Federal Register / Vol. 73, No. 236 / Monday, December 8, 2008 / Notices 74567 

document and all documents entered 

into this docket is available on the 

World Wide Web at http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Joann Spittle, U.S. Department of 

Transportation, Maritime 

Administration, 1200 New Jersey 

Avenue, SE., Room W21–203, 

Washington, DC 20590. Telephone 202– 

366–5979. 

SUPPLEMENTARY INFORMATION: As 

described by the applicant the intended 

service of the vessel BOLGESKREKK 

(Sheets To The Wind) is: 

Intended Use: ‘‘Six-pack charter and 

sailing tours. Day use only.’’ 

Geographic Region: ‘‘S.F. Bay and 

local tributaries.’’ 

Privacy Act 

Anyone is able to search the 

electronic form of all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

Statement in the Federal Register 

published on April 11, 2000 (Volume 

65, Number 70; Pages 19477–78). 

Dated: November 25, 2008. 

By order of the Maritime Administrator. 

Leonard Sutter, 

Secretary, Maritime Administration. 

[FR Doc. E8–28921 Filed 12–5–08; 8:45 am] 

BILLING CODE 4910–81–P 

DEPARTMENT OF THE TREASURY 

Submission for OMB Review; 

Comment Request 

December 2, 2008. 

The Department of the Treasury will 

submit the following public information 

collection requirement(s) to OMB for 

review and clearance under the 

Paperwork Reduction Act of 1995, 

Public Law 104–13 on or after the date 

of publication of this notice. Copies of 

the submission(s) may be obtained by 

calling the Treasury Bureau Clearance 

Officer listed. Comments regarding this 

information collection should be 

addressed to the OMB reviewer listed 

and to the Treasury Department 

Clearance Officer, Department of the 

Treasury, Room 11000, and 1750 

Pennsylvania Avenue, NW., 

Washington, DC 20220. 

DATES: Written comments should be 

received on or before January 7, 2009 to 

be assured of consideration. 

Internal Revenue Service (IRS) 

OMB Number: 1545–1942. 

Type of Review: Extension. 

Title: Notice 2005–44, Charitable 

Contributions of Certain Motor Vehicles, 

Boats, and Airplanes. 

Description: The notice provides 

guidance under new Subsection 

170(f)(12) and 6720 regarding how to 

determine the amount of a charitable 

contribution for certain vehicles and the 

related substantiation and information 

reporting requirements. 

Respondents: Individuals or 

Households. 

Estimated Total Burden Hours: 3,041 

hours. 

OMB Number: 1545–2117. 

Type of Review: Extension. 

Title: TD 9423 (Final)— 

Implementation of Form 990 (REG– 

142333–07 (Prop & Temp)). 

Description: This document contains 

final and temporary regulations 

necessary to implement the redesigned 

Form 990, ‘‘Return of Organization 

Exempt From Income Tax.’’ All tax 

exempt organizations required under 

section 6033 of the Internal Revenue 

Code (Code) to file annual information 

returns are affected by these temporary 

regulations. These regulations are 

applicable to taxable years beginning 

after December 31, 2007. Because these 

regulations are already applicable, 

taxpayers. 

Respondents: Private Sector. 

Estimated Total Burden Hours: 1 

hours. 

OMB Number: 1545–1660. 

Type of Review: Extension. 

Title: Notice 99–43 Nonrecognition 

Exchanges under Section 897. 

Description: Notice 99–43 This notice 

announces a modification of the current 

rules under Temporary Regulation Sec. 

1.897–6T(a)(1) regarding transfers, 

exchanges, and other dispositions of 

U.S. real property interests in 

nonrecognition transactions occurring 

after June 18, 1980. The new rule will 

be included in regulations finalizing the 

temporary regulations. 

Respondents: Private Sector. 

Estimated Total Burden Hours: 200 

hours. 

OMB Number: 1545–1505. 

Type of Review: Extension. 

Form: 8820. 

Title: Orphan Drug Credit. 

Description: Filers use this form to 

elect to claim the orphan drug credit, 

which is 50% of the qualified clinical 

testing expenses paid or incurred with 

respect to low or unprofitable drugs for 

rare diseases and conditions, as 

designated under section 526 of the 

Federal Food, Drug, and Cosmetic Act. 

Respondents: Private Sector. 

Estimated Total Burden Hours: 266 

hours. 

OMB Number: 1545–1221. 

Type of Review: Extension. 

Title: EE–147–87 (Final) Qualified 

Separate Lines of Business. 

Description: The affected public 

includes employers who maintain 

qualified employee retirement plans. 

Were applicable, the employer must 

furnish notice to the IRS that the 

employer treats itself as operating 

qualified separate lines of business and 

some may request an IRS determination 

that such lines satisfy administrative 

scrutiny. 

Respondents: Private Sector. 

Estimated Total Burden Hours: 899 

hours. 

