Federal Register / Vol. 88, No. 155 / Monday, August 14, 2023 / Proposed Rules 54961 

V–171 [Amended] 

From Lexington, KY; INT Lexington 251° 

and Louisville, KY, 114° radials; Louisville; 

Terre Haute, IN; Danville, IL; Peotone, IL; 

INT Peotone 281° and Joliet, IL, 173° radials; 

to Joliet. From Nodine, MN; INT Nodine 298° 

and Farmington, MN, 124° radials; to 

Farmington. From Alexandria, MN; INT 

Alexandria 321° and Grand Forks, ND, 152° 

radials; to Grand Forks. 

* * * * * 

Issued in Washington, DC, on August 8, 

2023. 

Karen L. Chiodini, 

Acting Manager, Rules and Regulations 

Group. 

[FR Doc. 2023–17359 Filed 8–11–23; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF LABOR 

Mine Safety and Health Administration 

30 CFR Parts 56, 57, 60, 70, 71, 72, 75, 

and 90 

[Docket No. MSHA–2023–0001] 

RIN 1219–AB36 

Lowering Miners’ Exposure to 

Respirable Crystalline Silica and 

Improving Respiratory Protection 

AGENCY: Mine Safety and Health 

Administration, Department of Labor. 

ACTION: Proposed rule; extension of 

comment period. 

SUMMARY: The Mine Safety and Health 

Administration (MSHA) is extending 

the comment period on the proposed 

rule entitled Lowering Miners’ Exposure 

to Respirable Crystalline Silica and 

Improving Respiratory Protection 

published in the Federal Register on 

July 13, 2023, with an established 

public comment period that is 

scheduled to end on August 28, 2023. In 

response to requests for additional time 

to develop and submit comments on the 

proposed rule, MSHA is extending the 

comment period for an additional 15 

days—that is, from August 28, 2023, to 

September 11, 2023. 

DATES: The comment period for the 

proposed rule that was published on 

July 13, 2023, at 88 FR 44852 is 

extended. All comments must be 

submitted by midnight Eastern Time on 

September 11, 2023. 

ADDRESSES: All submissions must 

include RIN 1219–AB36 or Docket No. 

MSHA–2023–0001. You should not 

include personal or proprietary 

information that you do not wish to 

disclose publicly. If you mark parts of 

a comment as ‘‘business confidential’’ 

information, MSHA will not post those 

parts of the comment. Otherwise, MSHA 

will post all comments without change, 

including any personal information 

provided. MSHA cautions against 

submitting personal information. 

You may submit comments and 

informational materials, clearly 

identified by RIN 1219–AB36 or Docket 

Id. No. MSHA–2023–0001, by any of the 

following methods: 

1. Federal eRulemaking Portal:

https://www.regulations.gov. Follow the 

online instructions for submitting 

comments for MSHA–2023–0001. 

2. Email: zzMSHA-comments@

dol.gov. Include ‘‘RIN 1219–AB36’’ in 

the subject line of the message. 

3. Regular Mail: MSHA, Office of

Standards, Regulations, and Variances, 

201 12th Street South, Suite 4E401, 

Arlington, Virginia 22202–5450. 

4. Hand Delivery or Courier: MSHA,

Office of Standards, Regulations, and 

Variances, 201 12th Street South, Suite 

4E401, Arlington, Virginia, between 

9:00 a.m. and 5:00 p.m. Monday through 

Friday, except Federal holidays. Before 

visiting MSHA in person, call 202–693– 

9440 to make an appointment. 

Docket. For access to the docket to 

read comments, hearing transcripts, 

supporting materials, and other 

documents, go to https://

www.regulations.gov. The docket can 

also be reviewed in person at MSHA, 

Office of Standards, Regulations, and 

Variances, 201 12th Street South, 

Arlington, Virginia, between 9 a.m. and 

5 p.m. Monday through Friday, except 

Federal holidays. Before visiting MSHA 

in person, call 202–693–9440 to make 

an appointment. 

Email Notification. To subscribe to 

receive an email notification when 

MSHA publishes rulemaking documents 

in the Federal Register, go to https://

public.govdelivery.com/accounts/ 

USDOL/subscriber/new. 

FOR FURTHER INFORMATION CONTACT: S. 

Aromie Noe, Director, Office of 

Standards, Regulations, and Variances, 

MSHA, at: silicaNPRM@dol.gov (email); 

202–693–9440 (voice); or 202–693–9441 

(facsimile). These are not toll-free 

numbers. 

SUPPLEMENTARY INFORMATION: On July 

13, 2023, MSHA published in the 

Federal Register the proposed rule 

entitled Lowering Miners’ Exposure to 

Respirable Crystalline Silica and 

Improving Respiratory Protection (88 FR 

44852). The proposed rule is available at 

the Federal eRulemaking Portal, https:// 

regulations.gov, and at MSHA’s website, 

https://www.msha.gov. The proposed 

rule would amend MSHA’s existing 

standards to better protect miners 

against occupational exposure to 

respirable crystalline silica, a 

carcinogen, and to improve respiratory 

protection for all airborne hazards. 

The public comment period for this 

proposed rule was scheduled to close on 

August 28, 2023, 45 days after 

publication of the proposed rule. MSHA 

received requests from commenters for 

both an extension of the comment 

period and for no extension of the 

comment period. Several requested that 

there not be any extension, so that a 

final rule can be promulgated without 

delay to prevent additional diseases 

among miners. Others requested that the 

comment period be extended to prepare 

comments, gather data and information, 

and address the questions MSHA raised 

in the proposal. Generally, those 

requesters asked for an additional 60, 90 

or 120 days. 

After reviewing these comments, 

MSHA has determined that it is 

appropriate to extend the public 

comment period until September 11, 

2023, in order to provide stakeholders 

and interested parties an additional 15 

days to review the proposal and prepare 

comments. 

Authority and Signature 

(Authority: 30 U.S.C. 811) 

Dated: August 8, 2023. 

Christopher J. Williamson, 

Assistant Secretary of Labor for Mine Safety 

and Health. 

[FR Doc. 2023–17370 Filed 8–11–23; 8:45 am] 

BILLING CODE 4520–43–P 

DEPARTMENT OF THE TREASURY 

Office of Investment Security 

31 CFR Chapter VIII 

[Docket ID TREAS–DO–2023–0009] 

RIN 1505–AC82 

Provisions Pertaining to U.S. 

Investments in Certain National 

Security Technologies and Products in 

Countries of Concern 

AGENCY: Office of Investment Security, 

Department of the Treasury. 

ACTION: Advance notice of proposed 

rulemaking. 

SUMMARY: The Executive Order of 

August 9, 2023, ‘‘Addressing United 

States Investments in Certain National 

Security Technologies and Products in 

Countries of Concern’’ (the Order), 

directs the Secretary of the Treasury (the 

Secretary) to issue regulations that 

identify categories of transactions 

involving technologies and products 

that may contribute to the threat to the 


ddrumheller on DSK120RN23PROD with PROPOSALS1
54962 Federal Register / Vol. 88, No. 155 / Monday, August 14, 2023 / Proposed Rules 

national security of the United States 

identified under the Order and require 

United States persons to notify the 

Department of the Treasury (the 

Treasury Department) of each such 

transaction; and identify categories of 

transactions involving technologies and 

products that pose a particularly acute 

national security threat to the United 

States and prohibit United States 

persons from engaging in such 

transactions. This advance notice of 

proposed rulemaking (ANPRM) seeks 

public comment on various topics 

related to the implementation of the 

Order. 

DATES: Written comments on this 

ANPRM must be received by September 

28, 2023. 

ADDRESSES: Written comments may be 

submitted through one of two methods: 

• Electronic Submission: Comments 

may be submitted electronically through 

the Federal Government eRulemaking 

portal at https://www.regulations.gov. 

• Mail: Send to U.S. Department of 

the Treasury, Attention: Meena R. 

Sharma, Acting Director, Office of 

Investment Security Policy and 

International Relations, 1500 

Pennsylvania Avenue NW, Washington, 

DC 20220. 

We encourage comments to be 

submitted via https://

www.regulations.gov. Please submit 

comments only and include your name 

and company name (if any) and cite 

‘‘Provisions Pertaining to U.S. 

Investments in Certain National 

Security Technologies and Products in 

Countries of Concern’’ in all 

correspondence. 

Anyone submitting business 

confidential information should clearly 

identify the business confidential 

portion at the time of submission, file a 

statement justifying nondisclosure and 

referring to the specific legal authority 

claimed, and provide a non-confidential 

version of the submission. For 

comments submitted electronically 

containing business confidential 

information, the file name of the 

business confidential version should 

begin with the characters ‘‘BC.’’ Any 

page containing business confidential 

information must be clearly marked 

‘‘BUSINESS CONFIDENTIAL’’ on the 

top of that page. The corresponding 

non-confidential version of those 

comments must be clearly marked 

‘‘PUBLIC.’’ The file name of the nonconfidential version should begin with 

the character ‘‘P.’’ Any submissions 

with file names that do not begin with 

either a ‘‘BC’’ or a ‘‘P’’ will be assumed 

to be public and will be posted without 

change, including any business or 

personal information provided, such as 

names, addresses, email addresses, or 

telephone numbers. 

To facilitate an efficient review of 

submissions, the Treasury Department 

encourages but does not require 

commenters to: (1) submit a short 

executive summary at the beginning of 

all comments; (2) provide supporting 

material, including empirical data, 

findings, and analysis in reports or 

studies by established organizations or 

research institutions; (3) consistent with 

the questions below, describe the 

relative benefits and costs of the 

recommended approach; and (4) refer to 

the numbered question(s) herein to 

which each comment is addressed. 

The Treasury Department welcomes 

interested parties’ submissions of 

written comments discussing relevant 

experiences, information, and views. 

Parties wishing to supplement their 

written comments in a meeting may 

request to do so, and the Treasury 

Department may accommodate such 

requests as resources permit. 

Additionally, in consultation with the 

Departments of Commerce and State, 

the Treasury Department expects to seek 

additional opportunities to engage in 

discussions with certain stakeholders, 

including foreign partners and allies. 

