Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Rules and Regulations 19467 

connections, usually using Internet 

Protocol, typically carried over Ethernet 

or Wi-Fi. The requirements of this part 

are limited to those televisions for 

which the Department of Energy has 

adopted and published test procedures 

for measuring energy use. 

■ 3. In § 305.5, revise paragraph (d) and 

remove paragraph (e), as follows: 

§ 305.5 Determinations of estimated 

annual energy consumption, estimated 

annual operating cost, and energy 

efficiency rating, water use rate, and other 

required disclosure content. 

* * * * * 

(d) Representations for ceiling fans 

under § 305.13 and televisions under 

§ 305.17 must be derived from 

applicable procedures in 10 CFR parts 

429, 430, and 431. 

■ 4. In § 305.8, revise paragraphs (a)(1) 

and (3), add new paragraph (a)(4), and 

revise paragraph (b)(1) to read as 

follows: 

§ 305.8 Submission of data. 

(a)(1) Except as provided in 

paragraphs (a)(2) through (4) of this 

section, each manufacturer of a covered 

product subject to the disclosure 

requirements of this part and subject to 

Department of Energy certification 

requirements in 10 CFR part 429 shall 

submit annually a report for each model 

in current production containing the 

same information that must be 

submitted to the Department of Energy 

pursuant to 10 CFR part 429 for that 

product, and that the Department has 

identified as public information 

pursuant to 10 CFR part 429. In lieu of 

submitting the required information to 

the Commission as required by this 

section, manufacturers may submit such 

information to the Department of Energy 

via the CCMS at https://

regulations.doe.gov/ccms as provided 

by 10 CFR 429.12. 

* * * * * 

(3) Manufacturers of televisions shall 

submit annually a report containing the 

brand name; model number; screen size 

(diagonal in inches); power (in watts) 

consumed in on mode, standby-passive 

mode, in standby-active mode, low 

mode, and off mode; and annual energy 

consumption (kWh/year) for each basic 

model in current production. The report 

should also include a starting serial 

number, date code, or other means of 

identifying the date of manufacture with 

the first submission for each basic 

model. In lieu of submitting the 

required information to the Commission 

as required by this section, 

manufacturers may submit such 

information to the Department of Energy 

via the Compliance and Certification 

Management System (CCMS) at https:// 

regulations.doe.gov/ccms as provided 

by 10 CFR 429.12. 

(4) This section does not require 

reports for general service light-emitting 

diode (LED or OLED) lamps. 

(b)(1) All data required by § 305.8(a) 

except serial numbers shall be 

submitted to the Commission annually, 

on or before the following dates: 

Product category 

Deadline 

for data 

submission 

Refrigerators .......................................................................................................................................................................................... Aug. 1. 

Refrigerators-freezers ........................................................................................................................................................................... Aug. 1. 

Freezers ................................................................................................................................................................................................ Aug. 1. 

Central air conditioners ......................................................................................................................................................................... July 1. 

Heat pumps ........................................................................................................................................................................................... July 1. 

Dishwashers .......................................................................................................................................................................................... June 1. 

Water heaters ........................................................................................................................................................................................ May 1. 

Room air conditioners ........................................................................................................................................................................... July 1. 

Furnaces ............................................................................................................................................................................................... May 1. 

Pool heaters .......................................................................................................................................................................................... May 1. 

Clothes washers .................................................................................................................................................................................... Oct. 1. 

Fluorescent lamp ballasts ..................................................................................................................................................................... Mar. 1. 

Showerheads ........................................................................................................................................................................................ Mar. 1. 

Faucets .................................................................................................................................................................................................. Mar. 1. 

Water closets ........................................................................................................................................................................................ Mar. 1. 

Ceiling fans ........................................................................................................................................................................................... Mar. 1. 

Urinals ................................................................................................................................................................................................... Mar. 1. 

Metal halide lamp fixtures ..................................................................................................................................................................... Sept. 1. 

General service fluorescent lamps ....................................................................................................................................................... Mar. 1. 

Medium base compact fluorescent lamps ............................................................................................................................................ Mar. 1. 

General service incandescent lamps .................................................................................................................................................... Mar. 1. 

Televisions ............................................................................................................................................................................................ June 1. 

* * * * * 

§ 305.17—[Amended] 

■ 5. In § 305.17, remove paragraph (h). 

By direction of the Commission. 

Donald S. Clark, 

Secretary. 

[FR Doc. 2014–07739 Filed 4–8–14; 8:45 am] 

BILLING CODE 6750–01–P 

DEPARTMENT OF DEFENSE 

Office of the Secretary 

32 CFR Part 117 

[Docket ID: DOD–2011–OS–0063] 

RIN 0790–AI71 

National Industrial Security Program 

AGENCY: Department of Defense (DoD). 

ACTION: Interim final rule. 

SUMMARY: This DoD interim final rule 

(rule) assigns responsibilities and 

establishes requirements related to the 

National Industrial Security Program 

(NISP) to ensure maximum uniformity 

and effectiveness for both DoD and nonDoD Components, as defined in this 

rule, for which the Department serves as 

the Cognizant Security Agency (CSA) 

and provides industrial security services 

in accordance with Executive Order 

(EO) 12829, ‘‘National Industrial 

Security Program.’’ The rule provides 

guidance on the procedures used to 

ensure classified information will be 

properly safeguarded if a contractor has 

reported foreign ownership, control or 

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19468 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Rules and Regulations 

influence (FOCI) information which 

DoD must evaluate, mitigate, or negate 

as appropriate. The rule also provides 

guidance for the evaluation, mitigation, 

and/or negation of FOCI information 

reported by a company, as defined in 

the rule, which is in process for a 

facility security clearance (FCL). 

DATES: Effective Date: This rule is 

effective April 9, 2014. Comments must 

be received by June 9, 2014. 

ADDRESSES: You may submit comments, 

identified by 32 CFR part 117, Docket 

No. DoD–2011–OS–0063 or Regulatory 

Information Number (RIN) 0790–AI71 

by any of the following methods: 

• Federal Rulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Federal Docket Management 

System Office, 4800 Mark Center Drive, 

2nd floor, East Tower, Suite 02G09, 

Alexandria, VA 22350–3100. 

Instructions: All submissions received 

must include the agency name and 

docket number or RIN for this Federal 

Register document. The general policy 

for comments and other submissions 

from members of the public is to make 

these submissions available for public 

viewing on the Internet at http://

www.regulations.gov as they are 

received without change, including any 

personal identifiers or contact 

information. 

FOR FURTHER INFORMATION CONTACT: 

Valerie Heil, (703) 604–1112. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

The purpose of this part 117, subpart 

C is to set forth industrial security 

procedures and practices related to 

FOCI for the Components to ensure 

maximum uniformity and effectiveness 

in the DoD implementation of E.O. 

12829. 

In accordance with the authority in 

DoD Directive (DoDD) 5143.01, the 

purpose of the rule is to implement 

policy, assign responsibilities, establish 

requirements and provide procedures, 

consistent with E.O. 12829, DoD 

Instruction (DoDI) 5220.22, and E.O. 

10865, ‘‘Safeguarding Classified 

Information within Industry,’’ for the 

protection of classified information that 

is disclosed to, or developed by 

contractors. 

This rule provides NISP policy to the 

Components and establishes procedures 

concerning the initial FCL eligibility of 

U.S. companies that may be subject to 

FOCI or continued FCL eligibility for 

contractors subject to FOCI; provides 

criteria for determining whether 

contractors are under FOCI; prescribes 

responsibilities in FOCI matters; and 

outlines security measures that may be 

considered to negate or mitigate the 

effects of FOCI to an acceptable level. 

This rule does not levy requirements on 

U.S. contractors. 

Depending upon the nature and 

extent of FOCI, DoD mitigates FOCI by 

putting into place mechanisms such as 

a voting trust agreement (VTA), proxy 

agreement (PA), special security 

agreement (SSA) or security control 

agreement (SCA). These arrangements 

require trustees, proxy holders or 

outside directors to oversee and provide 

business management of the U.S. 

contractor. 

For calendar year (CY) 11, five 

contractors cleared by DoD were subject 

to a SCA, of which three required access 

to SECRET information and two 

required access to TOP SECRET 

information. The average number of 

outside directors for a SCA is two. For 

CY11, 16 contractors were subject to a 

SSA, of which 12 required access to 

SECRET information and four required 

access to TS information. The average 

number of outside directors for a SSA is 

three. In CY 11, there were no VTAs and 

nine PAs that required access to TS 

information. The average number of 

proxy holders for a PA is three. The 

proxy holders, voting trustees, or 

outside directors must be eligible for 

access at the level of the FCL. 

CY 11 total estimated costs for 

personnel security investigations of 

trustees, proxy holders and outside 

director are as follows: 

(1) The unit cost for a SECRET 

clearance (National Agency Check with 

Law and Credit NACLC) is $228. 

3 SCA × 2 outside directors × $228/

NACLC = $1,368 

12 SSA × 3 outside directors × $4005/ 

NACLC = $8,208 

(2) The unit cost for a TS (Single Scope 

Background Investigation—SSBI) is 

$4,005 

2 SCAs × 3 outside directors × $4,005 = 

$16,020 

4 SSAs × 3 outside directors × $4,005 = 

$48,060 

9 PAs × 3 proxy holders × $4,005 = 

$108,135 

Therefore, the total estimated 

investigation cost for outside directors 

and proxy holders under SCAs, SSAs 

and PAs for CY 11 is $181,791. These 

costs are government costs and not 

levied on contractors. 

FOCI measures provide protection 

from unauthorized transfer of classified 

information to foreign interests, thus 

saving billions of dollars. 

At the same time, the procedures in 

this rule allow companies determined to 

be under FOCI to be cleared through a 

FOCI mitigation or negation agreement 

and thus realize billions of dollars in 

classified contracts. 