OMB Number: 1545–0499. 

Type of Review: Extension. 

Form: 5305–SEP. 

Title: Simplified Employee Pension— 

Individual Retirement Accounts 

Contribution Agreement. 

Description: This form is used by an 

employer to make and agreement to 

provide benefits to all employees under 

a Simplified Employee Pension (SEP) 

described in section 408(k). This form is 

not to be filed with the IRS but to be 

retained in the employer’s records as 

proof of establishing a SEP and 

justifying a deduction for contributions 

to the SEP. The data is used to verify the 

deduction. 

Respondents: Private Sector. 

Estimated Total Burden Hours: 

495,000 hours. 

Clearance Officer: Glenn P. Kirkland, 

(202) 622–3428, Internal Revenue 

Service, Room 6516, 1111 Constitution 

Avenue, NW., Washington, DC 20224. 

OMB Reviewer: Nicholas A. Fraser, 

(202) 395–5887, Office of Management 

and Budget, Room 10235, New 

Executive Office Building, Washington, 

DC 20503. 

Celina Elphage, 

Treasury PRA Clearance Officer. 

[FR Doc. E8–28943 Filed 12–5–08; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Office of Investment Security; 

Guidance Concerning the National 

Security Review Conducted by the 

Committee on Foreign Investment in 

the United States 

AGENCY: Department of the Treasury. 

ACTION: Notice. 

SUMMARY: This notice provides guidance 

to U.S. businesses and foreign persons 

that are parties to transactions that are 

mstockstill on PROD1PC66 with NOTICES

74568 Federal Register / Vol. 73, No. 236 / Monday, December 8, 2008 / Notices 

1 ‘‘National security considerations’’ are facts and 

circumstances, with respect to a transaction, that 

have potential national security implications and 

that therefore are relevant for CFIUS to analyze in 

determining whether a transaction threatens to 

impair U.S. national security, i.e., whether the 

transaction poses ‘‘national security risk.’’ The term 

‘‘national security concerns’’ is used in this 

document to describe those circumstances where 

CFIUS (or any CFIUS member) has unresolved 

questions about whether the transaction poses 

national security risk or where CFIUS (or any 

CFIUS member) has identified national security 

risks and those risks have not yet been mitigated. 

2The terms ‘‘U.S. business’’ and ‘‘foreign person’’ 

are defined at 31 CFR 800.226 and 800.216, 

respectively. 

3The terms ‘‘foreign government-controlled 

transaction’’ and ‘‘critical infrastructure’’ are 

defined at 31 CFR 800.214 and 800.208, 

respectively. 

covered by section 721 of the Defense 

Production Act of 1950, as amended by 

the Foreign Investment and National 

Security Act of 2007, and the 

regulations at 31 CFR part 800. The 

guidance is issued pursuant to section 

721(b)(2)(E), which requires the 

Chairperson of the Committee on 

Foreign Investment in the United States 

to publish guidance regarding the types 

of transactions that it has reviewed and 

that have presented national security 

considerations. 

FOR FURTHER INFORMATION CONTACT: 

Nova Daly, Deputy Assistant Secretary, 

U.S. Department of the Treasury, 1500 

Pennsylvania Avenue, NW., 

Washington, DC 20220, telephone: (202) 

622–2752, e-mail: 

Nova.Daly@do.treas.gov; or Welby 

Leaman, Senior Advisor, telephone: 

(202) 622–0099, e-mail: 

Welby.Leaman@do.treas.gov. 

I. Legislative Mandate for Guidance 

Consistent with section 721(b)(2)(E) of 

the Defense Production Act of 1950 

(‘‘section 721’’) (50 U.S.C. App. 2170), 

as amended by the Foreign Investment 

and National Security Act of 2007 

(‘‘FINSA’’), the U.S. Department of the 

Treasury, as the chair of the Committee 

on Foreign Investment in the United 

States (‘‘CFIUS’’), is issuing the 

following guidance regarding the types 

of transactions that CFIUS has reviewed 

and that have presented national 

security considerations.1

To place this guidance in context, the 

following three sections provide an 

overview of the purpose and nature of 

the foreign investment review process 

that CFIUS administers. This guidance 

does not create any rights for, or confer 

any rights on, any person, nor operate 

to bind the U.S. Government. 

II. Purpose and Nature of the CFIUS 

Process 

A. Purpose of the CFIUS Process 

The United States has a longstanding 

commitment to welcoming foreign 

investment. In May 2007, the 

President’s Statement on Open 

Economies reaffirmed that commitment, 

recognizing that ‘‘our prosperity and 

security are founded on our country’s 

openness.’’ CFIUS carries out its 

responsibilities within the context of 

this open investment policy. In the 

preamble to FINSA, Congress states that 

the purpose of the Act is ‘‘[t]o ensure 

national security while promoting 

foreign investment and the creation and 

maintenance of jobs [and] to reform the 

process by which such investments are 

examined for any effect they may have 

on national security.’’ 