FOR FURTHER INFORMATION CONTACT: 

Meena R. Sharma, Acting Director, 

Office of Investment Security Policy and 

International Relations, at U.S. 

Department of the Treasury, 1500 

Pennsylvania Avenue NW, Washington, 

DC 20220; telephone: (202) 622–3425; 

email: OIS.Outbound.Regulations@

treasury.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On August 9, 2023, the President 

issued the Order pursuant to his 

authority under the Constitution and the 

laws of the United States, including the 

International Emergency Economic 

Powers Act (IEEPA), the National 

Emergencies Act, and section 301 of 

Title 3, United States Code. In the 

Order, the President declared a national 

emergency and determined the need for 

action due to the policies and actions of 

countries of concern which seek to, 

among other things, exploit U.S. 

outbound investments to develop 

sensitive technologies and products 

critical for military, intelligence, 

surveillance, and cyber-enabled 

capabilities. In an Annex to the Order, 

the President identified one country, the 

People’s Republic of China (PRC), along 

with the Special Administrative Region 

of Hong Kong and the Special 

Administrative Region of Macau, as a 

country of concern. The President may 

modify the Annex to the Order and 

update the list of countries of concern 

in the future. 

Advanced technologies and products 

that are increasingly developed and 

financed by the private sector form the 

basis of next-generation military, 

intelligence, surveillance, and cyberenabled capabilities. For example, 

certain advanced semiconductors and 

microelectronics, quantum information 

technologies, and artificial intelligence 

(AI) systems will underpin military 

innovations that improve the speed and 

accuracy of military decision-making, 

planning, and logistics; enable the 

compromise of encryption and other 

cybersecurity controls; and advance 

mass surveillance capabilities. The 

potential military, intelligence, 

surveillance, and cyber-enabled 

applications of these technologies and 

products pose risks to U.S. national 

security particularly when developed by 

a country of concern such as the PRC in 

which the government seeks to (1) direct 

entities to obtain technologies to 

achieve national security objectives; and 

(2) compel entities to share or transfer 

these technologies to the government’s 

military, intelligence, surveillance, and 

security apparatuses. The PRC 

government explicitly seeks to advance 

these technologies and to ensure that 

new innovations simultaneously benefit 

its military and commercial aims. The 

PRC government is aggressively 

pursuing these objectives to confer a 

decisive advantage to its military, 

intelligence, surveillance, and cyberenabled services. The PRC government 

is also encouraging a growing number of 

PRC entities to undertake military 

research and development, including 

weapons production, which exploit 

private investments in pursuit of this 

goal. 

U.S. investments are often more 

valuable than capital alone because they 

can also include the transfer of 

intangible benefits. Investors from the 

United States often lend support to the 

companies in which they invest, and 

these could include PRC entities that are 

developing technology with military 

end uses. Intangible benefits that often 

accompany U.S. investments and help 

companies succeed include enhanced 

standing and prominence, managerial 

assistance, access to investment and 

talent networks, market access, and 

enhanced access to additional financing. 

Certain investments from the United 

States into a country of concern can be 

exploited to accelerate the development 

of sensitive technologies or products in 

ways that negatively impact the strategic 

military position of the United States. 


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Such investments, therefore, risk 

exacerbating this threat to U.S. national 

security. 

Cross-border investment creates 

valuable economic opportunities and 

promotes competitiveness, innovation, 

and productivity. For these reasons, the 

United States has and will continue to 

champion open and rules-based 

investment. 

The United States has undertaken 

efforts to enhance existing policy tools 

and develop new policy initiatives 

aimed at maintaining U.S. leadership in 

technologies critical to national 

security, while preventing the 

exploitation of our open economic 

ecosystem in ways that could 

undermine our national security. 

Nevertheless, there remain instances 

where the risks presented by U.S. 

investments enabling countries of 

concern to develop critical military, 

intelligence, surveillance, or cyberenabled capabilities are not sufficiently 

addressed by existing tools. 

Accordingly, the Order directs the 

Secretary to establish a program to 

prohibit or require notification 

concerning certain types of outbound 

investments by United States persons 

into certain entities located in or subject 

to the jurisdiction of a country of 

concern, and certain other entities 

owned by persons of a country of 

concern, involved in discrete categories 

of advanced technologies and products. 

The Order has two primary 

components that serve different 

objectives with respect to the relevant 

technologies and products. The first 

component requires the Secretary to 

prohibit certain types of investment by 

a United States person in a covered 

foreign person whose business involves 

certain categories of advanced 

technologies and products. The second 

component requires notification to the 

Secretary regarding certain types of 

investments by a United States person 

in a covered foreign person whose 

business involves other categories of 

technologies and products. The focus of 

both components is on investments that 

could enhance a country of concern’s 

military, intelligence, surveillance, or 

cyber-enabled capabilities through the 

advancement of technologies and 

products in particularly sensitive areas. 

II. Program Overview 

The Treasury Department is 

considering implementation of the 

Order through the establishment of a 

program that would (1) prohibit certain 

types of investment by United States 

persons into certain entities located in 

or subject to the jurisdiction of a 

country of concern, and certain other 

entities owned by persons of a country 

of concern, with capabilities or 

activities related to defined technologies 

and products; and (2) require 

submission of a notification to the 

Secretary by United States persons for 

certain types of investment into certain 

entities located in or subject to the 

jurisdiction of a country of concern, and 

certain other entities owned by persons 

of a country of concern, with 

capabilities or activities related to 

defined technologies and products. The 

Treasury Department does not 

contemplate that the program will entail 

a case-by-case review of U.S. outbound 

investments. Rather, the Treasury 

Department expects that the transaction 

parties will have the obligation to 

determine whether a given transaction 

is prohibited, subject to notification, or 

permissible without notification. 

Importantly, the program is not 

intended to impede all U.S. investments 

into a country of concern or impose 

sector-wide restrictions on United States 

person activity. The high-level 

categories of the technologies and 

products that are the focus of the 

program, as enumerated in the Order, 

are: (1) semiconductors and 

microelectronics, for which the 

Treasury Department is considering a 

prohibition on transactions related to 

certain advanced technologies and 

products, and considering a notification 

requirement related to other 

technologies and products; (2) quantum 

information technologies, for which the 

Treasury Department is considering a 

prohibition on transactions related to 

certain technologies and products; and 

(3) AI systems, for which the Treasury 

Department is considering a notification 

requirement for transactions related to 

certain technologies and products with 

specific end uses and is considering a 

prohibition in certain other cases, as 

discussed herein. 

The Treasury Department anticipates 

that transactions covered by the 

program would include certain 

acquisitions of equity interests (e.g., 

mergers and acquisitions, private equity, 

and venture capital), greenfield, joint 

ventures, and certain debt financing 

transactions by United States persons. 

Given the focus on transactions that 

could aid in the development of 

technological advances that pose a risk 

to U.S. national security, the Treasury 

Department expects to create a carveout 

or exception for specific types of 

transactions, such as certain 

investments into publicly-traded 

securities or into exchange-traded 

funds. 

It is not proposed that the program 

provide for retroactive application of the 

provisions related to the prohibition of 

certain transactions and the notification 

of others. However, the Treasury 

Department may, after the effective date 

of the regulations, request information 

about transactions by United States 

persons that were completed or agreed 

to after the date of the issuance of the 

Order to better inform the development 

and implementation of the program. 

The Treasury Department, in 

consultation with the Department of 

Commerce and, as appropriate, other 

executive departments and agencies, 

will evaluate the program after an initial 

period of no longer than one year 

following the effective date of the 

implementing regulations to consider 

whether adjustments to the program are 

warranted. 

III. Issues for Comment 

The Treasury Department welcomes 

comments and views from a wide range 

of stakeholders on all aspects of how the 

Secretary should implement this new 

program under the Order. The Treasury 

Department is particularly interested in 

obtaining information on the topics 

discussed below. 

Note that this ANPRM does not 

necessarily identify the full scope of 

potential approaches the Treasury 

Department might ultimately undertake 

in regulations to implement the Order. 

A. Overview 

The Order frames the key terms that 

will be developed through rulemaking. 

Accordingly, United States persons may 

either be required to notify the Treasury 

Department of, or be prohibited from 

undertaking, a transaction with a 

‘‘covered foreign person’’—that is, a 

‘‘person of a country of concern’’ (per 

the President’s designation of a country 

of concern in the Annex to the Order) 

that is engaged in certain defined 

activities involving ‘‘covered national 

security technologies and products’’ that 

may contribute to the threat to the 

national security of the United States. 

These requirements would not apply to 

a United States person engaged in an 

‘‘excepted transaction.’’ Definitions 

under consideration for these and 

related terms are discussed below, along 

with questions on which the Treasury 

Department seeks comment. 

B. U.S. Person 

The Order authorizes the Secretary to 

prohibit or require notification of 

instances where a ‘‘United States 

person’’ engages in a covered 

transaction. The Order defines a 

‘‘United States person’’ as any United 

States citizen, lawful permanent 

resident, entity organized under the 


ddrumheller on DSK120RN23PROD with PROPOSALS1
54964 Federal Register / Vol. 88, No. 155 / Monday, August 14, 2023 / Proposed Rules 

laws of the United States or any 

jurisdiction within the United States, 

including any foreign branches of any 

such entity, and any person in the 

United States. 

The Treasury Department is 

considering adopting the Order’s 

definition of the term ‘‘United States 

person’’ without elaboration or 

amendment and referring to it as a ‘‘U.S. 

person.’’ The Treasury Department 

expects the regulations to apply to U.S. 

persons wherever they are located. 

The ANPRM seeks comment on this 

topic including: 

1. In what ways, if any, should the 

Treasury Department elaborate or amend the 

definition of ‘‘U.S. person’’ to enhance clarity 

or close any loopholes? What, if any, 

unintended consequences could result from 

the definition under consideration? 

2. Are there additional factors that the 

Treasury Department should consider when 

determining whether an individual or entity 

is a ‘‘U.S. person’’? Please explain. 