By maintaining the capability for 

foreign-owned U.S. contractors to 

compete for classified contracts with 

FOCI mitigation, DoD, through the 

NISP, enhances competition and 

realizes cost savings through that 

competition. 

Background 

DoD, as one of the four NISP CSAs, 

provides oversight of more than 10,000 

U.S. contractors as well as another 3,000 

divisions and branch offices of those 

contractors on behalf of the DoD 

Components and the non-DoD 

Components. Non-DoD Components 

issuing contracts requiring access to 

classified information who are not one 

of the four designated NISP CSAs (i.e., 

the Department of Energy, the Office of 

the Director of National Intelligence, the 

Nuclear Regulatory Commission and the 

DoD) must enter into agreements with 

DOD to establish the terms of oversight 

on their behalf. Currently, the 

procedures for assessing initial FCL 

eligibility for U.S. companies and 

continued FCL eligibility for U.S. 

contractors which may be subject to 

FOCI are not uniform or consistent since 

these procedures do not apply to the 

non-DoD Components. Currently, DoD 

does not have uniform procedures to 

assess the risks and the potential 

adverse impact on the performance of 

contracts requiring access to classified 

information due to any FOCI 

information reported by U.S. contractors 

or U.S. companies in process for an 

FCL. The rule will provide uniform and 

effective procedures for DoD to assess 

the risks associated with reports of 

material changes to FOCI information 

which are submitted annually by U.S. 

contractors. 

The rule also establishes procedures 

and criteria for appropriate actions to 

mitigate or negate any existing FOCI 

factors when DoD determines a U.S. 

company in process for an FCL or a U.S. 

contractor is under FOCI and is thus 

ineligible for access to classified 

information. The rule also prescribes 

responsibilities for FOCI matters, to 

include assessment of risks which may 

result from a contractor’s FOCI 

information. Finally, it outlines security 

measures DoD may consider, 

implement, and oversee to mitigate or 

negate the effects of FOCI to an 

acceptable level for classified contract 

performance. 

The addition of this rule is part of 

DoD’s retrospective plan, completed in 

August 2011, under Executive Order 

13563, ‘‘Improving Regulation and 

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Rules and Regulations 19469 

Regulatory Review.’’ Executive Order 

13563 emphasizes the importance of 

retrospective analysis of rules with its 

‘‘look back’’ requirement, which states 

that ‘‘within 120 days of the date of this 

order, each agency shall develop . . . a 

preliminary plan.’’ The plans should 

‘‘facilitate the periodic review of rules 

that may be outmoded, ineffective, 

insufficient, or excessively burdensome, 

and to modify, streamline, expand, or 

repeal them in accordance with what 

has been learned.’’ This rule updates 

policy and procedures for industry that 

are more than 20 years old. DoD’s full 

plan and updates can be accessed at: 

http://exchange.regulations.gov/

exchange/topic/eo-13563. 

Justification for Interim Final Rule 

Without this rule, the Components 

face an elevated risk of unauthorized 

disclosure of classified information to 

foreign interests resulting in potential 

economic losses or damage to U.S. 

national security. There is such an 

increased probability of unauthorized 

disclosure of classified information 

because the owner of a U.S. company 

has direct authority over all aspects of 

his company (e.g., who gets paid, what 

contracts, including classified contracts 

are pursued, and access to information/ 

programs that those contracts include. If 

the U.S. company has a foreign owner 

and is awarded a contract requiring 

access to classified information, these 

procedures provide actions for the USG 

to take to keep that foreign owner from 

having direct authority over the 

disclosure of and access to classified 

information. If there are no procedures 

as set forth in this rule to evaluate and 

determine how to negate or mitigate the 

foreign ownership, there will be nothing 

to prevent unauthorized disclosures of 

classified information since the foreign 

owner will have unfettered control of 

the U.S. company. This proposed rule 

provides the baseline requirements for 

the USG to evaluate the foreign owner’s 

rights and determine whether those 

rights can be mitigated to effectively 

protect classified information and 

preclude its unauthorized disclosure. 

Depending upon what a foreign-owned 

U.S. company is working on, 

unauthorized disclosure of classified 

information could have an adverse 

impact on national security. 

This rule allows fair and open 

competition among U.S. companies, 

including foreign-owned U.S. 

companies, who are vying for the 

opportunity to provide products and 

services to the Components when access 

to classified information is required. 

Also, without this rule, Components 

will not have the ability to consider 

innovative technologies developed by 

foreign-owned U.S. companies due to 

concerns with awarding a classified 

contract without a uniform process to 

assess and effectively mitigate or negate 

existing FOCI. Finally, the lack of a 

formal, uniform process has created 

significant delay in the completion of 

National Interest Determinations (NIDs) 

for foreign-owned U.S. contractors. 

These delays increase the costs to 

Components by preventing contract 

performance when access to classified 

information is required. 

This rule provides a baseline for 

protection of classified information 

through analysis, evaluation and, if 

needed, protective measures to mitigate 

or FOCI information at U.S. companies 

performing on contracts requiring access 

to classified information. Government 

Contracting Activities (GCAs) don’t 

know if there are risks, such as foreign 

ownership or control of a U.S. company 

before awarding a contract requiring 

access to classified information or when 

a U.S. company is acquired by a foreign 

interest while performing on any 

contracts requiring access to classified 

information without these procedures. 

The uniform procedures in this rule 

provide the GCAs with analysis of 

potential adverse impact and mitigation 

or negation of FOCI information to 

allow foreign-owned U.S. companies to 

compete to perform on classified 

contracts. DoD and non-DoD 

Components face an increased 

probability of the loss or compromise of 

classified information and subsequent 

harm to the national security, as a result 

of the award of classified contracts to 

foreign-owned U.S. companies without 

this rule in place for the proper 

mitigation of FOCI information. 

Definitions 

For the definitions without a cited 

source in this rule, upon approval of 

this rule, those terms and their 

definitions will be proposed for 

inclusion in the next edition of the Joint 

Publication 1–02, ‘‘DoD Dictionary of 

Military and Associated Terms’’ 

(available at http://www.dtic.mil/

doctrine/new_pubs/jp1_02.pdf). 

Regulatory Procedures 

E.O. 12866, ‘‘Regulatory Planning and 

Review’’ and E.O. 13563, ‘‘Improving 

Regulation and Regulatory Review’’ 

It has been certified that 32 CFR part 

117 does not: 

(1) Have an annual effect on the 

economy of $100 million or more or 

adversely affect in a material way the 

economy; a section of the economy; 

productivity; competition; jobs; the 

environment; public health or safety; or 

State, local, or tribal governments or 

communities; 

(2) Create a serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; 

(3) Materially alter the budgetary 

impact of entitlements, grants, user fees, 

or loan programs, or the rights and 

obligations of recipients thereof; or 

(4) Raise novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in these Executive Orders. 

Section 202, Public Law 104–4, 

‘‘Unfunded Mandates Reform Act’’ 

It has been certified that 32 CFR part 

117 does not contain a Federal mandate 

that may result in expenditure by State, 

local and tribal governments, in 

aggregate, or by the private sector, of 

$100 million or more in any one year. 

Public Law 96–354, ‘‘Regulatory 

Flexibility Act’’ (5 U.S.C. 601) 

It has been certified that 32 CFR part 

117 is not subject to the Regulatory 

Flexibility Act (5 U.S.C. 601) because it 

would not, if promulgated, have a 

significant economic impact on a 

substantial number of small entities. 

Public Law 96–511, ‘‘Paperwork 

Reduction Act’’ (44 U.S.C. Chapter 35) 

It has been certified that 32 CFR part 

117 does not impose additional 

reporting or recordkeeping requirements 

under the Paperwork Reduction Act of 

1995. Standard Form (SF) 328, 

‘‘Certificate Pertaining to Foreign 

Interests’’ has been assigned OMB 

Control Number 0704–0194. 

E.O. 13132, ‘‘Federalism’’ 

It has been certified that 32 CFR part 

117 does not have federalism 

implications, as set forth in E.O. 13132. 

This rule does not have substantial 

direct effects on: 

(1) The States; 

(2) The relationship between the 

National Government and the States; or 

(3) The distribution of power and 

responsibilities among the various 

levels of Government. 

List of Subjects in 32 CFR Part 117 

Classified information, Facility 

security clearances, Foreign ownership, 

control or influence procedures, 

Security measures. 

■ Accordingly, 32 CFR part 117 is 

added to read as follows: 

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19470 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Rules and Regulations 

PART 117—NATIONAL INDUSTRIAL 

SECURITY PROGRAM 

Subpart A—[Reserved] 

Subpart B—[Reserved] 

Subpart C—Procedures for 

Government Activities Relating to 

Foreign Ownership, Control or 

Influence (FOCI) 

Sec. 

117.51 Purpose. 

117.52 Applicability. 

117.53 Definitions. 

117.54 Policy. 

117.55 Responsibilities. 

117.56 Foreign ownership, control or 

influence (FOCI). 

Authority: Executive Order (E.O.) 12829, 

January 6, 1993, 58 FR 3479. 

Subpart A—[Reserved] 

Subpart B—[Reserved] 

Subpart C—Procedures for 

Government Activities Relating to 

Foreign Ownership, Control or 

Influence (FOCI) 

§ 117.51 Purpose. 

This part sets forth industrial security 

procedures and practices related to 

Foreign Ownership, Control or 

Influence (FOCI) for the Department of 

Defense (DoD) Components, as defined 

in this part and non-DoD Components, 

as defined in this part, to ensure 

maximum uniformity and effectiveness 

in DoD implementation of the National 

Industrial Security Program (NISP) 

established by Executive Order (E.O.) 

12829 ‘‘National Industrial Security 

Program,’’ (available at http://

www.archives.gov/isoo/policydocuments/eo-12829.html). 

§ 117.52 Applicability. 

(a) This part applies to: 

(1) The DoD Components. 

(2) The non-DoD Components. When 

the term Government Contracting 

Activities (GCAs) is used, it applies to 

both DoD Components and non-DoD 

Components. 