The rules governing the CFIUS 

process are set forth in section 721; in 

Executive Order 11858, as amended 

most recently by Executive Order 13456 

of January 23, 2008 (‘‘Executive Order 

11858’’); and in regulations found at 31 

CFR part 800, as amended most recently 

by the Final Rule published at 73 FR 

70702 (Nov. 21, 2008) (‘‘Regulations’’). 

These provisions establish CFIUS and 

provide the President and CFIUS with 

the authority to review any ‘‘covered 

transaction,’’ defined in the Regulations 

as ‘‘any transaction that is proposed or 

pending after August 23, 1988, by or 

with any foreign person, which could 

result in control of a U.S. business by 

a foreign person.’’ 2 The purpose of the 

national security reviews conducted by 

CFIUS is to allow CFIUS to identify and 

address any national security risk that 

arises as a result of a covered 

transaction, and, in the circumstances 

described in § 800.506(b) of the 

Regulations, to request that the 

President determine whether to suspend 

or prohibit a covered transaction or take 

other action. 

B. Nature of the CFIUS Process 

1. CFIUS Reviews Are Limited to 

National Security Considerations 

CFIUS focuses solely on any genuine 

national security concerns raised by a 

covered transaction, not on other 

national interests. The requirements, 

described below, that CFIUS or the 

President must satisfy in order to take 

action with respect to a covered 

transaction, demonstrate this narrow 

focus on national security alone. 

Section 721 requires CFIUS to 

complete a review of a covered 

transaction within a 30-day period. 

CFIUS concludes action on the vast 

majority of transactions within this 

initial 30-day review period. In limited 

cases, following a review, CFIUS may 

initiate an investigation, which it must 

complete within a subsequent 45-day 

period. CFIUS initiates an investigation 

only where: (1) CFIUS or a member of 

CFIUS believes that the transaction 

threatens to impair the national security 

of the United States and that threat has 

not been mitigated; (2) an agency 

designated by the Department of the 

Treasury as a lead agency recommends, 

and CFIUS concurs, that an 

investigation be undertaken; (3) the 

transaction is a foreign governmentcontrolled transaction; or (4) the 

transaction would result in foreign 

control of any critical infrastructure of 

or within the United States, if CFIUS 

determines that the transaction could 

impair national security and that risk 

has not been mitigated. With respect to 

transactions described in (3) and (4) 

above, CFIUS would not initiate an 

investigation if the Treasury Department 

and any lead agency it has designated 

determine, at the Deputy Secretary level 

or higher, that the transaction will not 

impair the national security of the 

United States.3

CFIUS concludes action under section 

721 on a covered transaction only if it 

has determined that there are no 

unresolved national security concerns. 

That determination must be certified to 

Congress after CFIUS concludes action. 

CFIUS is authorized to enter into or 

impose, and enforce, agreements or 

conditions to mitigate any national 

security risk posed by the covered 

transaction. Section 721 and Executive 

Order 11858, however, contain 

important conditions on CFIUS’s 

exercise of this authority. First, before 

CFIUS may pursue a risk mitigation 

agreement or condition, the agreement 

or condition must be justified by a 

written analysis that identifies the 

national security risk posed by the 

covered transaction and sets forth the 

risk mitigation measures that the CFIUS 

member(s) preparing the analysis 

believe(s) are reasonably necessary to 

address the risk. CFIUS must agree that 

risk mitigation is appropriate and must 

approve the proposed mitigation 

measures. Second, CFIUS may pursue a 

risk mitigation measure intended to 

address a particular risk only if 

provisions of law other than section 721 

do not adequately address the risk. Such 

other laws include, for example, the 

International Traffic in Arms 

Regulations (‘‘ITAR’’), Export 

Administration Regulations (‘‘EAR’’), 

and the National Industrial Security 

Program Operating Manual 

(‘‘NISPOM’’). Accordingly, for example, 

if the NISPOM provides adequate 

authority to address the risk posed by a 

transaction—e.g., the possibility in a 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 73, No. 236 / Monday, December 8, 2008 / Notices 74569 

4 In addition, pursuant to section 7(c) of 

Executive Order 11858, CFIUS may not, except in 

extraordinary circumstances, require that a party to 

a transaction recognize, state its intent to comply 

with, or consent to the exercise of any authorities 

under existing provisions of law. 

particular case that a foreign 

government may use a foreign company 

to obtain classified government 

information concerning systems critical 

to U.S. national defense—then CFIUS 

would not pursue its own risk 

mitigation measures under section 721 

to address that risk.4

Only the President has the authority 

to suspend or prohibit a covered 

transaction. Pursuant to section 6(c) of 

Executive Order 11858, CFIUS refers a 

covered transaction to the President if 

CFIUS or any member of CFIUS 

recommends suspension or prohibition 

of the transaction, or if CFIUS otherwise 

seeks a Presidential determination on 

the transaction. 

