3112 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

DEPARTMENT OF THE TREASURY 

Office of Investment Security 

31 CFR Parts 800 and 801 

RIN 1505–AC64 

Provisions Pertaining to Certain 

Investments in the United States by 

Foreign Persons 

AGENCY: Office of Investment Security, 

Department of the Treasury. 

ACTION: Final rule; and interim rule with 

request for comments. 

SUMMARY: The final rule revises 

regulations that implement certain 

provisions of section 721 of the Defense 

Production Act of 1950, as amended by 

the Foreign Investment Risk Review 

Modernization Act of 2018 (FIRRMA). 

The interim rule also adds a new 

definition for the term ‘‘principal place 

of business’’ and the Department of the 

Treasury is seeking comments on this 

definition. While this rule retains many 

features of the prior regulations, the rule 

makes a number of substantive changes, 

primarily to implement FIRRMA. 

DATES: 

Effective date: The final rule is 

effective on February 13, 2020. The 

interim rule regarding § 800.239 is 

effective on February 13, 2020. 

Applicability date: See § 800.104. 

Comment date: The Department of the 

Treasury (Treasury Department) is 

seeking written comments from the 

public on the definition of ‘‘principal 

place of business’’ found at § 800.239, 

which must be received by February 18, 

2020. 

ADDRESSES: Written comments on 

§ 800.239 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. 

Electronic submission of comments 

allows the commenter maximum time to 

prepare and submit a comment, ensures 

timely receipt, and enables the Treasury 

Department to make the comments 

available to the public. 

• Mail: Send to U.S. Department of 

the Treasury, Attention: Laura Black, 

Director of Investment Security Policy 

and International Relations, 1500 

Pennsylvania Avenue NW, Washington, 

DC 20220. 

Please submit comments only and 

include your name and company name 

(if any), and cite ‘‘Provisions Pertaining 

to Certain Investments in the United 

States by Foreign Persons’’ in all 

correspondence. In general, the 

Treasury Department will post all 

comments to https://

www.regulations.gov without change, 

including any business or personal 

information provided, such as names, 

addresses, email addresses, or telephone 

numbers. All comments received, 

including attachments and other 

supporting material, will be part of the 

public record and subject to public 

disclosure. You should only submit 

information that you wish to make 

publicly available. 

FOR FURTHER INFORMATION CONTACT: 

Laura Black, Director of Investment 

Security Policy and International 

Relations; Meena R. Sharma, Deputy 

Director of Investment Security Policy 

and International Relations; David 

Shogren, Senior Policy Advisor; or 

Alexander Sevald, Senior Policy 

Advisor, at U.S. Department of the 

Treasury, 1500 Pennsylvania Avenue 

NW, Washington, DC 20220; telephone: 

(202) 622–3425; email: CFIUS.FIRRMA@

treasury.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. The Statute and Proposed Rules 

On August 13, 2018, the Foreign 

Investment Risk Review Modernization 

Act of 2018 (FIRRMA), Subtitle A of 

Title XVII of Public Law 115–232, 132 

Stat. 2173, became law. FIRRMA 

amended and updated section 721 

(section 721) of the Defense Production 

Act of 1950 (DPA), which delineates the 

authorities and jurisdiction of the 

Committee on Foreign Investment in the 

United States (CFIUS or the Committee). 

FIRRMA maintains the Committee’s 

jurisdiction over any transaction which 

could result in foreign control of any 

U.S. business, and it broadens the 

authorities of the President and CFIUS 

under section 721 to review and to take 

action to address any national security 

concerns arising from certain noncontrolling investments and real estate 

transactions. Additionally, FIRRMA 

modernizes CFIUS’s processes to better 

enable timely and effective reviews of 

transactions falling under its 

jurisdiction. In FIRRMA, Congress 

acknowledged the important role of 

foreign investment in the U.S. economy 

and reaffirmed the United States’ open 

investment policy, consistent with the 

protection of national security. See 

section 1702(b) of FIRRMA. 

FIRRMA requires the issuance of 

regulations implementing its provisions. 

In Executive Order 13456, 73 FR 4677 

(January 23, 2008), the President directs 

the Secretary of the Treasury to issue 

regulations implementing section 721. 