(b) This part does not: 

(1) Limit in any manner the authority 

of the Secretary of Defense, the 

Secretaries of the Army, Navy and Air 

Force; or the Heads of the Components, 

as defined in this part, to grant access 

to classified information under the 

cognizance of their respective 

department or agency to any individual 

or entity designated by them. The 

granting of such access is outside the 

scope of the NISP and is governed by 

Executive Order (E.O.) 13526, 

‘‘Classified National Security 

Information,’’ (available at http://www.

archives.gov/isoo/pdf/cnsi-eo.pdf) and 

applicable disclosure policies. 

(2) Limit the authority of a GCA to 

limit, deny, or revoke access to 

classified information under its 

statutory, regulatory, or contractual 

jurisdiction. 

(3) Levy requirements on contractors 

and companies currently in process for 

facility security clearances (FCLs) as 

they are subject to the requirements of 

DoD 5220.22–M, ‘‘National Industrial 

Security Program Operating Manual 

(NISPOM)’’ (available at http://www.

dtic.mil/whs/directives/corres/pdf/

522022m.pdf) and the security 

requirements of their contracts. 

§ 117.53 Definitions. 

Unless otherwise noted, these terms 

and their definitions are for the 

purposes of this part only. 

Access. As defined in DoD 5220.22– 

M. 

Affiliate. As defined in DoD 5220.22– 

M. 

Board resolution. A formal, written 

decision of a company’s board of 

directors, used to draw attention to a 

single act or board decision, e.g., to 

approve or adopt a change to a set of 

rules, a new program or contract. 

Carve-out. As defined in DoD 

Directive 5205.07, ‘‘Special Access 

Program (SAP) Policy,’’ (available at 

http://www.dtic.mil/whs/directives/

corres/pdf/520507p.pdf). 

Classified contract. As defined in DoD 

5220.22–M. 

Classified information. As defined in 

Joint Publication 1–02 ‘‘DoD Dictionary 

of Military and Associated Terms’’ 

(available at http://www.dtic.mil/

doctrine/new_pubs/jp1_02.pdf). 

Company. As defined in DoD 

5220.22–M. 

Components. DoD Components and 

non-DoD Components for which DoD 

provides industrial security services in 

accordance with E.O. 12829. 

COMSEC. As defined in Joint 

Publication 6–0, ‘‘Joint Communication 

System’’ (available at http://

www.dtic.mil/doctrine/new_pubs/jp6_

0.pdf). 

Contractor. As defined in DoD 

5220.22–M. 

Counterintelligence. As defined in 

Joint Publication 1–02. 

Covered transaction. As defined in 

DoD Instruction 2000.25, ‘‘DoD 

Procedures for Reviewing and 

Monitoring Transactions Filed with the 

Committee on Foreign Investment in the 

United States (CFIUS)’’. (available at 

http://www.dtic.mil/whs/directives/

corres/pdf/200025p.pdf). 

CSA. As defined in DoD 5220.22–M. 

Defense articles. As defined in DoD 

5220.22–M. 

Defense Industrial Base. As defined in 

Joint Publication 1–02. 

Document. As defined in E.O. 13526. 

DoD Components. Office of the 

Secretary of Defense (OSD), the Military 

Departments, the Office of the Chairman 

of the Joint Chiefs of Staff and the Joint 

Staff, the Combatant Commands, the 

Office of the Inspector General of the 

Department of Defense, the Defense 

Agencies, the DoD Field Activities, and 

all other organizational entities within 

DoD. 

Facility. As defined in DoD 5220.22– 

M. 

Facility security clearance (FCL). As 

defined in DoD 5220.22–M. 

Facility Security Officer (FSO). A U.S. 

citizen contractor employee, who is 

cleared as one of the Key Management 

Personnel required for the FCL, to 

supervise and direct security measures 

necessary for implementing applicable 

requirements set forth in DoD 5220.22– 

M. 

FOCI action plan. For purposes of this 

part, the methods or agreements that can 

be applied to mitigate or negate the risk 

of foreign ownership or control to allow 

a U.S. contractor to maintain or a U.S. 

company to be granted an FCL. 

FOCI mitigation agreement. For 

purposes of this part, a signed 

agreement between a foreign interest 

and a U.S. contractor or a company in 

process for an FCL which, based on an 

assessment of FOCI information, 

imposes various security measures 

within an institutionalized set of 

company practices and procedures. 

Examples include board resolutions, 

security control agreements (SCAs) and 

special security agreements. 

FOCI negation agreement. For 

purposes of this part, a signed 

agreement between a foreign interest 

and U.S. contractor or a company in 

process for an FCL under which the 

foreign owner relinquishes most 

ownership rights to U.S. citizens who 

are approved by the U.S. Government 

and have been favorably adjudicated for 

access to classified information based 

on the results of a personnel security 

clearance investigation. Examples 

include voting trust agreements (VTAs) 

and proxy agreements (PAs). 

Foreign government information 

(FGI). As defined in E.O. 13526. 

Foreign interest. As defined in DoD 

5220.22–M. 

GCA. As defined in DoD 5220.22–M. 

Industrial security. As defined in DoD 

5220.22–M. 

Information. As defined in E.O. 

13526. 

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Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Rules and Regulations 19471 

Limited Access Authorization (LAA). 

As defined in DoD 5220.22–M. 

National interest determination (NID). 

As defined in 32 CFR part 2004, 

‘‘National Industrial Security Program 

Directive No. 1.’’ 

Non-DoD Components. Those USG 

executive branch departments and 

agencies identified in DoD 5220.22–M 

that have entered into agreements with 

the Secretary of Defense to act as the 

NISP Cognizant Security Agency (CSA) 

for, and on their behalf, in rendering 

security services for the protection of 

classified information disclosed to or 

generated by industry pursuant to 

Section 202 of E.O. 12829. 

Personnel security clearance (PCL). As 

defined in DoD 5220.22–M. 

Personnel security clearance 

assurance (PCLSA). A written 

certification by USG or applicable 

foreign government industrial security 

authorities, which certifies the PCL 

level or eligibility for a PCL at a 

specified level for their citizens. The 

assurance is used, in the case of the 

United States, to give an LAA to a nonU.S. citizen, provided all other 

investigative requirements are met. 

Prime contract. As defined in DoD 

5220.22–M. 

Proscribed information. TOP SECRET 

(TS) information, COMSEC information 

excluding controlled cryptographic 

items when unkeyed and utilized with 

unclassified keys, restricted data (RD), 

special access program (SAP) 

information, or sensitive 

compartmented information (SCI). 

Restricted Data (RD). As defined in 

DoD 5220.22–M. 

Sensitive compartmented information 

(SCI). As defined in Joint Publication 1– 

02. 

Security assurance. A written 

confirmation, requested by and 

exchanged between governments, that 

contains the following elements: 

Verification of the personnel security 

clearance (PCL) level of the sponsoring 

foreign government’s citizens or 

nationals; a statement by a responsible 

official of the sponsoring foreign 

government that the recipient of the 

information is approved by the 

sponsoring foreign government for 

access to information of the security 

classification involved on behalf of the 

sponsoring government; and an 

obligation that the sponsoring foreign 

government will ensure compliance 

with any security agreement or other 

use, transfer and security requirements 

specified by the components. The 

security assurance usually will be in a 

request for visit authorization or with 

courier orders or a transportation plan; 

but is not related to the PCL security 

assurance. 

Special Access Program (SAP). As 

defined in E.O. 13526. 

Subcontract. As defined in DoD 

5220.22–M. 

§ 117.54 Policy. 

It is DoD policy that DoD FOCI 

procedures will be used to protect 

against foreign interests: 

(a) Gaining unauthorized access to 

classified, export-controlled, or all 

communications security (COMSEC) 

(classified or unclassified) information 

in accordance with E.O. 12829 and DoD 

Instruction 8523.01, ‘‘Communications 

Security’’ (available at http://

www.dtic.mil/whs/directives/corres/pdf/

852301p.pdf). DoD FOCI procedures for 

access to unclassified COMSEC are set 

forth in National Security Agency 

Central Security Service (NSA/CSS) 

Policy Manual 3–16, ‘‘Control of 

Communications Security Material’’ 

(available to authorized users of 

SIPRNET at www.iad.nsa.smil.mil/

resources/library/nsa_office_of_policy_

section/pdf/NSA_CSS_MAN-3-16_

080505.pdf). 

(b) Adversely affecting the 

performance of classified contracts, in 

accordance with E.O. 12829. 

(c) Undermining U.S. security and 

export controls, in accordance with E.O. 

12829. 

§ 117.55 Responsibilities. 

(a) The Under Secretary of Defense for 

Intelligence (USD(I)) will, in accordance 

with DoD Directive 5143.01, ‘‘Under 

Secretary of Defense for Intelligence 

(USD(I))’’ (available at http://

www.dtic.mil/whs/directives/corres/pdf/

514301p.pdf) and DoD Instruction 

5220.22, ‘‘National Industrial Security 

Program’’ (see http://www.dtic.mil/whs/ 

directives/corres/pdf/522022p.pdf): 

(1) Oversee policy and management of 

the NISP, to include FOCI matters. 

(2) Direct, administer, and oversee the 

FOCI provisions of the NISP to ensure 

that the program is efficient and 

consistently implemented. 

(3) Provide additional guidance 

regarding FOCI matters by 

memorandum as needed. 

(4) Coordinate with the Under 

Secretary of Defense for Policy (USD(P)) 

and the Under Secretary of Defense for 

Acquisition, Technology and Logistics 

(USD(AT&L)) on matters under their 

cognizance that affect the NISP 

consistent with paragraphs (c) and (d) of 

this section. 

(b) The Director, Defense Security 

Service (DSS), in addition to the 

responsibilities in paragraph (d) of this 

section, under the authority, direction, 

and control of the USD(I) will in 

accordance with DoD Instruction 

5220.22, ‘‘National Industrial Security 

Program’’ (available at http://

www.dtic.mil/whs/directives/corres/pdf/

522022p.pdf). 