In order to exercise the authority to 

suspend or prohibit a covered 

transaction under section 721, the 

President is required to make two 

findings: (1) That there is credible 

evidence that leads the President to 

believe that the foreign interest 

exercising control might take action that 

threatens to impair the national 

security; and (2) that provisions of law, 

other than section 721 and the 

International Emergency Economic 

Powers Act (‘‘IEEPA’’), do not, in the 

judgment of the President, provide 

adequate and appropriate authority for 

the President to protect the national 

security. 

2. The CFIUS Process Is Based on a 

Voluntary Notice System 

CFIUS administers a voluntary notice 

system, allowing parties to a transaction 

to decide whether to initiate a CFIUS 

review by filing a voluntary notice 

under section 721. This distinguishes 

the CFIUS process from investment 

screening used in some countries, where 

all transactions that meet specified 

value thresholds or other criteria are 

subject to mandatory review by 

government agencies. 

To reassure parties that choose to file 

voluntarily with CFIUS that the 

sensitive and proprietary business 

information that they submit to CFIUS 

will be protected, section 721(c) 

prohibits CFIUS from disclosing to the 

public any information filed with CFIUS 

under section 721, except in certain 

legal proceedings. This includes the 

identity of filers and details of a notified 

transaction, as well as information 

provided to CFIUS in connection with 

a transaction never formally notified to 

CFIUS. 

In making their decision about 

whether to submit a voluntary notice of 

a transaction to CFIUS, parties to a 

transaction may wish to consider 

whether their transaction could present 

national security considerations, since 

CFIUS focuses solely on national 

security. A covered transaction that has 

been notified to CFIUS, and on which 

CFIUS has concluded action under 

section 721 after determining that there 

were no unresolved national security 

concerns, qualifies for a ‘‘safe harbor,’’ 

as described in § 800.601 of the 

Regulations and section 7(f) of 

Executive Order 11858. Thus, subject to 

the terms of the safe harbor and any 

mitigation agreement or conditions 

imposed by CFIUS, the transaction can 

proceed without the possibility of 

subsequent suspension or prohibition 

under section 721. A covered 

transaction that CFIUS has not reviewed 

and cleared without objection does not 

qualify for the safe harbor, and CFIUS 

has the authority to initiate review of 

the transaction on its own, even after 

the transaction has been concluded, 

which CFIUS may choose to do if it 

believes the transaction presents 

national security considerations. 

III. National Security Considerations 

A. The Process for Analyzing National 

Security Risk 

Section 721 requires CFIUS to review 

covered transactions notified to it ‘‘to 

determine the effects of the 

transaction[s] on the national security of 

the United States,’’ but does not define 

‘‘national security,’’ other than to note 

that the term includes issues relating to 

homeland security. Instead, section 721 

provides an illustrative list of factors, 

listed below, for CFIUS and the 

President to consider in assessing 

whether the transaction poses national 

security risks. 

CFIUS considers the national security 

factors identified in section 721 and all 

other national security factors that are 

relevant to a covered transaction it is 

reviewing. In the context of these 

factors, CFIUS identifies all national 

security considerations (i.e., facts and 

circumstances that have potential 

national security implications) in order 

to assess whether the transaction poses 

national security risk (i.e., whether the 

foreign person that exercises control 

over the U.S. business as a result of the 

transaction might take action that 

threatens to impair U.S. national 

security). In conducting its analysis of 

whether the transaction poses national 

security risk, CFIUS assesses whether a 

foreign person has the capability or 

intention to exploit or cause harm (i.e., 

whether there is a threat) and whether 

the nature of the U.S. business, or its 

relationship to a weakness or 

shortcoming in a system, entity, or 

structure, creates susceptibility to 

impairment of U.S. national security 

(i.e., whether there is a vulnerability). 

National security risk is a function of 

the interaction between threat and 

vulnerability, and the potential 

consequences of that interaction for U.S. 

national security. This national security 

risk assessment is conducted based on 

information provided by the parties, 

public sources, and government sources, 

including a classified National Security 

Threat Assessment that, as required by 

section 721, the Director of National 

Intelligence prepares for CFIUS within 

twenty days after a notice of a 

transaction is accepted. 

B. Statutory List of National Security 

Factors 

Section 721(f) provides the following 

illustrative list of factors for 

consideration by CFIUS and the 

President in determining whether a 

covered transaction poses national 

security risk: 

• The potential effects of the 

transaction on the domestic production 

needed for projected national defense 

requirements. 

• The potential effects of the 

transaction on the capability and 

capacity of domestic industries to meet 

national defense requirements, 

including the availability of human 

resources, products, technology, 

materials, and other supplies and 

services. 

• The potential effects of a foreign 

person’s control of domestic industries 

and commercial activity on the 

capability and capacity of the United 

States to meet the requirements of 

national security. 