C. Covered Foreign Person; Person of a 

Country of Concern 

The Order requires the Treasury 

Department to prohibit or require 

notification of certain transactions by a 

U.S. person into a ‘‘covered foreign 

person.’’ The Treasury Department is 

considering elaborating upon the 

definition of a ‘‘covered foreign person’’ 

in the Order to mean (1) a person of a 

country of concern that is engaged in, or 

a person of a country of concern that a 

U.S. person knows or should know will 

be engaged in, an identified activity 

with respect to a covered national 

security technology or product; or (2) a 

person whose direct or indirect 

subsidiaries or branches are referenced 

in item (1) and which, individually or in 

the aggregate, comprise more than 50 

percent of that person’s consolidated 

revenue, net income, capital 

expenditure, or operating expenses. (For 

more information on the knowledge 

standard under consideration, see 

subsection J below.) 

Further, the Treasury Department is 

considering elaborating upon the 

definition for the term ‘‘person of a 

country of concern’’ mentioned in the 

Order to mean (1) any individual that is 

not a U.S. citizen or lawful permanent 

resident of the United States and is a 

citizen or permanent resident of a 

country of concern; (2) an entity with a 

principal place of business in, or an 

entity incorporated in or otherwise 

organized under the laws of a country 

of concern; (3) the government of a 

country of concern, including any 

political subdivision, political party, 

agency, or instrumentality thereof, or 

any person owned, controlled, or 

directed by, or acting for or on behalf of 

the government of such country of 

concern; or (4) any entity in which a 

person or persons identified in items (1) 

through (3) holds individually or in the 

aggregate, directly or indirectly, an 

ownership interest equal to or greater 

than 50 percent. 

The Treasury Department intends that 

the definitions of ‘‘covered foreign 

person’’ and ‘‘person of a country of 

concern’’ together provide clarity and 

predictability within the scope of the 

authorities granted by the Order while 

avoiding major loopholes and 

unintended consequences. For example, 

item (2) of the definition of ‘‘covered 

foreign person’’ is intended to capture 

parent companies whose subsidiaries 

and branches engage in activities related 

to a covered national security 

technology or product. (Meanwhile, 

item (1) would capture such 

subsidiaries and branches themselves as 

covered foreign persons.) In addition, 

item (4) of the definition of ‘‘person of 

a country of concern’’ is intended to 

capture entities located outside of a 

country of concern that are majorityowned by persons of a country of 

concern. 

The ANPRM seeks comment on this 

topic including: 

3. Should the Treasury Department further 

elaborate in any way on the definitions of 

‘‘covered foreign person’’ and ‘‘person of a 

country of concern’’ to enhance clarity or 

close any loopholes? 

4. What additional information would be 

helpful for U.S. persons to ascertain whether 

a transaction involves a ‘‘covered foreign 

person’’ as defined in section III.C? 

5. What, if any, unintended consequences 

could result from the definitions under 

consideration? What is the likely impact on 

U.S. persons and U.S. investment flows? 

What is the likely impact on persons and 

investment flows from third countries or 

economies? If you believe there will be 

impacts on U.S. persons, U.S. investment 

flows, third-country persons, or third-country 

investment flows, please provide specific 

examples or data. 

6. What could be the specific impacts of 

item (2) of the definition of ‘‘covered foreign 

person’’? What could be the consequences of 

setting a specific threshold of 50 percent in 

the categories of consolidated revenue, net 

income, capital expenditures, and operating 

expenses? Are there other approaches that 

should be considered with respect to U.S. 

person transactions into companies whose 

subsidiaries and branches engage in the 

identified activity with respect to a covered 

national security technology or product? 

7. What analysis or due diligence would a 

U.S. person anticipate undertaking to 

ascertain whether they are investing in a 

covered foreign person? What challenges 

could arise in this process for the investor 

and what clarification in the regulations 

would be helpful? How would U.S. persons 

anticipate handling instances where they 

attempt to ascertain needed information but 

are unable to, or receive information they 

have doubts about? What contractual or other 

methods might a U.S. person employ to 

enhance certainty that a transaction they are 

undertaking is not a covered transaction? 

8. What other recommendations do you 

have on how to enhance clarity or refine the 

definitions, given the overall objectives of the 

program? 

D. Covered Transactions 

The Order requires the Secretary to 

promulgate regulations defining 

‘‘prohibited transactions’’ and 

‘‘notifiable transactions.’’ These are 

distinct concepts and the scope of each 

is discussed below in connection with 

specific ‘‘covered national security 

technologies and products.’’ 

The Treasury Department is 

considering using a single term, 

‘‘covered transaction,’’ that would apply 

to the definition of both prohibited and 

notifiable transactions. Specifically, the 

Treasury Department is considering 

defining the term ‘‘covered transaction’’ 

to mean a U.S. person’s direct or 

indirect (1) acquisition of an equity 

interest or contingent equity interest in 

a covered foreign person; (2) provision 

of debt financing to a covered foreign 

person where such debt financing is 

convertible to an equity interest; (3) 

greenfield investment that could result 

in the establishment of a covered foreign 

person; or (4) establishment of a joint 

venture, wherever located, that is 

formed with a covered foreign person or 

could result in the establishment of a 

covered foreign person. The Treasury 

Department intends this definition to be 

forward-looking, and not to cover 

transactions and the fulfillment of 

uncalled, binding capital commitments 

with cancellation consequences made 

prior to the issuance of the Order. The 

Treasury Department may, after the 

effective date of the regulations, request 

information about transactions by U.S. 

persons that were completed or agreed 

to after the date of the issuance of the 

Order to better inform the development 

and implementation of the program. 

The Treasury Department is 

considering including ‘‘indirect’’ 

transactions as ‘‘covered transactions’’ 

in order to close loopholes that would 

otherwise result, and to clarify that 

attempts to evade prohibitions on 

certain transactions cannot find safe 

harbor in the use of intermediary 

entities that are not ‘‘U.S. persons’’ or 

‘‘covered foreign persons,’’ as defined. 

Examples of such conduct could 

include, but would not be limited to, a 

U.S. person knowingly investing in a 

third-country entity that will use the 

investment to undertake a transaction 


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with a covered foreign person that 

would be subject to the program if 

engaged in by a U.S. person directly. 

The Treasury Department does not 

intend the definition of ‘‘covered 

transaction’’ under consideration to 

apply to the following activities, so long 

as they do not involve any of the 

definitional elements of a ‘‘covered 

transaction’’ and are not undertaken as 

part of an effort to evade these rules: 

university-to-university research 

collaborations; contractual arrangements 

or the procurement of material inputs 

for any of the covered national security 

technologies or products (such as raw 

materials); intellectual property 

licensing arrangements; bank lending; 

the processing, clearing, or sending of 

payments by a bank; underwriting 

services; debt rating services; prime 

brokerage; global custody; equity 

research or analysis; or other services 

secondary to a transaction. 

The definition of ‘‘covered 

transaction’’ under consideration would 

also exclude ‘‘excepted transactions,’’ as 

discussed in this ANPRM. 

The Order describes additional 

activities that are, or may be, prohibited. 

In particular, any conspiracy formed to 

violate the regulations and any action 

that evades, has the purpose of evading, 

causes a violation of, or attempts to 

violate the Order or any regulation 

issued thereunder is prohibited. 

In addition, the Order provides 

authority to the Secretary to prohibit 

U.S. persons from ‘‘knowingly directing 

transactions’’ that would be prohibited 

transactions pursuant to the Order if 

engaged in by a U.S. person. 

The Order also provides authority to 

the Secretary to require U.S. persons to 

‘‘take all reasonable steps to prohibit 

and prevent any transaction by a foreign 

entity controlled by such United States 

person that would be a prohibited 

transaction if engaged in by a United 

States person.’’ With respect to 

notifiable transactions, the Order 

provides authority to the Secretary to 

require U.S. persons to provide 

notification of ‘‘any transaction by a 

foreign entity controlled by such United 

States person that would be a notifiable 

transaction if engaged in by a United 

States person.’’ (For more information 

on the obligations of U.S. persons with 

respect to controlled foreign entities, see 

subsection M below.) 

The ANPRM seeks comment on this 

topic including: 

9. What modifications, if any, should be 

made to the definition of ‘‘covered 

transaction’’ under consideration to enhance 

clarity or close any loopholes? 

10. What additional information would be 

helpful for U.S. persons to ascertain whether 

a transaction is a ‘‘covered transaction’’ as 

defined in section III.D? 

11. What, if any, unintended consequences 

could result from the definition of ‘‘covered 

transaction’’ under consideration? What is 

the likely impact on U.S. persons and U.S. 

investment flows? What is the likely impact 

on persons and investment flows from third 

countries or economies? If you believe there 

will be impacts on U.S. persons, U.S. 

investment flows, third-country persons, or 

third-country investment flows, please 

provide specific examples or data. 

12. How, if at all, should the inclusion of 

‘‘debt financing to a covered foreign person 

where such debt financing is convertible to 

an equity interest’’ be further refined? What 

would be the consequences of including 

additional debt financing transactions in the 

definition of ‘‘covered transaction’’? 

13. The Treasury Department is 

considering how to treat follow-on 

transactions into a covered foreign person 

and a covered national security technology or 

product when the original transaction relates 

to an investment that occurred prior to the 

effective date of the implementing 

regulations. What would be the consequences 

of covering such follow-on transactions? If 

you believe certain follow-on transactions 

should or should not be covered, please 

provide examples and information to support 

that position. 

14. How could the Treasury Department 

provide clarity on the definition of an 

‘‘indirect’’ covered transaction? What are 

particular categories that should or should 

not be covered as ‘‘indirect’’ covered 

transactions, and why? 

15. How could prongs (3) and (4) of the 

‘‘covered transaction’’ definition under 

consideration be clarified in rulemaking such 

that a U.S. person can ascertain whether a 

greenfield or joint venture investment ‘‘could 

result’’ in the establishment of a covered 

foreign person? What are the impacts and 

consequences if a knowledge standard, actual 

or constructive, is used as part of these 

prongs? What are the impacts and 

consequences if a foreseeability standard is 

used as part of these prongs? (For more 

information on the knowledge standard 

under consideration, see subsection J below.) 