(1) Make FOCI determinations on a 

case-by-case basis for U.S. contractors or 

companies under consideration for an 

FCL under the NISP. 

(2) Collect information necessary to 

examine the source, nature, and extent 

of a company’s ownership, control, or 

influence by foreign interests. 

(3) Determine, on behalf of the GCAs, 

whether a U.S. company is under FOCI 

to such a degree that the granting of an 

FCL would be inconsistent with the U.S. 

national security interests. 

(4) Determine the security measures 

necessary to negate or mitigate FOCI 

and make recommendations to the U.S. 

company and to those GCAs with a 

contractual interest or other equity in 

the matter. 

(5) Provide GCAs a guide to clarify 

their roles and responsibilities with 

respect to the FOCI process and to 

national interest determinations (NIDs), 

in particular. Update the guide, as 

needed, in coordination with the Office 

of the Under Secretary of Defense for 

Intelligence (OUSD(I)) Security 

Directorate. 

(6) Determine a U.S. company’s 

eligibility for an FCL on an initial and 

continuing basis depending on recurring 

security reviews and other interactions. 

(7) Develop proposed changes to 

maintain the currency and effectiveness 

of this part. Forward proposed changes 

and associated justification to the 

OUSD(I) Security Directorate for 

consideration as future changes to this 

part. 

(8) Consider and, as warranted, 

approve requests for exception to DoD 

5220.22–M in consultation with affected 

GCAs for specific contractors and for 

specific periods of time (such as, to the 

completion date of a contract) when a 

contractor is unable to comply with the 

requirements of DoD 5220.22–M. 

Consideration of such requests will 

include an evaluation of any proposed 

alternative procedures with supporting 

justification and coordination as 

applicable, consistent with paragraph 

(a)(4) of this section. 

(9) Coordinate and receive the 

concurrence of the OUSD(I) Security 

Directorate on requests for exception to 

DoD 5220.22–M and consistent with 

paragraph (a)(4) of this section when 

any of the following provisions apply: 

(i) The request exceeds the authority 

of the Director, DSS as defined in this 

section; 

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(ii) The proposed exception applies to 

more than one contractor location; or, 

(iii) The exception would be contrary 

to U.S. national policy or international 

agreements, including those relating to 

foreign government information (FGI) 

and international issues under the 

cognizance of the USD(P) with 

coordination as applicable, consistent 

with paragraph (a)(4) of this section. 

(c) The USD(P) will, in accordance 

with DoD Directive 5111.1, ‘‘Under 

Secretary of Defense for Policy 

(USD(P))’’ (available at http://

www.dtic.mil/whs/directives/corres/pdf/

511101p.pdf), advise the USD(I) and 

DSS on the foreign relations and 

international security aspects of FOCI, 

including FGI, foreign disclosures of 

U.S. classified information, exports of 

defense articles and technical data, 

security arrangements for DoD 

international programs, North Atlantic 

Treaty Organization security, and 

international agreements. 

(d) The USD(AT&L) will, in 

accordance with DoD Directive 5134.01, 

‘‘Under Secretary of Defense for 

Acquisition, Technology and Logistics 

(USD(AT&L))’’ (available at http://

www.dtic.mil/whs/directives/corres/pdf/

513401p.pdf): 

(1) Advise the USD(I) on the 

development and implementation of 

NISP policies, in accordance with DoD 

Instruction 5220.22. 

(2) Ensure that DoD Components 

establish and maintain a record 

capturing the current and legitimate 

need for access to classified information 

by contractors in the Defense Industrial 

Base. 

(3) Ensure that acquisition elements of 

DoD Components comply with the 

applicable provisions of DoD 5220.22– 

M. 

(e) The Director, DoD SAP Central 

Office (SAPCO) will, in accordance with 

DoD Directive 5205.07, ‘‘Special Access 

Program (SAP) Policy’’ (available at 

http://www.dtic.mil/whs/directives/

corres/pdf/520507p.pdf), notify DSS of 

the existence of SAP equities when DSS 

considers the acceptability of a 

contractor’s FOCI action plan. In 

addition, the Director, DoD SAPCO, will 

develop procedures for the 

consideration of a NID when a 

contractor cleared under a Special 

Security Agreement (SSA) requires 

access to an unacknowledged Special 

Access Program (SAP). 

(f) The Heads of the Components will: 

(1) Oversee compliance by GCA 

personnel with applicable procedures 

identified in this subpart. 

(2) Designate in writing an individual 

who is authorized to make decisions 

and provide a coordinated GCA position 

on FOCI matters to DSS within 

timelines established in this part. 

(3) Submit proposed changes to DoD 

5220.22–M, as deemed appropriate, to 

the OUSD(I) Security Directorate. 

§ 117.56 Foreign ownership, control or 

influence (FOCI). 

(a) General. This section provides 

guidance for and establishes procedures 

concerning the initial or continued FCL 

eligibility of U.S. companies and U.S. 

contractors with foreign involvement; 

provides criteria for determining 

whether U.S. companies are under 

FOCI; prescribes responsibilities in 

FOCI matters; and outlines security 

measures that DSS may consider to 

mitigate or negate the effects of FOCI to 

an acceptable level. As stated in DoD 

5220.22–M, and in accordance with E.O. 

12829: 

(1) The Secretary of Defense serves as 

the Executive Agent for inspecting and 

monitoring contractors who require or 

will require access to, or who store or 

will store classified information. 

(2) The Components reserve the 

discretionary authority, and have the 

obligation, to impose any security 

procedure, safeguard, or restriction they 

believe necessary to ensure that 

unauthorized access to classified 

information is effectively precluded and 

that performance of classified contracts, 

as defined in DoD 5220.22–M, is not 

adversely affected by FOCI. 

(b) Procedures — (1) Criteria. A U.S. 

company is considered to be under 

FOCI whenever a foreign interest has 

the power, direct or indirect (whether or 

not exercised, and whether or not 

exercisable through the ownership of 

the U.S. company’s securities, by 

contractual arrangements or other 

means), to direct or decide matters 

affecting the management or operations 

of the company in a manner that may 

result in unauthorized access to 

classified information or may adversely 

affect the performance of classified 

contracts. 

(2) FOCI Analysis. Conducting an 

analysis of available information on a 

company to determine the existence, 

nature, and source of FOCI is a critical 

aspect of evaluating previously 

uncleared companies for FCLs and also 

in determining continued eligibility of 

contractors for FCLs. 

(i) A U.S. company determined to be 

under FOCI is ineligible for an FCL 

unless and until security measures have 

been put in place to mitigate FOCI. 

(ii) In making a determination as to 

whether a company is under FOCI, DSS 

will consider the information provided 

by the company or its parent entity on 

the Standard Form (SF) 328, ‘‘Certificate 

Pertaining to Foreign Interests,’’ 

(available at http://www.dtic.mil/whs/

directives/infomgt/forms/eforms/

sf0328.pdf) and any other relevant 

information (e.g., filings with the 

Securities and Exchange Commission 

(for publicly traded companies), articles 

of incorporation, by-laws, and loan and 

shareholder agreements, as well as other 

publicly available information about the 

company. Depending on specific 

circumstances (e.g., extensive minority 

foreign ownership at a cleared 

subsidiary in the corporate family), DSS 

may request one or more of the legal 

entities that make up a corporate family 

to submit individual SF 328s and will 

determine the appropriate FOCI action 

plan(s) that must be put in place. 

(iii) When a contractor has been 

determined to be under FOCI, the 

primary consideration will be the 

safeguarding of classified information. 

DSS is responsible for taking whatever 

interim action is necessary to safeguard 

classified information, in coordination 

with other affected agencies as 

appropriate consistent with § 117.54. 

(iv) When a merger, sale, or 

acquisition involving a foreign interest 

and a contractor is finalized prior to 

having an acceptable FOCI mitigation or 

negation agreement in place, DSS will 

invalidate any existing FCL until such 

time as DSS determines that the 

contractor has submitted an acceptable 

FOCI action plan (see DoD 5220.22–M) 

and has agreed to interim measures that 

address FOCI concerns pending formal 

execution of a FOCI mitigation or 

negation agreement. Invalidation 

renders the contractor ineligible to 

receive new classified material or to bid 

on new classified contracts. If the 

affected GCA determines that continued 

access to classified material is required, 

DSS may continue the FCL in an 

invalidated status when there is no 

indication that classified information is 

at risk of compromise. If classified 

information remains at risk of 

compromise due to the FOCI, DSS will 

take action to impose appropriate 

security countermeasures or terminate 

the FCL, in coordination with the 

affected GCA. 

(v) Changed conditions, such as a 

change in ownership, indebtedness, or a 

foreign intelligence threat, may justify 

certain adjustments to the security terms 

under which a contractor is cleared or, 

alternatively, require the use of a 

particular FOCI mitigation or negation 

agreement. Depending on specific 

circumstances, DSS may determine that 

a contractor is no longer under FOCI or, 

conversely, that a contractor is no longer 

eligible for an FCL. 

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(vi) If the contractor determined to be 

under FOCI does not have possession of 

classified material and does not have a 

current or pending requirement for 

access to classified information, DSS 

will administratively terminate the FCL. 