• The potential effects of the 

transaction on U.S. international 

technological leadership in areas 

affecting U.S. national security. 

• The potential national securityrelated effects on U.S. critical 

technologies. 

• The potential effects on the longterm projection of U.S. requirements for 

sources of energy and other critical 

resources and material. 

• The potential national securityrelated effects of the transaction on U.S. 

critical infrastructure, including 

[physical critical infrastructure such as] 

major energy assets. 

• The potential effects of the 

transaction on the sales of military 

goods, equipment, or technology to 

countries that present concerns related 

to terrorism; missile proliferation; 

mstockstill on PROD1PC66 with NOTICES

74570 Federal Register / Vol. 73, No. 236 / Monday, December 8, 2008 / Notices 

5As described in Section II.B.1 above, section 721 

also prescribes special procedural rules for certain 

covered transactions involving ‘‘critical 

infrastructure of or within the United States.’’ 

chemical, biological, or nuclear 

weapons proliferation; or regional 

military threats. 

• The potential that the transaction 

presents for transshipment or diversion 

of technologies with military 

applications, including the relevant 

country’s export control system. 

• Whether the transaction could 

result in the control of a U.S. business 

by a foreign government or by an entity 

controlled by or acting on behalf of a 

foreign government. 

• The relevant foreign country’s 

record of adherence to nonproliferation 

control regimes and record of 

cooperating with U.S. counterterrorism 

efforts. 

Section 721 also provides that CFIUS 

may consider any other factors that the 

Committee finds appropriate in 

determining whether a transaction poses 

national security risk. 

IV. Types of Transactions That CFIUS 

Has Reviewed and That Have Presented 

National Security Considerations 

As discussed above, CFIUS analyzes 

the particular facts and circumstances of 

each transaction it reviews in order to 

identify what national security 

considerations, if any, are presented by 

the transaction. Thus, while the 

guidance provided in this section is 

drawn from CFIUS’s extensive 

experience in reviewing voluntary 

notices regarding foreign investment 

transactions both prior and subsequent 

to the enactment of FINSA, it is 

necessarily illustrative and does not 

purport to describe all national security 

considerations that CFIUS may identify 

and analyze in reviewing a transaction. 

Accordingly, this discussion does not 

provide comprehensive guidance on all 

types of covered transactions that have 

presented national security 

considerations. 

Furthermore, the fact that a 

transaction presents national security 

considerations does not mean that 

CFIUS will necessarily determine that 

the transaction poses national security 

risk. This guidance does not identify the 

types of transactions that pose national 

security risk, and it should not be used 

for that purpose. In addition, this 

guidance should not be interpreted to 

suggest that the U.S. Government 

encourages or discourages the types of 

transactions described in this section. 

The national security considerations 

presented by transactions that CFIUS 

has reviewed pertain to one or both of 

the following: (1) The nature of the U.S. 

business over which foreign control is 

being acquired, and (2) the nature of the 

foreign person that acquires control over 

a U.S. business. Again, this does not 

mean that a transaction that corresponds 

to one or the other, or both, of these 

categories was necessarily determined 

by CFIUS to pose national security risk, 

but it does mean that the facts and 

circumstances surrounding the 

transaction implicated national security 

factors that CFIUS considered. 

A. Transactions That Have Presented 

National Security Considerations 

Because of the Nature of the U.S. 

Business Over Which Control Is Being 

Acquired 

This section describes covered 

transactions that CFIUS has reviewed 

(having received voluntary notices 

regarding the transactions) and that 

have presented national security 

considerations because the transaction 

involves a U.S. business that provides 

goods or services that directly or 

indirectly contribute to U.S. national 

security. As noted above, CFIUS is 

focused on identifying and addressing 

national security risks posed by covered 

transactions, regardless of the industry 

of the parties to the transaction. 

Accordingly, CFIUS does not focus on 

any one U.S. business sector or group of 

sectors. Since its inception, CFIUS has 

received and reviewed voluntary notices 

regarding transactions across a broad 

spectrum of the U.S. economy. The 

following description of covered 

transactions that CFIUS has reviewed 

and that have presented national 

security considerations is illustrative 

only. 

A significant number of covered 

transactions that CFIUS has reviewed 

and that have presented national 

security considerations involve foreign 

control of U.S businesses that provide 

products and services—either as prime 

contractors or as subcontractors or 

suppliers to prime contractors—to 

agencies of the U.S. Government and 

state and local authorities, including, 

but not limited to, sole-source 

arrangements. These notices have 

sometimes involved companies with 

access to classified information, often 

included U.S. businesses in the defense, 

security, and national security-related 

law enforcement sectors, and covered 

such industry segments as weapons and 

munitions manufacturing, aerospace, 

and radar systems. They have also 

included U.S. businesses that supply 

goods and services with broader 

applicability to a variety of U.S. 