On October 11, 2018, the Treasury 

Department published its first 

rulemaking under FIRRMA in the form 

of an interim rule, which amended the 

regulations in part 800 to implement, 

and make updates consistent with, 

certain provisions of FIRRMA that 

became immediately effective (October 

2018 Interim Rule). See 83 FR 51316 

(October 11, 2018). The October 2018 

Interim Rule took effect on November 

10, 2018. 

The Treasury Department published a 

second interim rule on October 11, 

2018, pursuant to section 1727(c) of 

FIRRMA, setting forth the scope of, and 

procedures for, a pilot program to 

review certain transactions involving 

foreign persons and critical technologies 

(Pilot Program Interim Rule). See 83 FR 

51322 (October 11, 2018). The Pilot 

Program Interim Rule, which took effect 

on November 10, 2018, implemented 

jurisdiction over, and established 

mandatory declarations for, certain 

transactions involving investments by 

foreign persons in certain U.S. 

businesses that produce, design, test, 

manufacture, fabricate, or develop one 

or more critical technologies. 

On September 24, 2019, the Treasury 

Department published two proposed 

rules to implement provisions of 

FIRRMA. See 84 FR 50174 (September 

24, 2019); 84 FR 50214 (September 24, 

2019). (The Office of the Federal 

Register made versions available for 

public inspection on September 17, 

2019.) Public comments on the 

proposed rules were due by October 17, 

2019. 

The proposed rule at 84 FR 50174 

proposed amendments to CFIUS 

regulations codified at part 800 of title 

31 of the Code of Federal Regulations 

(CFR). These provisions specifically 

relate to CFIUS’s authorities and the 

process and procedures to review: (1) A 

merger, acquisition, or takeover by or 

with a foreign person that could result 

in foreign control of a U.S. business; (2) 

a non-controlling ‘‘other investment’’ 

that affords a foreign person specified 

access to information in the possession 

of, rights in, or involvement in the 

substantive decisionmaking of certain 

U.S. businesses related to critical 

technologies, critical infrastructure, or 

sensitive personal data; (3) any change 

in a foreign person’s rights if such 

change could result in foreign control of 

a U.S. business or an ‘‘other 

investment’’ in certain U.S. businesses; 

or (4) any other transaction, transfer, 

agreement, or arrangement, the structure 

of which is designed or intended to 

evade or circumvent the application of 

section 721. Further explanation of 

FIRRMA and the proposed provisions 

can be found in the proposed rule at 84 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3113 

FR 50147; changes to the proposed rule 

are explained in further detail below. 

The proposed rule at 84 FR 50214, 

which proposed regulations to 

implement the provisions of FIRRMA 

related to CFIUS’s new jurisdiction to 

review certain types of transactions 

involving real estate in the United 

States, is being finalized in a separate 

and concurrent rulemaking. That rule 

adds a part 802 to chapter VIII of title 

31 of the CFR to implement FIRRMA’s 

expansion of CFIUS’s jurisdiction over 

transactions involving the purchase or 

lease by, or concession to, a foreign 

person of certain real estate in the 

United States. 

FIRRMA also authorizes the 

Committee to assess and collect fees 

with respect to covered transactions for 

which a written notice is filed. The 

Treasury Department will publish a 

separate proposed rule implementing 

the Committee’s fee authority at a later 

date. 

B. Structure of FIRRMA Rulemaking and 

This Rule 

Consistent with CFIUS processes 

generally, this rule reflects extensive 

consultation with CFIUS member 

agencies, as well as other relevant U.S. 

Government agencies. Given the 

specificity of certain provisions of the 

rule, the Treasury Department 

anticipates that it will periodically 

review, and when necessary, amend the 

regulations to address changes in 

technology, data use, and the national 

security landscape more generally. 

This action finalizes the revisions to 

part 800. The rule retains many features 

of the provisions of part 800 prior to 

their revision by the October 2018 

Interim Rule and this rule. See 73 FR 

70702 (November 21, 2008) (Prior 

Regulations), while implementing the 

changes that FIRRMA made to CFIUS’s 

jurisdiction and process. In amending 

part 800 to incorporate CFIUS’s new 

jurisdiction over certain non-controlling 

‘‘other investments’’ (which this rule 

describes as ‘‘covered investments’’), 

certain conforming revisions were made 

to existing provisions. For example, the 

coverage section in subpart C of the rule 

regarding ‘‘covered control 

transactions’’ is based on the ‘‘covered 

transactions’’ section in the Prior 

Regulations and provides examples 

illustrating transactions that are covered 

control transactions and those that are 

not. There is also now a covered 

investment section within the coverage 

section in subpart C that provides 

examples illustrating transactions that 

are covered under the new jurisdiction. 