16. Please specify whether and how any of 

the following could fall within the 

considered definition of ‘‘covered 

transaction’’ such that additional clarity 

would be beneficial given the policy intent 

of this program is not to implicate these 

activities unless undertaken as part of an 

effort to evade these rules: 

• University-to-university research 

collaborations; 

• Contractual arrangements or the 

procurement of material inputs for any of the 

covered national security technologies or 

products; 

• Intellectual property licensing 

arrangements; 

• Bank lending; 

• The processing, clearing, or sending of 

payments by a bank; 

• Underwriting services; 

• Debt rating services; 

• Prime brokerage; 

• Global custody; and 

• Equity research or analysis. 

17. Are there other secondary or 

intermediary services incident to a 

transaction where there may be questions 

about whether they fall within the definition 

of ‘‘covered transaction’’? What are these 

situations and what are the reasons they 

should or should not be within the definition 

of a ‘‘covered transaction’’? 

E. Excepted Transactions 

Certain transactions may fall within 

the definition of ‘‘covered transaction’’ 

as set forth in section III.D but, due to 

the nature of the transaction, present a 

lower likelihood of concern. With an 

interest in minimizing unintended 

consequences and focusing on 

transactions that present a higher risk, 

the Treasury Department is considering 

a category of transactions that would be 

‘‘excepted transactions’’ and thus 

excluded from the definition of 

‘‘covered transaction.’’ The definition 

under consideration for ‘‘excepted 

transaction’’ is: 

1.a. An investment: 

i. into a publicly traded security, with 

‘‘security’’ defined as set forth in section 

3(a)(10) of the Securities Exchange Act of 

1934; or 

ii. into an index fund, mutual fund, 

exchange-traded fund, or a similar 

instrument (including associated derivatives) 

offered by an investment company as defined 

in the section 3(a)(1) of the Investment 

Company Act of 1940 or by a private 

investment fund; or 

iii. made as a limited partner into a 

venture capital fund, private equity fund, 

fund of funds, or other pooled investment 

funds, in each case where 

A. the limited partner’s contribution is 

solely capital into a limited partnership 

structure and the limited partner cannot 

make managerial decisions, is not 

responsible for any debts beyond its 

investment, and does not have the ability 

(formally or informally) to influence or 

participate in the fund’s or a covered foreign 

person’s decision making or operations and 

B. the investment is below a de minimis 

threshold to be determined by the Secretary. 

1.b. Notwithstanding a., any investment 

that affords the U.S. person rights beyond 

those reasonably considered to be standard 

minority shareholder protections will not 

constitute an ‘‘excepted transaction;’’ such 

rights include, but are not limited to: 

i. Membership or observer rights on, or the 

right to nominate an individual to a position 

on, the board of directors or an equivalent 

governing body of the covered foreign person; 

or 

ii. Any other involvement, beyond the 

voting of shares, in substantive business 

decisions, management, or strategy of the 

covered foreign person. or 

2. The acquisition of the equity or other 

interest owned or held by a covered foreign 

person in an entity or assets located outside 

of a country of concern where the U.S. person 

is acquiring all interests in the entity or 

assets held by covered foreign persons; or 


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3. An intracompany transfer of funds from 

a U.S. parent company to a subsidiary 

located in a country of concern; or 

4. A transaction made pursuant to a 

binding, uncalled capital commitment 

entered into before the date of the Order. 

The objective of item 1. of the 

definition of ‘‘excepted transaction’’ 

under consideration is to carve out 

certain transactions that are unlikely to 

involve the transfer of both capital and 

additional benefits to a covered foreign 

person. With respect to item 1.a.iii, the 

Treasury Department is considering 

whether the exception should only 

apply to investors or investments into 

funds beneath a defined threshold, 

based on one or more benchmarks such 

as the size of the limited partner’s 

investment in the fund or the size of the 

limited partner itself. The rationale for 

this approach is that transactions above 

a threshold are more likely to involve 

the conveyance of intangible benefits 

such as those often associated with 

larger institutional investors, including 

standing and prominence, managerial 

assistance, and enhanced access to 

additional financing. 

The objective of item 2. under 

consideration is to carve out buyouts of 

country of concern ownership, which 

eliminates the opportunity and 

incentive for a U.S. person to lend 

support to a covered foreign person. The 

objective of item 3. is to avoid 

unintended interference with the 

ongoing operation of a U.S. subsidiary 

in a country of concern when that U.S. 

subsidiary meets the definition of a 

covered foreign person, although the 

Treasury Department anticipates that 

the definition of a ‘‘covered transaction’’ 

under consideration would not apply to 

most routine intracompany actions such 

as the sale or purchase of inventory or 

fixed assets, the provision of paid 

services, the licensing of technology, or 

the provision of loans, guarantees, or 

other obligations. (The subsidiary, as a 

covered foreign person, would still be 

covered by the relevant provisions as it 

relates to other U.S. persons, and the 

U.S. parent would have other 

obligations as related to an entity that it 

controls—see subsection M for more 

information.) The objective of item 4. is 

to avoid penalizing U.S. persons who 

have entered into binding agreements 

prior to the date of the Order. 

The ANPRM seeks comment on this 

topic including: 

18. What modifications, if any, should be 

made to the definition of ‘‘excepted 

transaction’’ under consideration to enhance 

clarity or close any loopholes? 

19. What information would a U.S. person 

need to obtain to ascertain whether a 

transaction is an ‘‘excepted transaction’’ as 

defined in section III.E? 

20. What, if any, unintended consequences 

could result from the definition under 

consideration? What is the definition’s likely 

impact on U.S. persons and U.S. investment 

flows? What is the likely impact on persons 

and investment flows from third countries or 

economies? If you believe there will be 

impacts on U.S. persons, U.S. investment 

flows, third-country persons, or third-country 

investment flows, please provide specific 

examples or data. 

21. What other types of investments, if any, 

should be considered ‘‘excepted 

transactions’’ and why? Are there any 

transactions included in the definition under 

consideration that should not be considered 

‘‘excepted transactions,’’ and if so, why? 

22. The Treasury Department is 

considering the appropriate scope of item 

1.a.iii of ‘‘excepted transaction,’’ which 

carves out from program coverage certain 

transactions by U.S. persons made as a 

limited partner where the investment is 

below a de minimis threshold. The goal of 

the qualifier in item 1.a.iii.B is to exclude 

from the ‘‘excepted transaction’’ carveout 

those transactions in excess of a set 

threshold, which would be set at a high level, 

where there is a greater likelihood of 

additional benefits being conveyed, and the 

U.S. limited partner knows or should have 

known that the venture capital fund, private 

equity fund, fund of funds, or other pooled 

investment fund into which the U.S. person 

is investing as a limited partner, itself invests 

in one or more covered foreign persons. The 

Treasury Department is considering defining 

such a threshold with respect to one or more 

factors such as the size of the U.S. limited 

partner’s transaction, and/or the total assets 

under management of the U.S. limited 

partner. The concern is the enhanced 

standing and prominence that may be 

associated with the size of the transaction or 

the investor, and increased likelihood of the 

conveyance of intangible benefits to the 

covered foreign person. What are the 

considerations as to the impact of this 

potential limitation on U.S. investors, and in 

particular, categories of U.S. investors that 

may invest in this manner as limited 

partners? If the Treasury Department 

includes a threshold based on the size of the 

U.S. limited partner’s investment in the fund, 

what should this threshold be, and why? If 

the Treasury Department includes a 

threshold based on assets under 

management, what should this threshold be, 

and why? What are the costs and benefits to 

either of these approaches? What other 

approaches should the Treasury Department 

consider in creating a threshold, above which 

the ‘‘excepted transaction’’ exception would 

not apply—for example, what would be the 

considerations if the threshold size was with 

respect to the limited partner’s investment as 

a percentage of the fund’s total capital? 

23. When investing as a limited partner 

into a financing vehicle that involves the 

pooling of funds from multiple investors 

with the intent to engage in multiple 

transactions—such as a venture capital or 

private equity fund—what, if any, covenants, 

contracts, or other limitations could a U.S. 

investor attach to their capital contribution to 

ensure the U.S. investor’s capital is not 

invested in a covered transaction, even if the 

fund continues to invest in covered 

transactions? What burdens would this create 

for U.S. investors? If such limitations existed 

or were required, how might investment 

firms change how they raise capital from U.S. 

investors, if at all? 

24. With respect to item 3. of ‘‘excepted 

transaction,’’ regarding intracompany 

transfers of funds from a U.S. parent 

company to a subsidiary located in a country 

of concern, the Treasury Department is 

interested in understanding how frequently 

such intracompany transfers would meet the 

definition of a ‘‘covered transaction.’’ What 

would be the impact if the exception were 

applicable only to relevant subsidiaries that 

were established as a subsidiary of the U.S. 

parent before the date of the Order versus 

also including subsidiaries established at any 

time in the future? Note that an exception for 

intracompany transfers from the parent 

company would not change the status of the 

subsidiary as a covered foreign person for 

purposes of receiving investments from other 

U.S. persons. 

25. Additionally with respect to item 3., 

the Treasury Department is considering 

defining the parent-subsidiary relationship as 

one in which a U.S. person’s ownership 

interest is equal to or greater than 50 percent. 

What are the costs and benefits to this 

approach? 

F. Covered National Security 

Technologies and Products: Overview 

As discussed in section III.D, the 

Treasury Department is considering 

defining the term ‘‘covered transaction’’ 

based on an investment by a U.S. person 

in or resulting in a covered foreign 

person. The Order directs the Treasury 

Department to focus on transactions that 

include certain covered national 

security technologies or products. 

Accordingly, the Treasury Department 

is considering defining the term 

‘‘covered foreign person’’ using a further 

reference to an identified activity with 

respect to a designated covered national 

security technology or product. Thus, 

the Treasury Department is interested in 

developing clearly defined and well 

understood definitions with respect to 

each designated covered national 

security technology and product as well 

as the identified activity linking the 

foreign person to the technology or 

product. 