(3) Assessing the Implications of 

FOCI. (i) If DSS determines that a 

company is under FOCI, DSS will assess 

the extent and manner to which the 

FOCI may result in unauthorized access 

to classified information or adverse 

impact on the performance of classified 

contracts and the type of actions, if any, 

that would be necessary to mitigate or 

negate the associated risks to a level 

deemed acceptable to DSS. An analysis 

of some of the FOCI factors may clearly 

identify risk; while others may result in 

circumstances that would mitigate or 

negate risks. Therefore, these factors 

must be considered in the aggregate 

with regard to the foreign interest that 

is the source of the FOCI, the country 

or countries in which the foreign 

interest is domiciled and has its 

principal place of business (if not in the 

country of domicile), and any other 

foreign country that is identified by DSS 

because it is a substantial source of the 

revenue for, or otherwise has significant 

ties to, the foreign interest. DSS will 

consider the following FOCI factors and 

any other relevant information in the 

context of threat, vulnerability, and 

sensitivity of the classified information 

required for current or prospective 

contract performance when rendering a 

risk management assessment and 

determination of the acceptability of a 

company’s FOCI action plan: 

(A) Record of economic and 

government espionage against U.S. 

targets. 

(B) Record of enforcement and/or 

engagement in unauthorized technology 

transfer. 

(C) Record of compliance with 

pertinent U.S. laws, regulations, and 

contracts. 

(D) The type and sensitivity of the 

information that will be accessed. 

(E) The source, nature, and extent of 

FOCI, including, but not limited to, 

whether a foreign interest holds a 

majority or substantial minority position 

in the company, taking into 

consideration the immediate, 

intermediate, and ultimate parent 

companies of the company or prior 

relationships between the U.S. company 

and the foreign interest. 

(F) The nature of any relevant 

bilateral and multilateral security and 

information exchange agreements, (e.g., 

the political and military relationship 

between the United States Government 

(USG) and the government of the foreign 

interest). 

(G) Ownership or control, in whole or 

in part, by a foreign government. 

(H) Any other factor that indicates or 

demonstrates a capability on the part of 

foreign interests to control or influence 

the operations or management of the 

business organization concerned. 

(ii) As part of its FOCI assessment and 

evaluation of any FOCI action plan, DSS 

will also request and consider 

counterintelligence (CI) and technology 

transfer risk assessments and any 

available intelligence from all 

appropriate USG sources. DSS will 

request these assessments as soon as 

practicable, for the company itself and 

for all business entities in the 

company’s ownership chain. 

(iii) If a company disputes a DSS 

determination that the company is 

under FOCI, or disputes the DSS 

determination regarding the types of 

actions necessary to mitigate or negate 

the FOCI, the company may appeal in 

writing those determinations to the 

Director, DSS, for a final agency 

decision no later than 30 days after 

receipt of written notification of the DSS 

decision. The company must identify 

the specific relief sought and grounds 

for that relief in its appeal. In response, 

the Director, DSS, may request 

additional information from the 

company. At a minimum, DSS will 

respond to appeals within 30 days, 

either with a decision or an estimate as 

to when a decision will be rendered. 

DSS will not release pre-decisional 

information to the company, its legal 

counsel, or any of its representatives 

without the express written approval of 

the applicable GCAs who own the data 

and any other USG entities with an 

interest in the company’s FOCI action 

plan. 

(iv) DoD recognizes that FOCI 

concerns may arise in a variety of other 

circumstances, all of which cannot be 

listed in this subpart. In FOCI cases 

involving any foreign ownership or 

control, DSS will advise and consult 

with the appropriate GCAs, including 

those with special security needs, 

regarding the required FOCI mitigation 

or negation method and provide those 

GCAs with the details of the FOCI 

factors and any associated risk 

assessments. DSS and GCAs will meet 

to discuss the FOCI action plan, when 

determined necessary by either DSS or 

the applicable GCAs. When DSS 

determines that a company may be 

ineligible for an FCL by virtue of FOCI, 

or that additional action by the 

company may be necessary to mitigate 

the FOCI or associated risks, DSS will 

promptly notify the company and 

require it to submit a FOCI action plan 

to DSS within 30 calendar days of the 

notification. In addition, DSS will 

advise company management that 

failure to submit the requested plan 

within the prescribed period of time 

will result in termination of FCL 

processing or initiation of action to 

revoke an existing FCL, as applicable. 

(v) In instances where the 

identification of a foreign owner or 

voting interest of five percent or more 

cannot be adequately ascertained (e.g., 

the participating investors in a foreign 

investment or hedge fund, owning five 

percent or more of the company, cannot 

be identified), DSS may determine that 

the company is not eligible for an FCL. 

(vi) DSS will review and consider the 

FOCI action plan itself, the factors 

identified in paragraph (b)(3)(i) of this 

section, and any threat or risk 

assessments or other relevant 

information. If an action plan is 

determined to be unacceptable, DSS can 

recommend and negotiate an acceptable 

action plan including, but not limited 

to, the measures identified in 

paragraphs (b)(4)(ii) and (b)(4)(iii) of this 

section. In any event, DSS will provide 

written feedback to a company or the 

company’s designated representative on 

the acceptability of the FOCI action plan 

within 30 calendar days of receipt. 

(4) Options To Address FOCI. (i) 

Under all FOCI action plans, 

management positions requiring PCLs in 

conjunction with the FCL must be filled 

by eligible U.S. citizens residing in the 

United States in accordance with DoD 

5220.22–M. 

(ii) When factors related to foreign 

control or influence are present, but 

unrelated to ownership, the plan must 

provide positive measures that assure 

that the foreign interest can be 

effectively denied access to classified 

information and cannot otherwise 

adversely affect performance on 

classified contracts. Non-exclusive 

examples of such measures include: 

(A) Adoption of special board 

resolutions. 

(B) Assignment of specific oversight 

duties and responsibilities to 

independent board members. 

(C) Formulation of special executivelevel security committees to consider 

and oversee matters that affect the 

performance of classified contracts. 

(D) The appointment of a technology 

control officer. 

(E) Modification or termination of 

loan agreements, contracts, and other 

understandings with foreign interests. 

(F) Diversification or reduction of 

foreign-source income. 

(G) Demonstration of financial 

viability independent of foreign 

interests. 

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(H) Elimination or resolution of 

problem debt. 

(I) Physical or organizational 

separation of the contractor component 

performing on classified contracts. 

(J) Other actions that negate or 

mitigate foreign control or influence. 

(iii) FOCI concerns related to foreign 

ownership of a company or corporate 

family arise when a foreign interest has 

the ability, either directly or indirectly, 

whether exercised or exercisable, to 

control or influence the election or 

appointment of one or more members to 

the company’s governing board (e.g., 

Board of Directors, Board of Managers, 

or Board of Trustees) or its equivalent, 

by any means. Some methods that may 

be applied to mitigate the risk of foreign 

ownership are outlined in DoD 5220.22– 

M and further described in this section. 

While these methods are mentioned in 

relation to specific ownership and 

control thresholds, these descriptions 

should not be construed as DoDsanctioned criteria mandating the 

selection or acceptance of a certain 

FOCI action plan. DSS retains the 

authority to reject or modify any 

proposed FOCI action plan in 

consultation with the affected GCAs. 

(A) Board Resolution. This method is 

often used when a foreign interest does 

not own voting interests sufficient to 

elect, or otherwise is not entitled to 

representation on the company’s 

governing board. In such circumstances, 

the effects of foreign ownership will 

generally be mitigated by a resolution of 

the board of directors stating the 

company recognizes the elements of 

FOCI and acknowledges its continuing 

obligations under DD Form 441, ‘‘DoD 

Security Agreement’’ (available at 

http://www.dtic.mil/whs/directives/

infomgt/forms/eforms/dd0441.pdf). The 

resolution will identify the foreign 

shareholders and their representatives 

(if any) and note the extent of foreign 

ownership. The resolution will also 

include a certification that the foreign 

shareholders and their representatives 

will not require, will not have, and can 

be effectively excluded from access to 

all classified information in the 

possession of the contractor, and will 

not be permitted to occupy positions 

that may enable them to influence the 

organization’s policies and practices in 

the performance of classified contracts. 

Copies of such resolutions will be 

furnished to all board members and 

principal management officials. 

(B) SCA. The SCA is a tailored FOCI 

mitigation agreement often used when a 

foreign interest does not effectively own 

or control a company or corporate 

family (i.e., the company or corporate 

family are under U.S. control), but the 

foreign interest is entitled to 

representation on the company’s board. 

When an SCA is implemented, a U.S. 

citizen serves as an outside director, as 

defined in DoD 5220.22–M. DSS may 

determine the need for more than one 

outside director based on the FOCI 

analysis and risk assessments. 

(C) SSA. The SSA is a tailored FOCI 

mitigation agreement that preserves the 

foreign owner’s right to be represented 

on the company’s board (inside 

directors) with a direct voice in the 

business management of the company 

while denying the foreign owner 

unauthorized access to classified 

information. An SSA is based on the 

analysis of the FOCI factors set forth in 

paragraph (b)(3) and is often used when 

a foreign interest effectively owns or 

controls a company or corporate family. 

DSS assesses the implications of the 

FOCI factors in accordance with 

paragraphs (b)(3) and (b)(4)(iii) of this 

section. U.S. citizens serve as outside 

directors in accordance with DoD 

5220.22–M. 

(1) If a GCA requires a contractor 

cleared under an SSA to have access to 

proscribed information, the GCA will 

initiate action to consider a NID at the 

pre-contract phase to confirm that 

disclosure of such information is 

consistent with the national security 

interests of the United States. 

(2) Proscribed information includes 

TS; COMSEC material, excluding 

controlled cryptographic items when 

unkeyed and utilized with unclassified 

keys; RD; SAP; and SCI. 

(3) Contractor access to proscribed 

information will not be granted without 

the approval of the agency with control 

jurisdiction (i.e., National Security 

Agency (NSA) for COMSEC, whether 

the COMSEC is proscribed information 

or not; the Office of the Director of 

National Intelligence (ODNI) for SCI; 

and the Department of Energy (DOE) for 

RD in accordance with its policies). 

(4) In accordance with 32 CFR, part 

2004 and the procedures in paragraph 

(b)(5) of this section, GCAs will forward 

a request for concurrence to NSA, ODNI, 

or DOE when a proposed NID involves 

access to COMSEC, SCI, or RD, 

respectively, within 30 calendar days of 

DSS advisement of the NID requirement. 