Government agencies that have 

functions that are relevant to national 

security. Such goods and services may 

involve information technology 

(consulting, hardware, or software), 

telecommunications, energy, natural 

resources, industrial products, and a 

range of goods and services that affect 

the national security-relevant functions 

of the U.S. Government agency or create 

vulnerability to sabotage or espionage. 

CFIUS has also reviewed numerous 

covered transactions that have 

presented national security 

considerations because of the nature of 

the U.S. businesses, but without regard 

to government contracts. The U.S. 

businesses in these cases have 

operations, or produce or supply 

products or services, the security of 

which may have implications for U.S. 

national security. For example, some of 

these transactions involved U.S. 

businesses in the energy sector at 

various stages of the value chain: The 

exploitation of natural resources, the 

transportation of these resources (e.g., 

by pipeline), the conversion of these 

resources to power, and the provision of 

power to U.S. Government and civilian 

customers. Other transactions have 

involved U.S. businesses that affect the 

nation’s transportation system, 

including maritime shipping and port 

terminal operations and aviation 

maintenance, repair, and overhaul. 

Transactions involving U.S. businesses 

that could significantly and directly 

affect the U.S. financial system have 

also accounted for a number of covered 

transactions reviewed by CFIUS that 

have presented national security 

considerations. 

Some covered transactions that CFIUS 

has reviewed have presented national 

security considerations because they 

involve infrastructure that may 

constitute United States critical 

infrastructure, including major energy 

assets, which section 721 identifies as 

presenting national security 

considerations.5 As defined in section 

721 and further explained in the 

regulations, CFIUS determines whether 

a transaction involves critical 

infrastructure on a case-by-basis, 

depending on the importance of the 

particular assets involved in the 

transaction. 

CFIUS has also reviewed numerous 

covered transactions that have 

presented national security 

considerations related to the U.S. 

businesses’ production of certain types 

of advanced technologies that may be 

useful in defending, or in seeking to 

impair, U.S. national security. Many of 

these U.S. businesses are engaged in the 

design and production of 

semiconductors and other equipment or 

components that have both commercial 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 73, No. 236 / Monday, December 8, 2008 / Notices 74571 

and military applications. Others are 

engaged in the production or supply of 

goods and services involving 

cryptography, data protection, Internet 

security, and network intrusion 

detection, and they may or may not 

have contracts with U.S. Government 

agencies. 

More generally, a significant portion 

of the covered transactions that CFIUS 

has reviewed and that have presented 

national security considerations have 

involved U.S. businesses that are 

engaged in the research and 

development, production, or sale of 

technology, goods, software, or services 

that are subject to U.S. export controls. 

The report that CFIUS is required to 

submit to Congress each year, consistent 

with section 721(m), contains further 

information regarding the types of 

transactions that CFIUS has reviewed. 

An unclassified version of this report is 

released publicly. 

B. Transactions That Have Presented 

National Security Considerations 

Because of the Identity of the Foreign 

Person That Is Acquiring Control of a 

U.S. Business 

1. Generally 

Among the national security factors 

listed in section 721 for CFIUS’s 

consideration are factors related to the 

identity of the foreign person that is 

acquiring control of a U.S. business. For 

example, the factors include whether a 

transaction is a foreign governmentcontrolled transaction, and, particularly 

in the case of foreign governmentcontrolled transactions, what the record 

of the country of the investor is with 

regard to nonproliferation and other 

national security-related matters. CFIUS 

has reviewed covered transactions that 

have presented this sort of national 

security consideration. CFIUS has also 

reviewed covered transactions that have 

presented national security 

considerations because of the track 

record or intentions of the foreign 

person and its personnel with regard to 

actions that could impair U.S. national 

security, including whether the foreign 

person acquiring control of the U.S. 

business had plans to terminate 

contracts between the U.S. business and 

U.S. Government agencies for goods and 

services relevant to national security. 

However, as emphasized previously, 

the fact that a transaction presents a 

national security consideration does not 

necessarily mean that it poses a national 

security risk. First, risk requires not 

only threat, but also a vulnerability in 

U.S. national security. Second, the 

applicability of laws other than section 

721 has often resolved any national 

security concerns identified by CFIUS 

when considering relevant national 

security factors. 

2. Foreign Government-Controlled 

Transactions 

Whether a covered transaction is a 

‘‘foreign government-controlled 

transaction’’ is one of the national 

security factors listed in section 721 for 

consideration by CFIUS. The regulations 

define a foreign government-controlled 

transaction as ‘‘any covered transaction 

that could result in control of a U.S. 

business by a foreign government or a 

person controlled by or acting on behalf 

of a foreign government.’’ 31 CFR 

800.214. Foreign government-controlled 

transactions may include transactions 

resulting in control of a U.S. business 

by, among others, foreign government 

agencies, state-owned enterprises, 

government pension funds, and 

sovereign wealth funds. 