The Order defines the term ‘‘covered 

national security technologies and 

products’’ to mean sensitive 

technologies and products in the 

semiconductors and microelectronics, 

quantum information technologies, and 

artificial intelligence sectors that are 

critical for the military, intelligence, 

surveillance, or cyber-enabled 

capabilities of a country of concern, as 

determined by the Secretary in 


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consultation with the Secretary of 

Commerce and, as appropriate, the 

heads of other relevant agencies. Where 

applicable, ‘‘covered national security 

technologies and products’’ may be 

limited by reference to certain end uses 

of those technologies or products. 

The Treasury Department is 

considering regulations that would 

define specific covered national security 

technologies and products for purposes 

of notifiable transactions and prohibited 

transactions based on a description of 

the technology or product and the 

relevant activities, capabilities, or end 

uses of such technology or product, as 

applicable. U.S. persons undertaking a 

transaction with a covered foreign 

person engaged in activities with 

respect to the technology or product 

based on the definition would be subject 

to the program. 

The notification requirement will 

increase the U.S. Government’s 

visibility into U.S. person transactions 

involving the defined technologies and 

products that may contribute to the 

threat to the national security of the 

United States. The notifications will be 

helpful in highlighting trends with 

respect to related capital flows as well 

as inform future policy development. 

The definitions under consideration 

were crafted with these objectives in 

mind. 

The prohibitions under consideration 

would be narrowly tailored restrictions 

on specific, identified areas to prevent 

U.S. persons from investing in the 

development of technologies and 

products that pose a particularly acute 

national security threat. 

G. Covered National Security 

Technology or Product: Semiconductors 

and Microelectronics 

Consistent with the Order, the 

Treasury Department is considering a 

prohibition on U.S. persons undertaking 

certain transactions involving covered 

foreign persons engaged in activities 

involving sub-sets of advanced 

semiconductor and microelectronic 

technologies and products. 

Additionally, the Treasury Department 

is considering requiring notification by 

U.S. persons for certain other 

transactions involving covered foreign 

persons engaged in other semiconductor 

and microelectronic technologies and 

products. 

The U.S. Government is concerned 

with the development of semiconductor 

and microelectronic technology, 

equipment, and capabilities that will 

enable the production and certain uses 

of integrated circuits that will underpin 

military innovations that improve the 

speed and accuracy of military decisionmaking, planning, and logistics, among 

other things. The prohibition under 

consideration is focused on three 

concerns: (i) specific technology, 

equipment, and capabilities that enable 

the design and production of advanced 

integrated circuits or enhance their 

performance; (ii) advanced integrated 

circuit design, fabrication, and 

packaging capabilities; and (iii) the 

installation or sale to third-party 

customers of certain supercomputers, 

which are enabled by advanced 

integrated circuits. The Treasury 

Department is also considering a 

notification requirement for design, 

fabrication, and packaging of other 

integrated circuits. The notification 

requirement is intended to increase the 

U.S. Government’s visibility into the 

volume and nature of investments and 

inform future policy decisions. 

Specifically, the Treasury Department 

is considering a prohibition on U.S. 

persons undertaking a transaction with 

a covered foreign person engaged in 

activities involving: 

Technologies that Enable Advanced 

Integrated Circuits 

• Software for Electronic Design 

Automation: The development or 

production of electronic design 

automation software designed to be 

exclusively used for integrated circuit 

design. 

• Integrated Circuit Manufacturing 

Equipment: The development or 

production of front-end semiconductor 

fabrication equipment designed to be 

exclusively used for the volume 

fabrication of integrated circuits. 

Advanced Integrated Circuit Design and 

Production 

• Advanced Integrated Circuit Design: 

The design of integrated circuits that 

exceed the thresholds in Export Control 

Classification Number (ECCN) 3A090 in 

supplement No. 1 to 15 CFR part 774 of 

the Export Administration Regulations 

(EAR), or integrated circuits designed 

for operation at or below 4.5 Kelvin. 

• Advanced Integrated Circuit 

Fabrication: The fabrication of 

integrated circuits that meet any of the 

following criteria: (i) logic integrated 

circuits using a non-planar transistor 

architecture or with a technology node 

of 16/14 nanometers or less, including 

but not limited to fully depleted siliconon-insulator (FDSOI) integrated circuits; 

(ii) NOT–AND (NAND) memory 

integrated circuits with 128 layers or 

more; (iii) dynamic random-access 

memory (DRAM) integrated circuits 

using a technology node of 18 

nanometer half-pitch or less; (iv) 

integrated circuits manufactured from a 

gallium-based compound 

semiconductor; (v) integrated circuits 

using graphene transistors or carbon 

nanotubes; or (vi) integrated circuits 

designed for operation at or below 4.5 

Kelvin. 

Æ ‘‘Fabrication of integrated circuits’’ 

is defined as the process of forming 

devices such as transistors, poly 

capacitors, non-metal resistors, and 

diodes, on a wafer of semiconductor 

material. 

• Advanced Integrated Circuit 

Packaging: The packaging of integrated 

circuits that support the threedimensional integration of integrated 

circuits, using silicon vias or through 

mold vias. 

Æ ‘‘Packaging of integrated circuits’’ 

is defined as the assembly of various 

components, such as the integrated 

circuit die, lead frames, interconnects, 

and substrate materials, to form a 

complete package that safeguards the 

semiconductor device and provides 

electrical connections between different 

parts of the die. 

Supercomputers 

• Supercomputers: The installation or 

sale to third-party customers of a 

supercomputer, which are enabled by 

advanced integrated circuits, that can 

provide a theoretical compute capacity 

of 100 or more double-precision (64-bit) 

petaflops or 200 or more singleprecision (32-bit) petaflops of processing 

power within a 41,600 cubic foot or 

smaller envelope. 

In addition, the Treasury Department 

is considering a requirement for U.S. 

persons to notify the Treasury 

Department if undertaking a transaction 

with a covered foreign person engaged 

in activities involving any of the below: 

• Integrated Circuit Design: The 

design of integrated circuits for which 

transactions involving U.S. persons are 

not otherwise prohibited in section III.G. 

• Integrated Circuit Fabrication: The 

fabrication of integrated circuits for 

which transactions involving U.S. 

persons are not otherwise prohibited in 

section III.G. 

• Integrated Circuit Packaging: The 

packaging of integrated circuits for 

which transactions involving U.S. 

persons are not otherwise prohibited in 

section III.G. 

The ANPRM seeks comment on this 

topic including: 

26. Where possible, please provide 

empirical data about trends in U.S. 

investment into country of concern entities 

engaged in the activities described in section 

III.G. Based on this data, are there emerging 

trends with respect to U.S. outbound 

investments in semiconductors and 

microelectronics in countries of concern that 

would not be captured by the definitions in 

section III.G? If so, what are they? 


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27. Please identify any areas within this 

category where investments by U.S. persons 

in countries of concern may provide a 

strategic benefit to the United States, such 

that continuing such investment would 

benefit, and not impair, U.S. national 

security. Please also identify any key factors 

that affect the size of these benefits (e.g., do 

these benefits differ in size depending on the 

application of the technology or product at 

issue?). Please be specific and where 

possible, provide supporting material, 

including empirical data, findings, and 

analysis in reports or studies by established 

organizations or research institutions and 

indicate material that is business confidential 

per the instructions at the beginning of this 

ANPRM. 

28. What modifications, if any, should be 

made to the definitions under consideration 

to enhance clarity or close any loopholes? 

Please provide supporting rationale(s) and 

data, as applicable, for any such proposed 

modification. 

29. With respect to the definition of 

‘‘Electronic Design Automation Software,’’ 

would incorporation of a definition, 

including one found in the EAR, be 

beneficial? If so, how? Practically speaking, 

how would a focus on software for the design 

of particular integrated circuits—e.g., fin 

field-effect transistors (FinFET) or gate-allaround field effect transistors (GAAFET)—be 

beneficial? If so, how could such a focus be 

incorporated into the definition? 

30. Should the Treasury Department 

consider additional existing definitions from 

other U.S. Government regulations or 

programs? Should the Treasury Department 

consider any industry definitions that may be 

relevant? If so, please note any additional 

specific definitions, with citations, that the 

Treasury Department should consider in this 

category. 

31. How might the Treasury Department 

further clarify when transactions into entities 

engaged in activities involving 

semiconductors and microelectronics in 

countries of concern would be prohibited, 

and when they would be allowed but require 

notification? 

32. In what ways could the definition of 

‘‘Supercomputer’’ be clarified? Are there any 

alternative ways to focus this definition on a 

threshold of computing power without using 

the volume metric, such that it would 

distinguish supercomputers from data 

centers, including how to distinguish 

between low latency high-performance 

computers and large datacenters with 

disparate computing clusters? Are there any 

other activities relevant to such 

supercomputers other than the installation or 

sale of systems that should be captured? 

H. Covered National Security 

Technology or Product: Quantum 

Information Technologies 

The Order states that the regulations 

will define ‘‘covered national security 

technologies and products’’ to include 

sensitive technologies and products in 

the quantum information technologies 

category. 

The U.S. Government is concerned 

with the development and production of 

quantum information technologies and 

products that enable capabilities that 

could compromise encryption and other 

cybersecurity controls and jeopardize 

military communications, among other 

things. To address these concerns, the 

Treasury Department is considering a 

prohibition that would focus on specific 

and advanced quantum information 

technologies and products, or with 

respect to end uses. In the case of 

quantum sensors, the end-use 

provisions seek to distinguish from use 

cases in civilian fields such as medicine 

and geology, and in the case of quantum 

networking systems, they seek to avoid 

capturing quantum systems with no 

relevance to secure communications or 

systems related to classical encryption. 

The Treasury Department is currently 

not considering a separate notification 

requirement for quantum information 

technologies. 

The Treasury Department is 

considering a prohibition on U.S. 

persons undertaking a transaction with 

a covered foreign person engaged in 

activities involving: 

• Quantum Computers and 

Components: The production of a 

quantum computer, dilution 

refrigerator, or two-stage pulse tube 

cryocooler. 