NSA, ODNI, and DOE, as appropriate, 

will then have 30 calendar days to 

render a decision. 

(D) VTA or PA. These FOCI negation 

agreements may be used when a foreign 

interest effectively owns or controls a 

company or corporate family. Under a 

VTA, PA and associated documentation, 

the foreign owner relinquishes most 

rights associated with ownership of the 

company to cleared U.S. citizens 

approved by DSS. Both FOCI 

agreements can effectively negate 

foreign ownership and control; 

therefore, neither agreement imposes 

any restrictions on the company’s 

eligibility to have access to classified 

information or to compete for classified 

contracts including contracts with 

proscribed information. Both FOCI 

agreements can also effectively negate 

foreign government control (see 

paragraph (b)(11) of this section which 

provides guidance and requirements 

regarding foreign government 

ownership or control, including with 

respect to 10 U.S.C. 2536, ‘‘Award of 

Certain Contracts to Entities Controlled 

by a Foreign Government Prohibition 

(available at http://www.gpo.gov/fdsys/

granule/USCODE-2010-title10/

USCODE-2010-title10-subtitleA-partIVchap148-subchapV-sec2536/contentdetail.html)). DSS retains the authority 

to deny a proposed VTA or PA. 

(iv) When DSS implements a FOCI 

mitigation or negation agreement at a 

contractor, the agreement may specify 

that the entire agreement, or that 

particular provisions of the agreement 

(e.g., the provisions restricting 

unauthorized access to classified 

information and unclassified exportcontrolled information and the 

provisions of the visitation policy) will 

apply to and will be made binding upon 

all present and future subsidiaries of the 

company. If a subsidiary requires and is 

eligible for an FCL at the TS level, the 

company executing the FOCI mitigation 

agreement and any intermediate parents 

must be formally excluded from TS 

access unless they have their own 

requirement and are otherwise eligible 

for TS access. 

(v) DSS will provide a copy of the 

DSS FOCI assessment, proposed FOCI 

action plan and any associated risk 

assessments to the GCAs with an 

interest in the company or corporate 

family. In the absence of written 

objections (signed at the Program 

Executive Office (PEO) level or higher) 

from GCAs with an interest in the 

company or corporate family, DSS may 

proceed with implementation of what 

DSS considers in its discretion to be an 

acceptable FOCI action plan based on 

available information. Unless other 

regulatory review processes for mergers 

or acquisitions have an earlier suspense 

date, DSS will provide a 30 calendar 

day period for the GCAs with an interest 

in the company or corporate family to 

provide their PEO level or higher 

written objections. 

(vi) DSS will submit to the USD(I) for 

approval the DSS templates for those 

FOCI mitigation or negation agreements 

identified in paragraph (b)(4)(iii) of this 

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section as well as templates for any 

supplements thereto (e.g., the electronic 

communications plan (ECP) or 

technology control plan (TCP)). DSS 

may propose changes to the contents of 

these template FOCI mitigation or 

negation agreements. DSS may tailor 

non-substantive provisions of the 

template agreement for any particular 

FOCI case without further approval 

from the USD(I), provided DSS notifies 

the OUSD(I) Security Directorate of the 

deviation from the template. DSS may 

provide this notification through the 

electronic submission of an annotated 

copy of the modified agreement. 

(5) NID. The requirement for a NID to 

authorize access to proscribed 

information applies only to those 

foreign-owned U.S. contractors or 

companies in process for an FCL under 

an SSA which is used as a mechanism 

for FOCI mitigation. A NID does not 

authorize disclosure of classified 

information to a foreign government, a 

non-U.S. citizen or a non-U.S. entity. 

Timelines for NID decisions are set forth 

in 32 CFR part 2004 and the provisions 

of this paragraph. NIDs can be program, 

project, or contract specific, subject to 

the concurrence of NSA for COMSEC, 

ODNI for SCI or DOE for RD. For 

program and project NIDs, a separate 

NID is not required for each contract. 

DSS will inform the DoD SAPCO of NID 

requirements to allow the SAPCO to 

advise of awareness of unacknowledged 

SAPs or any carve-out SAP activity. 

(i) A NID is necessary when access to 

proscribed information is required for: 

(A) Pre-contract activities in 

accordance with paragraph 

(b)(4)(iii)(C)(1) of this section. 

(B) New contracts to be issued to a 

company in process for an FCL that DSS 

has determined to be under FOCI when 

an SSA is anticipated, or a contractor 

already cleared under an SSA. 

(C) Existing contracts when a 

contractor is acquired by foreign 

interests and proposes an SSA as the 

FOCI action plan. 

(ii) If a contractor is proposing to use 

an SSA to mitigate FOCI and requires 

access to proscribed information: 

(A) DSS will: 

(1) Request the contractor to provide 

information on all impacted contracts, 

both prime and subcontracts, unless the 

contractor is prohibited by contract from 

revealing their existence to DSS. In such 

instances, DSS will request that the 

contractor notify the government 

contracting officer and Program Security 

Officer of the need for a NID. 

(2) Provide written notification to the 

individual designated by the 

Component, in accordance with 

paragraph (f) of § 117.55 within 30 

calendar days of identifying the 

requirement for a NID. 

(3) Provide to appropriate GCAs the 

contractor’s proposed FOCI action plan, 

any associated risk assessments, and 

DSS’ recommendation for FOCI 

mitigation. 

(4) Ask the GCA to identify all of the 

GCA’s contracts affected by the 

proposed SSA that require a NID 

decision, unless the activity is 

unacknowledged. The cognizant SAPCO 

will inform the DoD SAPCO of any 

unacknowledged SAPs affected by the 

proposed SSA and consequently the 

NID requirement. 

(5) Provide OUSD(I) Security 

Directorate and the OUSD(AT&L), 

Deputy Assistant Secretary of Defense 

for Manufacturing and Industrial Base 

Policy, a monthly report of pending NID 

decisions that: 

(i) Exceed 30 calendar days from the 

date of the DSS written notice to the 

applicable GCA. 

(ii) Have been pending for NSA, 

ODNI, or DOE concurrence for more 

than 30 calendar days. 

(B) OUSD(I) will intervene, as 

warranted, with GCAs regarding NID 

decisions pending beyond 30 calendar 

days from the date of the DSS written 

notice, as well as with NSA, ODNI, and 

DOE regarding concurrence decisions 

that remain pending beyond 30 days 

from the date of the GCA request. 

(C) OUSD(AT&L) will confer, as 

warranted, with the applicable DoD 

Service Acquisition Executive or 

component equivalent about unresolved 

NID decisions. 

(D) The GCA will, upon written 

notification by DSS of the need for a 

NID: 

(1) Review the FOCI action plan 

proposed by the uncleared company, in 

addition to any associated risk 

assessments and the DSS analysis of the 

appropriate FOCI mitigation based on 

the existing FOCI factors. 

(2) Consider the FOCI factors noted in 

paragraph (b)(3) of this section in the 

aggregate with any associated risk 

assessments and DSS’ analysis to 

determine whether to issue a NID. 

(3) Provide DSS, as appropriate, one 

of the following within 30 calendar days 

of the DSS written notification that a 

NID is required: 

(i) A final, documented NID with a 

copy provided to the contractor. If the 

NID is not specific to a single program, 

project, or contract (e.g., a blanket NID), 

the GCA will also forward a copy of the 

NID to the OUSD(I) Security Directorate. 

(ii) A copy of the GCA’s request for 

NID concurrence sent to NSA, ODNI, or 

DOE, when access to COMSEC, SCI, or 

RD is involved. The GCA will request 

that NSA, ODNI, or DOE respond within 

30 calendar days of the date of the 

GCA’s written request directly to DSS 

with a copy to the GCA. 

(iii) A GCA decision that it will not 

issue a NID. 

(4) Contact DSS to determine an 

alternative method to the proposed SSA 

when the GCA chooses not to issue a 

NID (e.g., a contract modification, a 

contract novation, or a PA or VTA 

authorized by the Program Executive 

Officer). 

(5) Notify DSS in writing when NSA, 

ODNI, or DOE renders a decision on a 

proposed NID involving access to 

COMSEC, SCI, or RD, respectively. A 

GCA’s NID decision is not final until 

NSA, ODNI, or DOE, as applicable, 

respond regarding access to COMSEC, 

SCI, or RD. 

(6) When denying a NID, retain 

documentation explaining the rationale 

for the decision. 

(6) Government Security Committee 

(GSC). (i) Under a VTA, PA, SSA, or 

SCA, DSS will ensure that the 

contractor establishes a permanent 

committee of its Board of Directors or 

similar body known as the GSC. 

(A) The members of the GSC are 

required in accordance with DoD 

5220.22–M to ensure that the contractor 

maintains policies and procedures to 

safeguard classified and export 

controlled information entrusted to it, 

and that violations of those policies and 

procedures are promptly investigated 

and reported to the appropriate 

authority when it has been determined 

that a violation has occurred. 

(B) The GSC will also take the 

necessary steps in accordance with DoD 

5220.22–M to ensure that the contractor 

complies with U.S. export control laws 

and regulations and does not take action 

deemed adverse to performance on 

classified contracts. This will include 

the appointment of a Technology 

Control Officer and the establishment of 

Technology Control Plan (TCP). 

(ii) DSS will provide oversight, 

advice, and assistance to GSCs. These 

measures are intended to ensure that 

GSCs: 

(A) Maintain policies and procedures 

to safeguard classified information and 

export-controlled unclassified 

information in the possession of the 

contractor with no adverse impact on 

the performance of classified contracts. 

(B) Verify contractor compliance with 

the DD Form 441 or its successor form, 

the FOCI mitigation agreement or 

negation agreement and related 

documents, contract security 

requirements, USG export control laws, 

and the NISP. 

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(iii) In the case of an SSA, DSS will 

ensure that the number of outside 

directors exceeds the number of inside 

directors, as defined in DoD 5220.22–M. 

