITAR-controlled years later when reused, unmodified, in a submarine whose USML category has a catch-all ^[1]. Under the proposal, a part not on the USML within a year after leaving development would stay off it when later used in the same or equivalent form ^[1]. Exporters relying on that carve-out would need documents contemporaneous with development, such as concept designs, marketing plans, patent filings or contracts ^[1].

The rule also redefines when development ends. It “concludes when design is finalized and tested to support serial production,” and routine reliability, cost or cosmetic changes would not restart it ^[1]. The department told commenters it considered tying the definition to Milestone C but concluded the ITAR’s end of development “is more aligned with entrance into Full Rate Production or equivalent production at scale” ^[1].

Do I need a license to ship a foreign-made item back to its maker?

Not under proposed section 123.26. An unclassified foreign defense article could be temporarily exported without a license “solely for the purpose of servicing, inspecting, testing, calibrating, repairing, overhauling, upgrading, reconditioning, or one-to-one replacement of a defective item” by its original manufacturer or authorized service provider ^[1].

The politics

The rule rests on two directives. Section 38 of the Arms Export Control Act requires periodic review of the list, and Executive Order 14268, signed April 9, 2025, ordered State and the Defense Department to update the USML and the FMS-only list “to focus protections solely on our most sensitive and sophisticated technologies” ^[1, 2]. The September UUV rule also cites section 1345 of the FY2024 NDAA as requiring periodic review ^[3]. CRS notes that a February 2026 order, E.O. 14383, made industrial-capacity building an organizing principle of arms transfer policy, and that section 1213 of the FY2026 NDAA required a report on which items on the FMS-only list could be sold through DCS instead ^[6].

The proposal follows a run of State Department rules since July:

• July 23: an interim final rule taking suppressors for non-automatic and semi-automatic firearms off the USML, effective Nov. 20, issued in support of E.O. 14268 ^[5]
• Aug. 28: a rule removing certain civil aircraft modified to carry directed infrared countermeasures and missile warning systems, effective Oct. 13 ^[4]
• Sept. 18: an interim final rule narrowing Category XX(a) controls on uncrewed underwater vehicles of 8,000 pounds or less, made “with the concurrence of the Department of Defense” ^[3]

Trade counsel at Thompson Hine described the Oct. 1 proposal as “in furtherance of” E.O. 14268 ^[8]. The department classes the rule as a foreign affairs function exempt from Administrative Procedure Act notice requirements, but said it “elects to seek public comment” anyway ^[1]. Thomas G. DiNanno, under secretary for arms control and international security, signed it ^[1].

One naming note for compliance staff: the text uses “Department of Defense” rather than “Department of War,” because that is the agency name the Arms Export Control Act designates ^[1].

Next milestone

Comments on the UUV rule are due Oct. 19, the day it takes effect ^[3]. Comments on this proposal close Nov. 30, under docket DOS-2026-0991 and RIN 1400-AF40 ^[1]. The department posed 14 numbered questions. One asks whether to strip “software” from parts of the specially designed definition, and another whether the new development definitions cover continuous integration and continuous deployment ^[1]. Suppressor decontrol takes effect Nov. 20 ^[5]. The department has given no date for a final rule.