Æ ‘‘Quantum computer’’ is defined as 

a computer that performs computations 

that harness the collective properties of 

quantum states, such as superposition, 

interference, or entanglement. 

• Quantum Sensors: The 

development of a quantum sensing 

platform designed to be exclusively used 

for military end uses, government 

intelligence, or mass-surveillance end 

uses. 

• Quantum Networking and 

Quantum Communication Systems: The 

development of a quantum network or 

quantum communication system 

designed to be exclusively used for 

secure communications, such as 

quantum key distribution. 

The ANPRM seeks comment on this 

topic including: 

33. Where possible, please provide 

empirical data about trends in U.S. 

investment into country of concern entities 

engaged in quantum information 

technologies as described in section III.H. 

Please identify any technologies notable for 

the high volume or frequency of outbound 

investment activity or for the low volume or 

frequency of outbound investment activity. 

Based on this data, are there U.S. outbound 

investment trends in quantum information 

technologies in countries of concern that 

would not be captured by the definitions in 

section III.H? If so, what are they? 

34. Please identify any areas within this 

category where investments by U.S. persons 

in countries of concern may provide a 

strategic benefit to the United States, such 

that continuing such investment would 

benefit, and not impair, U.S. national 

security. Please also identify any key factors 

that affect the size of these benefits (e.g., do 

these benefits differ in size depending on the 

application of the technology or product at 

issue?). Please be specific and where 

possible, provide supporting material, 

including empirical data, findings, and 

analysis in reports or studies by established 

organizations or research institutions, and 

indicate material that is business confidential 

per the instructions at the beginning of this 

ANPRM. 

35. With respect to the definition of 

‘‘Quantum Computers and Components,’’ 

would any further specificity be beneficial 

and, if so, what, and why? Are there existing 

definitions from other U.S. Government 

regulations or programs that are not reflected 

in section III.H and should be considered? 

Please provide specificity. 

36. In defining ‘‘Quantum Sensors,’’ the 

policy objective is to avoid covering quantum 

sensors designed for commercial uses such as 

medical and geological applications. As such, 

the definition under consideration references 

certain end uses that have national security 

implications. What are the costs and benefits 

or unintended consequences with this 

approach? What alternative frameworks or 

definitions, if any, should the Treasury 

Department consider, and why? 

37. With respect to ‘‘Quantum Sensors’’ 

and ‘‘Quantum Networking and Quantum 

Communication Systems,’’ what could be the 

impact of the language ‘‘designed to be 

exclusively used’’? How would the 

alternative formulation ‘‘designed to be 

primarily used’’ change the scope? Is there 

another approach that should be considered? 

38. Additionally, with respect to 

‘‘Quantum Networking and Quantum 

Communications Systems,’’ the definition is 

intended to cover quantum cryptography. 

Are there other clarifications or 

enhancements that should be made to this 

definition? What might inadvertently be 

captured that was not intended as noted in 

section III.H? 

39. Are there other areas of quantum 

information technologies that should be 

considered as an addition or alternative to 

the definitions in section III.H? 

Please be specific and where possible, 

provide supporting material, including 

empirical data, findings, and analysis in 

reports or studies by established 

organizations or research institutions. 

I. Covered National Security Technology 

and Product: AI Systems 

The Order states that the regulations 

will define ‘‘covered national security 

technologies and products’’ to include 

sensitive technologies and products in 

the AI systems category. 

The U.S. Government is concerned 

with the development of AI systems that 

enable the military modernization of 

countries of concern—including 

weapons, intelligence, and surveillance 

capabilities—and that have applications 

in areas such as cybersecurity and 


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robotics. The policy objective is to cover 

U.S. investment into entities that 

develop AI systems that have 

applications that pose significant 

national security risks without broadly 

capturing entities that develop AI 

systems intended only for consumer 

applications or other civilian end uses 

that do not have national security 

consequences. To address these 

concerns, the Treasury Department is 

considering a notification requirement 

and a potential prohibition. 

Whether for purposes of a notification 

or prohibition, the Treasury Department 

is considering defining ‘‘AI system’’ as 

an engineered or machine-based system 

that can, for a given set of objectives, 

generate outputs such as predictions, 

recommendations, or decisions 

influencing real or virtual environments. 

AI systems are designed to operate with 

varying levels of autonomy. Covered 

foreign persons engaging in the 

development of software that 

incorporates an AI system with certain 

applications or end uses would be 

within scope. 

If the Treasury Department were to 

pursue a prohibition in this category, a 

potential approach is to focus on U.S. 

investments into covered foreign 

persons engaged in the development of 

software that incorporates an AI system 

and is designed to be exclusively used 

for military, government intelligence, or 

mass-surveillance end uses. 

Alternatively, ‘‘primarily used’’ could 

take the place of ‘‘exclusively used.’’ 

The Treasury Department is 

considering a requirement for U.S. 

persons to notify the Treasury 

Department if undertaking a transaction 

with a covered foreign person engaged 

in the development of software that 

incorporates an artificial intelligence 

system and is designed to be exclusively 

used for: cybersecurity applications, 

digital forensics tools, and penetration 

testing tools; the control of robotic 

systems; surreptitious listening devices 

that can intercept live conversations 

without the consent of the parties 

involved; non-cooperative location 

tracking (including international mobile 

subscriber identity (IMSI) Catchers and 

automatic license plate readers); or 

facial recognition. Alternatively, 

‘‘primarily used’’ could take the place of 

‘‘exclusively used.’’ 

AI is a fast-changing technology area 

with novel aspects. The Treasury 

Department welcomes comments on this 

category, including specific suggestions 

for additional approaches or definitions 

that should be considered in light of the 

national security concerns stated in 

section III.I. 

The ANPRM seeks comment on this 

topic including: 

40. Where possible, please provide 

empirical data about trends in U.S. 

investment into country of concern entities 

engaged in AI systems as described in section 

III.I. Please identify any technologies notable 

for the high volume or frequency of outbound 

investment activity or for the low volume or 

frequency of outbound investment activity. 

Based on this data, are there U.S. outbound 

investment trends in software that 

incorporates an AI system in countries of 

concern that would not be captured by the 

definitions in section III.I? If so, what are 

they? 

41. Please identify any areas within this 

category where investments by U.S. persons 

in countries of concern may provide a 

strategic benefit to the United States, such 

that continuing such investment would 

benefit, and not impair, U.S. national 

security. Please also identify any key factors 

that affect the size of these benefits (e.g., do 

these benefits differ in size depending on the 

application of the technology or product at 

issue?). Please be specific and where 

possible, provide supporting material, 

including empirical data, findings, and 

analysis in reports or studies by established 

organizations or research institutions and 

indicate material that is business confidential 

per the instructions at the beginning of this 

ANPRM. 

42. As stated in section III.I, the Treasury 

Department is considering a single definition 

of an ‘‘AI system’’ whether for purposes of a 

notification or prohibition. Are there any 

changes or clarifications that should be made 

to the definition of ‘‘AI system’’? What are 

the consequences and impacts of such a 

definition? Please provide supporting 

rationale(s) and data, as applicable, for any 

such proposed modification. 

43. Given the nature of AI, the Treasury 

Department is considering the scope of 

transactions subject to notification and a 

prohibition by reference to certain end uses 

of the technologies or products that have 

national security implications. What are the 

general policy and practical considerations 

with an approach related to AI systems 

designed to be used for specific end uses? 

What alternative frameworks, if any, should 

the Treasury Department consider, and why? 

44. With respect to AI systems designed to 

be used for specific end uses, what are the 

impacts or consequences of including the 

following end uses: 

• Military; 

• Government intelligence; 

• Mass-surveillance; 

• Cybersecurity applications; 

• Digital forensics tools; 

• Penetration testing tools; 

• Control of robotic systems; 

• Surreptitious listening devices that can 

intercept live conversations without the 

consent of the parties involved; 

• Non-cooperative location tracking 

(including IMSI catchers and automatic 

license plate readers); or 

• Facial recognition? 

Should any of these items be 

clarified? Are there other end uses that 

should be considered? 

45. To make sure the development of the 

software that incorporates an AI system is 

sufficiently tied to the end use, two primary 

alternatives are under consideration: 

‘‘designed to be exclusively used’’ and 

‘‘designed to be primarily used.’’ What are 

the considerations regarding each approach? 

Is there another approach that should be 

considered? 

46. The Treasury Department is interested 

in ways to structure this element of the 

program that may increase efficiency for U.S. 

persons in evaluating covered transactions. 

One approach may be to focus on 

transactions involving entities engaged in the 

development of software incorporating AI 

systems that are also identified on an existing 

list under a different U.S. Government 

program that has similar national security 

underpinnings. What are the considerations 

as to whether such an approach would be 

beneficial or not and why? What list or lists, 

if any, should the Treasury Department 

consider? 

47. What analysis or considerations would 

a U.S. person anticipate undertaking to 

ascertain whether investments in this 

category are covered? In what manner would 

the investor approach this via due diligence 

with the target? What challenges could arise 

in this process for the investor and what 

clarification in the regulations would be 

helpful? How would U.S. persons anticipate 

handling instances where they attempt to 

ascertain the information but are unable to, 

or receive information they have doubts 

about? 

48. What, if any, additional considerations 

not discussed in section III.I should the 

Treasury Department be aware of in 

considering a prohibition and notification 

framework as it relates to AI systems? What 

if any alternate frameworks should the 

Treasury Department consider, and why? 

J. Knowledge Standard 

The Treasury Department is 

considering regulations that condition a 

person’s obligations on that person’s 

knowledge of relevant circumstances— 

e.g., where the U.S. person has actual or 

constructive knowledge that the covered 

foreign person is engaged in, or will 

foreseeably be engaged in, certain 

activity regarding the technology or 

product. One approach under 

consideration is to adopt a definition 

similar to that found in the EAR at 15 

CFR 772.1, where ‘‘knowledge’’ means 

knowledge of a circumstance (including 

variations such as ‘‘know,’’ ‘‘reason to 

know,’’ or ‘‘reason to believe’’) 

including not only positive knowledge 

that the circumstance exists or is 

substantially certain to occur, but also 

an awareness of a high probability of its 

existence or future occurrence. Such 

awareness is inferred from evidence of 

a person’s conscious disregard of facts 

known to that person and is also 

inferred from a person’s willful 

avoidance of facts. 