DSS will determine if the outside 

directors should be a majority of the 

Board of Directors based on an 

assessment of security risk factors 

pertaining to the contractor’s access to 

classified information. In the case of an 

SCA, DSS will require the contractor to 

have at least one outside director, but 

may require more than one outside 

director based on an assessment of 

security risk factors. 

(iv) In the case where a contractor is 

cleared to the SECRET level under an 

SSA, and also has a subsidiary with a 

TS FCL based on an approved NID, 

some or all of the outside directors of 

the cleared parent contractor may be 

sponsored for eligibility for access to TS 

information with their TS PCLs held by 

the subsidiary. Access will be at the 

level necessary for the outside directors 

to carry out their security or business 

responsibilities for oversight of the 

subsidiary company in accordance with 

DoD 5220.22–M. If the subsidiary has an 

approved NID for access to SAP or SCI, 

the applicable GCA may determine that 

an outside director at the parent 

contractor requires approved access at 

the subsidiary. 

(7) Technology Control Plans (TCPs). 

Under a VTA, PA, SSA, SCA, or Limited 

FCL, DSS will require the contractor to 

develop and implement a TCP as 

required in DoD 5220.22–M. DSS will 

evaluate and, if the plan is adequate, 

approve the TCP. The TCP must include 

a description of all security measures 

required to prevent the unauthorized 

disclosure of classified or exportcontrolled information. Although TCPs 

must be tailored to the specific 

circumstances of the contractor or 

corporate family to be effective, DSS 

may provide examples of TCPs to the 

contractor to assist plan creation. 

(8) Electronic Communication Plan 

(ECP). Under a VTA, PA, or SSA, DSS 

will require the contractor to develop 

and implement an ECP tailored to the 

contractor’s operations. DSS will 

determine the extent of the ECP and 

review the plan for adequacy. The ECP 

must include a detailed network 

description and configuration diagram 

that clearly delineates which networks 

will be shared and which will be 

protected from access by the foreign 

parent or its affiliates. The network 

description will address firewalls, 

remote administration, monitoring, 

maintenance, and separate email 

servers, as appropriate. 

(9) Administrative Support Agreement 

(ASA). There may be circumstances 

when the parties to a transaction 

propose in the FOCI action plan that the 

U.S. contractor provides certain services 

to the foreign interest, or the foreign 

interest provides services to the U.S. 

contractor. The services to be provided 

must be such that there is no violation 

of the applicable FOCI mitigation or 

negation agreement. If approved, the 

extent of such support and limitations 

on the support will be fully documented 

in an ASA. 

(10) Annual Review and 

Certification—(i) Annual Meeting. DSS 

will meet at least annually with the 

GSCs of contractor’s operating under a 

VTA, PA, SSA, or SCA to review and 

discuss the purpose and effectiveness of 

the FOCI mitigation or negation 

agreement; establish a common 

understanding of the operating 

requirements and their implementation; 

answer questions from the GSC 

members; and provide guidance on 

matters related to FOCI mitigation and 

industrial security. These meetings will 

also include an examination by DSS, 

with the participation of the (FSO) and 

the GSC members, of: 

(A) Compliance with the approved 

security arrangement, standard rules, 

and applicable laws and regulations. 

(B) Problems regarding the practical 

application or utility of the security 

arrangement. 

(C) Security controls, practices, or 

procedures and whether they warrant 

adjustment. 

(ii) Annual Certification. For 

contractors operating under a VTA, PA, 

SSA, or SCA, DSS will obtain from the 

Chair of the GSC an implementation and 

compliance report one year from the 

effective date of the agreement and 

annually thereafter. DSS will review the 

annual report; address, resolve, or refer 

issues identified in the report; 

document the results of this review and 

any follow-up actions; and keep a copy 

of the report and documentation of 

related DSS actions on file for 15 years. 

The GSC’s annual report must include: 

(A) A detailed description stating how 

the contractor is carrying out its 

obligations under the agreement. 

(B) Changes to security procedures, 

implemented or proposed, and the 

reasons for those changes. 

(C) A detailed description of any acts 

of noncompliance with FOCI provisions 

and a discussion of steps taken to 

prevent such acts from recurring. 

(D) Any changes or impending 

changes of senior management officials 

or key board members, including the 

reasons for the change. 

(E) Any changes or impending 

changes in the organizational structure 

or ownership, including any 

acquisitions, mergers, or divestitures. 

(F) Any other issues that could have 

a bearing on the effectiveness of the 

applicable agreement. 

(11) Foreign Government Ownership 

or Control. (i) In accordance with 10 

U.S.C. 2536, the DoD cannot award 

contracts involving access to proscribed 

information to a company effectively 

owned or controlled by a foreign 

government unless a waiver has been 

issued by the Secretary of Defense or 

designee. 

(ii) A waiver is not required if the 

company is cleared under a PA or VTA 

because both agreements effectively 

negate foreign government control. 

(iii) DSS will, after consultation with 

the GCA, determine if a waiver is 

needed in accordance with subpart 

209.104–1 of the Defense Federal 

Acquisition Regulation Supplement 

‘‘Responsible Prospective Contractors, 

General Standards’’ (available at http:// 

www.acq.osd.mil/dpap/dars/dfars/pdf/

r20090115/209_1.pdf. The GCA will 

request the waiver from the USD(I) and 

provide supporting information, to 

include a copy of the proposed NID. 

(iv) Upon receipt of an approved 

waiver, the GCA will forward the waiver 

and the NID to DSS. 

(v) If the USD(I) does not grant the 

waiver, the company may propose to 

DSS an appropriate PA or VTA. 

Otherwise, the company is not eligible 

for access to proscribed information. 

(12) Changed Conditions. (i) DSS will 

require contractors to submit timely 

reports of changes to FOCI by DSSdesignated means in accordance with 

DoD 5220.22–M. 

(ii) Upon receipt of changes to the SF 

328 from contractors, DSS will assess 

the changes to determine if they are 

material; if they require the imposition 

of new FOCI mitigation or modification 

of existing FOCI mitigation; or if they 

warrant the termination of existing FOCI 

mitigation. DSS will periodically review 

the definition of material change with 

regard to FOCI and publish updated 

guidance as to what constitutes a 

reportable material change in 

coordination with OUSD(I) Security 

Directorate. 

(13) Limited FCL. (i) A Limited FCL 

may be an option for a single, narrowly 

defined purpose when there is foreign 

ownership or control of a U.S. company. 

In that respect, a Limited FCL is similar 

to an LAA for a non-U.S. citizen. 

Consideration of a Limited FCL includes 

a DSS determination that the company 

is under FOCI and that the company is 

either unable or unwilling to implement 

FOCI negation or mitigation. A GCA or 

a foreign government may sponsor a 

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Limited FCL consistent with the 

provisions of paragraphs (b)(13)(iii)(A) 

through (b)(13)(iii)(D) of this section. 

(ii) DSS will: 

(A) Document the requirements of 

each Limited FCL, including the 

limitations of access to classified 

information. 

(B) Verify a Limited FCL only to the 

sponsoring GCA or foreign government. 

(C) Ensure, in accordance with 

paragraph (b)(7) of this section, that the 

contractor has and implements a TCP 

consistent with DoD 5220.22–M. 

(D) Process a home office along with 

a branch or division, when the GCA or 

foreign government sponsors the branch 

or division for a Limited FCL and 

ensure that the limitations of the 

Limited FCL are applied to the home 

office as well as the branch or division. 

(E) Administratively terminate the 

Limited FCL when the FCL is no longer 

required. 

(iii) There are four types of Limited 

FCLs: 

(A) A GCA may sponsor a joint 

venture company established in the 

United States for the purpose of 

supporting a cooperative arms program 

involving DoD. An authorized GCA 

official, at the PEO level or higher, must 

certify in writing that the classified 

information to be provided to the 

company has been authorized for 

disclosure to the participating 

governments in compliance with U.S. 

National Disclosure Policy NDP–1, 

‘‘National Policy and Procedures for the 

Disclosure of Classified Military 

Information to Foreign Governments 

and International Organizations,’’ 

(available to designated disclosure 

authorities on a need-to-know basis 

from the Office of the Deputy Under 

Secretary of Defense for Policy 

Integration and Chief of Staff to the 

Under Secretary of Defense for Policy). 

Key management personnel (KMPs) and 

employees may be citizens of the 

countries of ownership, if DSS is able to 

obtain security assurances. The nonU.S. citizens retain their foreign 

government issued personnel security 

clearances. The company FSO must be 

a cleared U.S. citizen as set forth in DoD 

5220.22–M. 

(B) A U.S. subsidiary of a foreign 

company may be sponsored for a 

Limited FCL by the government of the 

foreign parent company when the 

foreign government desires to award a 

contract to the U.S. subsidiary involving 

access to classified information for 

which the foreign government is the 

original classification authority (i.e., 

FGI), and there is no other need for the 

U.S, subsidiary to have an FCL. The 

KMPs must all be U.S. citizens. 

However, if the U.S. subsidiary is to 

have access to U.S. classified 

information in the performance of the 

contract, the U.S. subsidiary must be 

considered for one of the FOCI 

agreements set forth in paragraph 

(b)(4)(iii) of this section. 

(C) A foreign owned freight forwarder 

may be sponsored for a Limited FCL by 

a foreign government for the purpose of 

providing services only to the 

sponsoring government. Access to U.S. 

classified information or material will 

be limited to information and material 

that has been authorized for export to 

the sponsoring government consistent 

with an approved direct commercial 

sale contract or foreign military sales 

letter of offer and acceptance. KMPs and 

employees may be citizens of the 

sponsoring government, if DSS is able to 

obtain security assurances on the 

individuals. As non-U.S. citizens, these 

individuals would not be eligible for a 

LAA; would be assigned under an 

extended visit authorization, and would 

retain their foreign government issued 

personnel security clearances. The FSO 

must be a U.S. citizen. 