Although foreign government control 

is clearly a national security factor to be 

considered, the fact that a transaction is 

a foreign government-controlled 

transaction does not, in itself, mean that 

it poses national security risk. In 

reviewing foreign governmentcontrolled transactions, as with all other 

covered transactions, CFIUS considers 

all facts and circumstances relevant to 

national security in assessing whether 

the foreign person that could exercise 

control has the capability to use its 

control of a U.S. business to take action 

to impair U.S. national security and 

whether the foreign person may seek to 

do so. 

In reviewing foreign governmentcontrolled transactions, CFIUS 

considers, among all other relevant facts 

and circumstances, the extent to which 

the basic investment management 

policies of the investor require 

investment decisions to be based solely 

on commercial grounds; the degree to 

which, in practice, the investor’s 

management and investment decisions 

are exercised independently from the 

controlling government, including 

whether governance structures are in 

place to ensure independence; the 

degree of transparency and disclosure of 

the purpose, investment objectives, 

institutional arrangements, and 

financial information of the investor; 

and the degree to which the investor 

complies with applicable regulatory and 

disclosure requirements of the countries 

in which they invest. 

CFIUS has reviewed and concluded 

action on numerous foreign 

government-controlled transactions, 

determining that there were no 

unresolved national security concerns. 

These transactions varied significantly 

with regard to several of the facts and 

circumstances described above. 

3. Exceptional Corporate 

Reorganizations in Which a New 

Foreign Person That Raises National 

Security Considerations Acquires 

Control of a U.S. Business 

A corporate reorganization normally 

involves the realignment of a company’s 

structure to achieve some legal, 

financial, or other business objective. It 

is only in exceptional cases that a 

corporate reorganization would present 

national security considerations. Even 

where a corporate reorganization results 

in a new foreign person obtaining 

control over a U.S. business—by 

becoming, for example, an intermediate 

parent of the U.S. business—the 

corporate reorganization usually would 

not result in a change in the ultimate 

parent of the U.S. business and, 

therefore, generally would not present 

national security considerations. 

In considering whether a covered 

transaction that arises in the context of 

a corporate reorganization is an 

exceptional case that would present 

national security considerations, CFIUS 

considers all relevant national security 

factors, including those listed in section 

721, with respect to any new foreign 

person that gains control of the U.S. 

business as a result of the transaction. 

In cases in which a corporate 

reorganization results in a new foreign 

person obtaining control of a U.S. 

business, the reorganization is unlikely 

to raise national security considerations 

if it does not result in any change in the 

relevant national security factors 

presented by the ownership structure of 

the U.S. business. 

One example of an exceptional 

corporate reorganization that would 

raise national security considerations 

would be the following: Control of a 

U.S. business is transferred from 

Corporation A, a foreign person, to 

Corporation B, another foreign person, 

both of which are wholly-owned 

subsidiaries of Corporation C. Although 

Corporation C continues to be the 

ultimate parent of the U.S. business, the 

facts and circumstances related to the 

actions, policies, and personnel of the 

new intermediate controlling entity, 

Corporation B, raise national security 

considerations that were not raised by 

the facts and circumstances related to 

control of the U.S. business by 

Corporation A, the previous 

intermediate controlling entity. 

mstockstill on PROD1PC66 with NOTICES

74572 Federal Register / Vol. 73, No. 236 / Monday, December 8, 2008 / Notices 

V. Information Regarding Transactions 

That May Present National Security 

Considerations 

CFIUS review of notified transactions 

is an intensive process, involving over 

a dozen U.S. Government agencies, 

departments, and offices. CFIUS reviews 

are limited to 30 days, absent the 

initiation of an investigation. Thus, it is 

important that, at the time of filing a 

voluntary notice, parties provide CFIUS 

with the information needed for its 

review, including regarding the parties’ 

products, services, and business 

operations, and the transaction itself. 

Section 800.402 of the Regulations, as 

recently amended, requires parties to 

include in their notice certain 

information that CFIUS normally 

requires to complete its review of any 

transaction. This includes, for example, 

a listing of certain contracts with the 

U.S. Government, products that the 

parties produce or sell, the foreign 

person’s plans with respect to the U.S. 

business, and the parties and 

individuals involved with the 

transaction. 

The regulations require parties to 

provide information regarding any other 

applicable national security-related 

regulatory authorities, such as the ITAR, 

EAR, and NISPOM. Some of the 

regulatory review processes under these 

authorities may have longer deadlines 

than the CFIUS process, and parties to 

transactions affected by these other 

reviews may wish to start or complete 

these processes prior to submitting a 

voluntary notice to CFIUS under section 

721. 