The Treasury Department is 

considering adopting this knowledge 


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standard across this program as 

described herein. This would mean that 

to be covered by the regulations, a U.S. 

person would need to know, or 

reasonably should know based on 

publicly available information and other 

information available through a 

reasonable and appropriate amount of 

due diligence, that it is undertaking a 

transaction involving a covered foreign 

person and that the transaction is a 

covered transaction. This knowledge 

standard would also apply to end uses 

as applicable to some of the definitions 

of covered national security 

technologies and products. 

The ANPRM seeks comment on this 

topic including: 

49. How could this standard be clarified for 

the purposes of this program? What, if any, 

alternatives should be considered? 

50. Is this due diligence already being done 

by U.S. persons in connection with 

transactions that would be covered 

transactions—e.g., for other regulatory 

purposes, prudential purposes, or otherwise? 

If so, please explain. What, if any, third-party 

services are used to perform due diligence as 

it relates to transactions involving the 

country of concern or more generally? 

51. What are the practicalities of 

complying with this standard? What, if any, 

changes to the way that U.S. persons 

undertake due diligence in a country of 

concern would be required because of this 

standard? What might be the cost to U.S. 

persons of undertaking such due diligence? 

Please be specific. 

K. Notification Requirements; Form, 

Content, and Timing 

The Order states that the regulations 

shall identify categories of notifiable 

transactions that may contribute to the 

threat to the national security of the 

United States identified under the Order 

and require U.S. persons to notify the 

Treasury Department of each such 

transaction. 

The Treasury Department is 

considering requiring U.S. persons to 

furnish information in the form of a 

notification for applicable covered 

transactions in semiconductors and 

microelectronics and AI systems that 

includes, but is not limited to: (i) The 

identity of the person(s) engaged in the 

transaction and nationality (for 

individuals) or place of incorporation or 

other legal organization (for entities); (ii) 

basic business information about the 

parties to the transaction, including 

name, location(s), business identifiers, 

key personnel, and beneficial 

ownership; (iii) the relevant or expected 

date of the transaction; (iv) the nature of 

the transaction, including how it will be 

effectuated, the value, and a brief 

statement of business rationale; (v) a 

description of the basis for determining 

that the transaction is a covered 

transaction—including identifying the 

covered national security technologies 

and products of the covered foreign 

person; (vi) additional transaction 

information including transaction 

documents, any agreements or options 

to undertake future transactions, 

partnership agreements, integration 

agreements, or other side agreements 

relating to the transaction with the 

covered foreign person and a 

description of rights or other 

involvement afforded to the U.S. 

person(s); (vii) additional detailed 

information about the covered foreign 

person, which could include products, 

services, research and development, 

business plans, and commercial and 

government relationships with a 

country of concern; (viii) a description 

of due diligence conducted regarding 

the investment; (ix) information about 

previous transactions made by the U.S. 

person into the covered foreign person 

that is the subject of the notification, as 

well as planned or contemplated future 

investments into such covered foreign 

person; and (x) additional details and 

information about the U.S. person, such 

as its primary business activities and 

plans for growth. 

With regard to the time frame in 

which U.S. persons must file 

notifications, the Treasury Department 

is considering requiring that 

notifications be filed no later than 30 

days following the closing of a covered 

transaction. 

Information would be collected via a 

portal hosted on the Treasury 

Department’s website to allow U.S. 

persons to electronically file 

notifications. The Treasury Department 

is considering the appropriate 

confidentiality requirements and 

restrictions around the disclosure of any 

information or documentary material 

submitted or filed with the Treasury 

Department pursuant to the 

implementing regulations. The Treasury 

Department is considering an approach 

whereby any information or 

documentary material submitted or filed 

would not be made public unless 

required by law, except that the 

following could be disclosed: (i) 

Information relevant to any 

administrative or judicial action or 

proceeding, including the issuance of 

any penalties; (ii) information to 

Congress or to any duly authorized 

committee or subcommittee of Congress; 

(iii) information important to the 

national security analysis or actions of 

the Treasury Department to any 

domestic government entity, or to any 

foreign governmental entity of a United 

States ally or partner, under the 

exclusive direction and authorization of 

the Secretary, only to the extent 

necessary for national security 

purposes, and subject to appropriate 

confidentiality and classification 

requirements; (iv) information relevant 

to any enforcement action under the 

Order and implementing regulations; 

and (v) information that the parties have 

consented to be disclosed to third 

parties. 

The ANPRM seeks comment on this 

topic including: 

52. How could the categories of 

information requested be clarified? Where 

might there be anticipated challenges or 

difficulties in furnishing the requested 

information? Please be specific and explain 

why. 

53. What additional information, if any, 

should the Treasury Department collect in 

support of the objectives of this program and 

informing future policy development? 

54. If there are multiple U.S. persons 

involved in a transaction, would there be 

benefit to a process that allows a combined 

notification or should each U.S. person be 

required to make a separate notification? 

55. What are the considerations with 

respect to a certification requirement as to 

the accuracy of the information based on the 

knowledge of the U.S. person? 

56. The Treasury Department is 

considering encouraging joint filings by the 

relevant U.S. person and covered foreign 

person. How might joint filings enhance the 

fidelity of the information provided? What 

practicalities should be considered? 

57. Should the Treasury Department 

require prior notification of a covered 

transaction (i.e., pre-closing) or permit postclosing notification within a specified period, 

such as 30 days? What are the anticipated 

consequences and impacts of these 

alternatives? Should the notification period 

be shorter or longer, and why? 

58. How could the specific information 

requirements affect transaction activity, if at 

all? Please be specific. 

59. How should the Treasury Department 

address the scenario where a transaction for 

which notification was provided was actually 

a prohibited transaction? How should the 

Treasury Department consider options such 

as ordering divestment and/or the issuance of 

civil monetary penalties? 

60. How should the Treasury Department 

address the scenario where a U.S. person is 

unable to gain the knowledge necessary to 

meaningfully respond to the information 

requirements? What might a U.S. person do 

in such a circumstance? 

61. Would U.S. persons ordinarily rely on 

legal counsel to assemble and submit the 

required information for notification? What 

factors might inform parties’ decision as to 

whether to engage legal counsel? 

L. Knowingly Directing Transactions 

The Order states that ‘‘the Secretary 

[of the Treasury] may prohibit United 

States persons from knowingly directing 

transactions if such transactions would 

be prohibited transactions pursuant to 


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this order if engaged in by a United 

States person.’’ Pursuant to this 

authority, the Treasury Department is 

considering defining ‘‘knowingly’’ for 

purposes of this provision in the Order 

to mean that the U.S. person had actual 

knowledge, or should have known, 

about the conduct, the circumstance, or 

the result. And the Treasury Department 

is considering defining ‘‘directing’’ to 

mean that a U.S. person orders, decides, 

approves, or otherwise causes to be 

performed a transaction that would be 

prohibited under these regulations if 

engaged in by a U.S. person. The 

Treasury Department is considering 

excluding from this definition certain 

identified conduct that is attenuated 

from the risks to U.S. national security 

identified in the Order, including the 

provision of a secondary, wraparound, 

or intermediary service or services such 

as third-party investment advisory 

services, underwriting, debt rating, 

prime brokerage, global custody, or the 

processing, clearing, or sending of 

payments by a bank, or legal, 

investigatory, or insurance services. 

This approach is narrower than the 

authority afforded to the Treasury 

Department under the Order. The 

Treasury Department intends to use the 

authority to tailor the regulations to 

prevent loopholes and target the 

identified national security threat by 

prohibiting U.S. person activity such as: 

• Scenario 1: A U.S. person General 

Partner manages a foreign fund that 

undertakes a transaction that would be 

prohibited if performed by a U.S. 

person. 

• Scenario 2: A U.S. person is an 

officer, senior manager, or equivalent 

senior-level employee at a foreign fund 

that undertakes a transaction at that U.S. 

person’s direction when the transaction 

would be prohibited if performed by a 

U.S. person. 

• Scenario 3: Several U.S. person 

venture partners launch a non-U.S. fund 

focused on undertaking transactions 

that would be prohibited if performed 

by a U.S. person. 

By contrast, the Treasury Department 

currently does not intend ‘‘knowingly 

directing’’ transactions to cover 

scenarios such as those described 

below, and is considering explicitly 

excluding them from this prohibition: 

• Scenario 4: A U.S. bank processes 

a payment from a U.S. person into a 

covered foreign person as part of that 

U.S. person’s engagement in a 

prohibited transaction. (Note, while the 

U.S. bank’s activity would not be 

prohibited, the U.S. person’s would be.) 

• Scenario 5: A U.S. person employed 

at a foreign fund signs paperwork 

approving the foreign fund’s 

procurement of real estate for its 

operations. The same fund invests into 

a person of a country of concern that 

would be a prohibited transaction if 

performed by a U.S. person. 

• Scenario 6: A U.S. person serves on 

the management committee at a foreign 

fund, which makes an investment into 

a person of a country of concern that 

would be a prohibited transaction if 

performed by a U.S. person. While the 

management committee reviews and 

approves all investments made by the 

fund, the U.S. person has recused 

themself from the particular investment. 

The ANPRM seeks comment on this 

topic including: 

62. What modifications, if any, should be 

made to the proposed definition of 

‘‘knowingly directing’’ to enhance clarity or 

close any loopholes? 

63. What, if any, unintended consequences 

could result from the proposed definition? 

What is the proposed definition’s likely 

impact on U.S. persons and U.S. investment 

flows? If you believe there will be impacts on 

U.S. persons and U.S. investment flows, 

please provide specific examples or data. 

64. What, if any, alternate approaches 

should the Treasury Department consider in 

order to prevent the conduct enumerated in 

scenarios 1, 2, and 3 in section III.L? 