(D) A senior GCA official, consistent 

with paragraph (f)(3) of § 117.55, may 

sponsor a U.S. company, determined to 

be under FOCI by DSS, for a Limited 

FCL when the other FOCI agreements 

described in paragraph (b)(4)(iii) and 

paragraphs (b)(13)(iii)(A) through 

(b)(13)(iii)(D) of this section do not 

apply, and there is a compelling need 

for the FCL. The official must fully 

describe the compelling need and 

certify in writing that the sponsoring 

GCA accepts the risk inherent in not 

negating or mitigating the FOCI. The 

Limited FCL permits performance only 

on a classified contract issued by the 

sponsoring GCA. 

(14) Foreign Mergers, Acquisitions, 

Takeovers and CFIUS. (i) CFIUS is a 

USG interagency committee chaired by 

the Treasury Department whose purpose 

is to review transactions that could 

result in the control of a U.S. business 

by a foreign person in order to 

determine the effect of such transactions 

on the national security of the United 

States. The regulations defining the 

CFIUS process are at 31 CFR part 800, 

‘‘Regulations Pertaining to Mergers, 

Acquisitions, and Takeovers by Foreign 

Persons’’. 

(ii) DoD is a member of CFIUS. DoD 

procedures for reviewing and 

monitoring transactions filed with 

CFIUS are provided in DoD Instruction 

2000.25. 

(iii) The CFIUS review and the DSS 

industrial security review for FOCI are 

separate processes subject to 

independent authorities, with different 

time constraints and considerations. 

However, CFIUS may not mitigate 

national security risks that are 

adequately addressed by other 

provisions of law. 

(iv) If the NISP process has not begun 

or has not been completed prior to the 

submission of a CFIUS notice, DSS will 

review, adjudicate, and mitigate FOCI 

on a priority basis. DSS will provide all 

relevant information to the OUSD(I) 

Security Directorate specifically, for any 

transaction undergoing concurrent 

CFIUS and DSS reviews. 

(A) By the 10th calendar day after the 

CFIUS review period begins DSS will 

advise the OUSD (AT&L) Manufacturing 

and Industrial Base Policy (MIBP) 

CFIUS Team electronically, with a copy 

to the OUSD(I) Security Directorate, of 

the U.S. company’s FCL status (e.g., no 

FCL, FCL in process, TS/S/C FCL). 

(B) For contractors or U.S. companies 

in process for an FCL, DSS will provide 

the following input in a signed 

memorandum with rationale included 

to the Director, Security, OUSD(I) 

Security Directorate on or before the 

suspense date established by the MIBP 

CFIUS Team: 

(1) Basic identification information 

about the contractor, to include name, 

address, and commercial and 

government entity code. 

(2) FCL level. 

(3) Identification of current classified 

contracts, to include identification of 

GCAs and any requirement for access to 

proscribed information. 

(4) The nature and status of any 

discussions DSS has had with the 

contractor or the foreign interest 

regarding proposed FOCI mitigation 

measures. 

(5) Whether DSS requires additional 

time beyond the established MIBP 

CFIUS team suspense date to determine 

and recommend to the OUSD(I) Security 

Directorate whether the proposed FOCI 

mitigation is sufficient to address risks 

within the scope of DSS’s FOCI 

authorities. 

(6) Identification of any known 

security issues (e.g., marginal or 

unsatisfactory security rating, 

unresolved counterintelligence 

concerns, alleged export violations). 

(v) If it appears that an agreement 

cannot be reached on material terms of 

a FOCI action plan, or if the U.S. 

company subject to the proposed 

transaction fails to comply with the 

FOCI reporting requirements of DoD 

5220.22–M, DSS may recommend 

additional time through the OUSD(I) 

Security Directorate to resolve any 

national security issues related to FOCI 

mitigation. 

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19478 Federal Register / Vol. 79, No. 68 / Wednesday, April 9, 2014 / Rules and Regulations 

(vi) If the proposed transaction 

involves access to proscribed 

information and the contractor is 

contemplating the use of an SSA to 

mitigate FOCI, the GCA will provide 

DSS with a preliminary determination 

regarding the acceptability of the 

proposed FOCI mitigation. The 

determination must be provided to DSS 

one day prior to the suspense date 

established by the MIBP CFIUS Team 

and must include whether a favorable 

NID will be provided. If the GCA does 

not notify DSS, DSS will not delay 

implementation of a FOCI action plan 

pending completion of a GCA’s NID 

process as long as there is no indication 

that the NID will be denied. 

(vii) If DSS, under its FOCI 

authorities, is notified of a transaction 

with respect to which the parties thereto 

have not filed a notice with CFIUS, DSS 

will notify the MIBP CFIUS Team 

through the OUSD(I) Security 

Directorate. 

(viii) When a merger, sale, or 

acquisition of a contractor is finalized 

prior to having an acceptable FOCI 

mitigation agreement in place, DSS will 

take actions consistent with paragraph 

(b)(2)(iv) of this section. 

Dated: April 2, 2014. 

Aaron Siegel, 

Alternate OSD Federal Register Liaison 

Officer, Department of Defense. 

[FR Doc. 2014–07826 Filed 4–8–14; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket Number USCG–2014–0096] 

RIN 1625–AA08 

Special Local Regulation; Charleston 

Race Week, Charleston Harbor; 

Charleston, SC 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The Coast Guard is 

establishing a special local regulation on 

the waters of Charleston Harbor in 

Charleston, South Carolina during 

Charleston Race Week, a series of 

sailboat races. The races are scheduled 

to take place on April 11, 2014 through 

April 13, 2014. Approximately 300 

sailboats are anticipated to participate 

in the races. The special local regulation 

is necessary to provide for the safety of 

life on the navigable waters of the 

United States during the races. The 

special local regulation consists of three 

race areas. Except for those persons and 

vessels participating in the sailboat 

races, persons and vessels are 

prohibited from entering, transiting 

through, anchoring in, or remaining 

within any of the race areas unless 

authorized by the Captain of the Port 

Charleston or a designated 

representative. 

DATES: This rule is effective on April 11, 

2014 through April 13, 2014. This rule 

will be enforced daily from 9 a.m. until 

4:30 p.m. 

ADDRESSES: Documents indicated in this 

preamble are part of docket USCG– 

2014–0096. To view documents 

mentioned in this preamble as being 

available in the docket, go to 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 

rulemaking. 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 rule, call or 

email Chief Warrant Officer Christopher 

Ruleman, telephone (843) 740–3184, 

email Christopher.L.Ruleman@uscg.mil. 

If you have questions on viewing the 

docket, call Cheryl Collins, Program 

Manager, Docket Operations, telephone 

(202) 366–9826. 

SUPPLEMENTARY INFORMATION: 

Table of Acronyms 

DHS Department of Homeland Security 

FR Federal Register 

NPRM Notice of Proposed Rulemaking 

A. Regulatory History and Information 

The Coast Guard is issuing this 

temporary final rule without prior 

notice and opportunity to comment 

pursuant to authority under section 4(a) 

of the Administrative Procedure Act 

(APA) (5 U.S.C. 553(b). This provision 

authorizes an agency to issue a rule 

without prior notice and opportunity to 

comment when the agency for good 

cause finds that those procedures are 

‘‘impracticable, unnecessary, or contrary 

to the public interest.’’ Under 5 U.S.C. 

553(b)(B), the Coast Guard finds that 

good cause exists for not publishing a 

notice of proposed rulemaking (NPRM) 

with respect to this rule because the 

Coast Guard did not receive necessary 

information about the event until 

February 4, 2014. As a result, the Coast 

Guard did not have sufficient time to 

publish an NPRM and to receive public 

comments prior to the event. Any delay 

in the effective date of this rule would 

be contrary to the public interest 

because immediate action is needed to 

minimize potential danger to the race 

participants, participant vessels, 

spectators, and the general public. 

Under 5 U.S.C. 553(d)(3), the Coast 

Guard finds that good cause exists for 

making this temporary rule effective less 

than 30 days after publication in the 

Federal Register. Delaying the effective 

date for this special local regulation is 

contrary to the public interest because 

immediate action is needed to minimize 

potential danger to the race participants, 

participant vessels, spectators, and the 

general public. 

B. Basis and Purpose 

The legal basis for the rule is the 

Coast Guard’s authority to establish 

special local regulations: 33 U.S.C. 

1233. The purpose of the rule is to 

insure safety of life on navigable waters 

of the United States during three 

Charleston Race Week sailboat races. 

C. Discussion of the Final Rule 

From April 11, 2014 through April 13, 

2014, Charleston Ocean Racing 

Association will host three sailboat 

races on Charleston Harbor in 

Charleston, South Carolina during 

Charleston Race Week. Approximately 

300 sailboats will be participating in the 

three races. 

The rule establishes a special local 

regulation on certain waters of 

Charleston Harbor in Charleston, South 

Carolina. The special local regulation 

will be enforced daily from 9 a.m. until 

4:30 p.m. on April 11, 2014 through 

April 13, 2014. The special local 

regulation consists of the following 

three race areas. 

1. Race Area #1. All waters 

encompassed within an 800 yard radius 

of position 32°46′23′′ N, 79°55′11′′ W. 

2. Race Area #2. All waters 

encompassed within a 900 yard radius 

of position 32°45′54′′ N, 79°54′41′′ W. 

3. Race Area #3. All waters 

encompassed within a 900 yard radius 

of position 32°46′09′′ N, 79°53′52′′ W. 

Except for those persons and vessels 

participating in the sailboat races, 

persons and vessels are prohibited from 

entering, transiting through, anchoring 

in, or remaining within any of the race 

areas unless specifically authorized by 

the Captain of the Port Charleston or a 

designated representative. Persons and 

vessels desiring to enter, transit through, 

anchor in, or remain within any of the 

race areas may contact the Captain of 

the Port Charleston by telephone at 

(843) 740–7050, or a designated 

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