In CFIUS’s experience, the efficiency 

of reviews is also enhanced when 

parties to transactions voluntarily 

provide in their notice additional 

information that may be relevant to the 

notified transaction but which is not 

listed in § 800.402 of the Regulations. A 

list of such information, which may be 

updated from time to time, is provided 

on the CFIUS Web site (http:// 

www.ustreas.gov/offices/internationalaffairs/cfius/). Examples of such 

information include: Information 

regarding whether the U.S. business 

develops or provides cyber systems, 

products, or services (including 

business systems used to manage or 

support common business processes 

and operations, such as enterprise 

resource planning, e-commerce, e-mail, 

and database systems; 

telecommunications or Internet systems; 

control systems used to monitor, assess, 

and control sensitive processes and 

physical functions, such as supervisory 

control, data acquisition, and process 

and distributed control systems; or 

safety, security, support, and other 

specialty systems, such as fire, intrusion 

detection, access control, people mover, 

and heating, ventilation, and air 

conditioning systems); information 

regarding whether the U.S. business 

processes natural resources and material 

or produces and transports energy; and 

information on any required regulatory 

reviews, on-going dealings, or 

outstanding issues that the parties have 

with other U.S. Government agencies 

with national security responsibilities. 

Where CFIUS requires additional 

information to enable it to review a 

notified transaction, CFIUS may request 

such additional information of the 

parties. Section 800.403(a)(3) of the 

Regulations authorizes the Staff 

Chairperson to reject any voluntary 

notice if the parties do not provide 

follow-up information within three 

business days of the request, or within 

a longer time frame if the parties so 

request in writing and the Staff 

Chairperson grants that request in 

writing. 

VI. Conclusion 

CFIUS does not issue advisory 

opinions as to whether a covered 

transaction raises national security 

considerations. Rather, it conducts full 

reviews of specific covered transactions 

that are notified to CFIUS pursuant to 

§ 800.401 of the Regulations. This 

guidance may provide assistance to 

parties as they consider whether to file 

a voluntary notice with CFIUS. 

Additional information is available on 

the CFIUS Web site, http:// 

www.ustreas.gov/offices/internationalaffairs/cfius/. 

Clay Lowery, 

Assistant Secretary (International Affairs). 

[FR Doc. E8–28791 Filed 12–5–08; 8:45 am] 

BILLING CODE 4810–25–P 

DEPARTMENT OF THE TREASURY 

Office of Foreign Assets Control 

Additional Designation of Four 

Individuals Pursuant to Executive 

Order 13224 

AGENCY: Office of Foreign Assets 

Control, Treasury. 

ACTION: Notice. 

SUMMARY: The Treasury Department’s 

Office of Foreign Assets Control 

(‘‘OFAC’’) is publishing the name of 

four newly-designated individuals 

whose property and interests in 

property are blocked pursuant to 

Executive Order 13224 of September 23, 

2001, ‘‘Blocking Property and 

Prohibiting Transactions With Persons 

Who Commit, Threaten To Commit, or 

Support Terrorism.’’ 

DATES: The designation by the Director 

of OFAC of the four individuals 

identified in this notice, pursuant to 

Executive Order 13224, is effective on 

November 20, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Assistant Director, Compliance 

Outreach & Implementation, Office of 

Foreign Assets Control, Department of 

the Treasury, Washington, DC 20220, 

tel.: 202/622–2490. 

SUPPLEMENTARY INFORMATION: 

Electronic and Facsimile Availability 

This document and additional 

information concerning OFAC are 

available from OFAC’s Web site 

(http://www.treas.gov/ofac) or via 

facsimile through a 24-hour fax-ondemand service, tel.: 202/622–0077. 

Background 

On September 23, 2001, the President 

issued Executive Order 13224 (the 

‘‘Order’’) pursuant to the International 

Emergency Economic Powers Act, 50 

U.S.C. 1701–1706, and the United 

Nations Participation Act of 1945, 22 

U.S.C. 287c. In the Order, the President 

declared a national emergency to 

address grave acts of terrorism and 

threats of terrorism committed by 

foreign terrorists, including the 

September 11, 2001, terrorist attacks in 

New York, Pennsylvania, and at the 

Pentagon. The Order imposes economic 

sanctions on persons who have 

committed, pose a significant risk of 

committing, or support acts of terrorism. 

The President identified in the Annex to 

the Order, as amended by Executive 

Order 13268 of July 2, 2002, 13 

individuals and 16 entities as subject to 

the economic sanctions. The Order was 

further amended by Executive Order 

13284 of January 23, 2003, to reflect the 

creation of the Department of Homeland 

Security. 

Section 1 of the Order blocks, with 

certain exceptions, all property and 

interests in property that are in or 

hereafter come within the United States 

or the possession or control of United 

States persons, of: (1) Foreign persons 

listed in the Annex to the Order; (2) 

foreign persons determined by the 

Secretary of State, in consultation with 

the Secretary of the Treasury, the 

Secretary of the Department of 

Homeland Security and the Attorney 

General, to have committed, or to pose 

a significant risk of committing, acts of 

terrorism that threaten the security of 

U.S. nationals or the national security, 

foreign policy, or economy of the United 

mstockstill on PROD1PC66 with NOTICES