65. If you believe any additional secondary 

or intermediate services not discussed in 

section III.L should be explicitly excluded 

from consideration, please explain why a 

given service should be excluded. 

66. Are there other advisory or other 

similar services provided in the context of 

foreign investment into a country of concern 

in the technology and product areas 

described in this ANPRM that may pose a 

threat to U.S. national security and should 

therefore be considered? 

M. Controlled Foreign Entities— 

Obligations of U.S. Persons 

The Order states that the Secretary 

may require U.S. persons to: (1) 

‘‘provide notification to the Department 

of the Treasury of any transaction by a 

foreign entity controlled by such United 

States person that would be a notifiable 

transaction if engaged in by a United 

States person’’; and (2) ‘‘take all 

reasonable steps to prohibit and prevent 

any transaction by a foreign entity 

controlled by such United States person 

that would be a prohibited transaction 

if engaged in by a United States 

person.’’ 

These two components serve different 

objectives, but they are implemented 

using a similar mechanism that places 

responsibility with the U.S. parent, and 

they share certain definitions and 

concepts. Pursuant to this authority, the 

Treasury Department is considering 

rules that would place certain 

obligations on U.S. persons related to 

foreign entities that they control. The 

Treasury Department is considering 

defining a ‘‘controlled foreign entity’’ as 

a foreign entity in which a U.S. person 

owns, directly or indirectly, a 50 

percent or greater interest. 

Further, the Treasury Department is 

considering whether and how to define 

‘‘all reasonable steps.’’ These could 

include factors such as (i) relevant 

binding agreements between a U.S. 

person and the relevant controlled 

foreign entity or entities; (ii) relevant 

internal policies, procedures, or 

guidelines that are periodically 

reviewed internally; (iii) 

implementation of periodic training and 

internal reporting requirements; (iv) 

implementation of effective internal 

controls; (v) a testing and auditing 

function; and (vi) the exercise of 

governance or shareholder rights, where 

applicable. 

The ANPRM seeks comment on this 

topic including: 

67. What are the considerations as to 

whether a foreign entity is a ‘‘controlled 

foreign entity’’ of a U.S. person, as the 

Treasury Department is considering defining 

it? What if any changes should be made to 

the definition of ‘‘controlled foreign entity’’ 

to make its scope and application clearer? 

Why? What, if any, changes should be made 

to broaden or narrow it? Why? 

68. What, if any, changes should be made 

to the factors informing ‘‘all reasonable 

steps’’ in order to make its scope and 

application clearer? Why? What would be the 

consequences and impacts of adopting these 

factors? 

N. National Interest Exemption 

The Order authorizes the Secretary to 

‘‘exempt from applicable prohibitions or 

notification requirements any 

transaction or transactions determined 

by the Secretary, in consultation with 

the heads of relevant agencies, as 

appropriate, to be in the national 

interest of the United States.’’ 

While the Treasury Department is not 

considering a case-by-case 

determination on an individual 

transaction basis as to whether the 

transaction is prohibited, must be 

notified, or is not subject to the 

program, the Treasury Department 

likely would need to review the facts 

and circumstances of the individual 

transaction subject to consideration for 

a national interest exemption. 

The Treasury Department is 

considering exempting from prohibition 

certain transactions in exceptional 

circumstances where the Secretary 

determines, in consultation with the 

heads of relevant departments and 

agencies, as appropriate, and in her sole 

discretion, that a particular transaction 

that would otherwise be a prohibited 

transaction should be permitted because 


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54972 Federal Register / Vol. 88, No. 155 / Monday, August 14, 2023 / Proposed Rules 

it either (i) provides an extraordinary 

benefit to U.S. national security; or (ii) 

provides an extraordinary benefit to the 

U.S. national interest in a way that 

overwhelmingly outweighs relevant 

U.S. national security concerns. 

The Secretary may request detailed 

documentation from the relevant U.S. 

person(s) involved in such proposed 

transaction(s) in order to consider 

whether to grant an exemption. The 

Treasury Department is not considering 

granting retroactive waivers or 

exemptions (i.e., waivers or exemptions 

after a prohibited transaction has been 

completed). 

The ANPRM seeks comment on this 

topic including: 

69. What would be the consequences and 

impacts of allowing for exemptions for 

certain transactions that ordinarily would be 

prohibited? What, if any, additional or 

alternate criteria should be enumerated for an 

exemption? 

70. What should the Treasury Department 

require from the U.S. person to substantiate 

the need for an exemption from the 

prohibition? 

O. Compliance; Record-Keeping 

The Treasury Department wishes to 

achieve widespread compliance, and to 

gather the information necessary to 

administer and enforce the program, 

without unduly burdening U.S. persons 

or discouraging transactions the 

program is not intended to address. The 

Treasury Department therefore seeks 

comment on the compliance and recordkeeping controls that may be put in 

place under the program. 

The ANPRM seeks comment on this 

topic including: 

71. What new compliance and 

recordkeeping controls will U.S. persons 

anticipate needing to comply with the 

program as described in this ANPRM? To 

what extent would existing controls for 

compliance with other U.S. Government laws 

and regulations be useful for compliance 

with this program? 

72. What additional information will U.S. 

persons need to collect for compliance 

purposes as a result of this program? 

P. Penalties 

The Order requires the Secretary to 

investigate, in consultation with the 

heads of relevant agencies, as 

appropriate, violations of the Order or 

the regulations and pursue available 

civil penalties for such violations. The 

Order also explicitly prohibits ‘‘any 

conspiracy formed to violate’’ the Order 

or implementing regulations as well as 

‘‘any action that evades, has the purpose 

of evading, causes a violation of, or 

attempts to violate’’ the Order or 

implementing regulations. It authorizes 

the Secretary to ‘‘refer potential criminal 

violations of this order or the 

regulations issued under this order to 

the Attorney General.’’ 

Further, under the Order, consistent 

with IEEPA, the Secretary can ‘‘nullify, 

void, or otherwise compel the 

divestment of any prohibited 

transaction entered into after the 

effective date’’ of the implementing 

regulations. The Treasury Department 

would not use this authority to unwind 

a transaction that was not prohibited at 

the time it was completed. 

The Treasury Department is 

considering penalizing the following 

with a civil penalty up to the maximum 

allowed under IEEPA: (i) material 

misstatements made in or material 

omissions from information or 

documentary material submitted or filed 

with the Treasury Department; (ii) the 

undertaking of a prohibited transaction; 

or (iii) the failure to timely notify a 

transaction for which notification is 

required. 

The ANPRM seeks comment on this 

topic including: 

73. How, if at all, should penalties and 

other enforcement mechanisms (such as 

ordering the divestment of a prohibited 

transaction) be tailored to the size, type, or 

sophistication of the U.S. person or to the 

nature of the violation? 

74. What factors should the Treasury 

Department analyze when determining 

whether to impose a civil penalty, as well as 

the amount? 

75. What transaction data sources should 

the Treasury Department use to monitor 

compliance with this program? 

76. What process should the Treasury 

Department institute in the event of a 

required divestment order? 

Q. Overarching and Additional Inquiries 

The Treasury Department welcomes 

comments and views from a wide range 

of stakeholders on all aspects of how the 

Secretary should implement the Order. 

A non-exclusive list of overarching and 

additional questions for comment is 

below: 

77. The Order identifies semiconductors 

and microelectronics, quantum information 

technologies, and AI systems as technologies 

and products covered by this program 

because of their critical role in enhancing the 

military, intelligence, surveillance, or cyberenabled capabilities of countries of concern 

in ways that threaten the national security of 

the United States. Are there questions about 

why and how these categories fit into the 

objectives of the program? Are there specific 

technologies and products that should be 

considered and not already discussed in this 

ANPRM? 

78. In light of the Order, what structural 

features should this program include that are 

not already previewed in this ANPRM, and 

why? 

79. What would be the major risks or 

obstacles to the effective operation of the 

program, as proposed? Where possible, 

please provide supporting material, 

including empirical data, findings, and 

analysis in reports or studies by established 

organizations or research institutions, to 

illustrate these risks. 

80. How significant are the anticipated 

costs and burdens of the regulations the 

Treasury Department is proposing? What 

types of U.S. businesses or firms (e.g., small 

businesses) would be particularly burdened 

by the program? How can such burdens be 

alleviated, consistent with the stated 

objectives of the program? 

81. The Treasury Department is interested 

in exploring public insights and supporting 

literature associated with outbound 

investment, to complement our own research 

to date. Have researchers (including in the 

fields of political science, international 

relations, national security law, economics, 

corporate finance, and other related fields) 

studied the national security costs and 

benefits of U.S. investment in countries of 

concern? Please provide any insights (and 

supporting literature) that characterize these 

costs and benefits and/or provides 

conclusions about net effects. 

82. How might firms approach compliance 

related to regulations issued under this 

Order? What types of requirements would 

lead to higher compliance costs for firms? 

What alternatives would result in lower 

compliance costs? Are there any baseline 

costs that firms would face regardless of 

choices the Treasury Department makes 

during rulemaking? Where possible, please 

quantify these costs (rough estimates or 

ranges are helpful as well). 

83. The Treasury Department is interested 

in understanding the risks of evasion and 

avoidance; how might U.S. persons or 

investment targets evade or avoid these 

regulations, and how should the Treasury 

Department account for these possible 

behaviors in the design of the program? 

Paul M. Rosen, 

Assistant Secretary for Investment Security. 

[FR Doc. 2023–17164 Filed 8–9–23; 4:15 pm] 

BILLING CODE 4810–AK–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 17 

RIN 2900–AR98 

VA Health Professional Scholarship 

Program 

AGENCY: Department of Veterans Affairs. 

ACTION: Proposed rule. 

SUMMARY: VA proposes to amend its 

regulations that govern the VA Health 

Professional Scholarship Program 

(HPSP) by implementing the mandates 

of the Consolidated Appropriations Act, 

which would expand the number of 

scholarships available to those who are 

pursuing degrees or training in mental 

health disciplines. We also propose to 


ddrumheller on DSK120RN23PROD with PROPOSALS1