The rule seeks to provide clarity to the 

business and investment communities 

with respect to the types of U.S. 

businesses that are covered under 

FIRRMA’s ‘‘other investment’’ authority. 

The rule also incorporates the changes 

made to part 800 in the October 2018 

Interim Rule published in October 2018, 

83 FR 51316 (October 11, 2018), and 

updates certain other provisions, 

generally as a result of written 

submissions received during this rule’s 

public comment period and the public 

comment period of the Pilot Program 

Interim Rule, such as amending the 

definitions of ‘‘excepted investor’’ and 

‘‘sensitive personal data,’’ clarifying the 

application of the ‘‘incremental 

acquisition rule,’’ refining several 

examples, and making adjustments to 

the information requirements for 

declarations and notices. In response to 

public comments, this action also 

implements an interim rule with respect 

to the definition of ‘‘principal place of 

business’’ at § 800.239, and the Treasury 

Department is seeking public comment 

on this definition. 

In the proposed rule, the Treasury 

Department noted that it was 

considering whether to retain the 

mandatory filing requirement under the 

Pilot Program Interim Rule. The rule 

incorporates many of the provisions of 

the Pilot Program Interim Rule, 

including the mandatory filing 

requirements for covered transactions 

involving critical technologies. 

However, the Treasury Department 

anticipates issuing a notice of proposed 

rulemaking that would revise the 

mandatory declaration requirement 

regarding critical technology at 

§ 800.401(c) from one based upon North 

American Industry Classification 

System (NAICS) codes to one based 

upon export control licensing 

requirements. 

As noted in the Pilot Program Interim 

Rule, the pilot program was temporary 

and was required by FIRRMA to end no 

later than March 5, 2020. This rule 

modifies the applicability of the pilot 

program so that it applies only to 

transactions for which specified actions 

were taken prior to the effective date of 

this rule. Because the Committee retains 

jurisdiction over pilot program covered 

transactions that were subject to the 

Pilot Program Interim Rule during the 

period of its effectiveness, the 

regulations at part 801 will remain in 

chapter VIII of title 31 of the CFR for 

reference. Accordingly, this rule revises 

the applicability rule in part 801, at 

§ 801.103, to specify that part 801 

applies only to pilot program covered 

transactions (as defined in part 801) for 

which specified actions occurred 

between November 10, 2018, and 

February 12, 2020. 

II. Overview of Comments on the 

Proposed Rule and the Pilot Program 

Interim Rule 

During the public comment period, 

the Treasury Department received a 

number of written submissions on the 

proposed rule reflecting a wide range of 

views. All comments received by the 

end of the comment period are available 

on the public rulemaking docket at 

https://www.regulations.gov. 

Additionally, the Treasury Department 

hosted a public teleconference call to 

discuss the proposed rule on September 

27, 2019, and a summary is available on 

the Committee’s section of the Treasury 

Department website. 

Following the publication of the Pilot 

Program Interim Rule in October 2018, 

the Treasury Department also received a 

number of written comments on that 

rule, which are similarly available on 

the public rulemaking docket and are 

addressed herein. 

The Treasury Department considered 

each comment submitted. Some of the 

comments were general in nature, for 

example, supporting the Treasury 

Department’s efforts and approach with 

respect to aspects of the proposed rule. 

Other commenters noted the potential 

impact of the proposed rule and the 

Pilot Program Interim Rule on foreign 

investment in the United States. The 

Treasury Department recognizes the 

vital importance of foreign investment 

to the U.S. economy. The Treasury 

Department drafted the proposed rule 

and Pilot Program Interim Rule, and 

made revisions in finalizing the rule, to 

protect U.S. national security from the 

risk posed by certain foreign investment 

while at the same time maintaining the 

open foreign investment policy of the 

United States. The Treasury Department 

has determined that the specificity 

provided in the rule—with respect to, 

for example, identification of covered 

investment critical infrastructure in the 

appendix and specific categories of 

sensitive personal data—provides 

clarity to the business and investment 

communities with respect to the types 

of transactions that are covered by the 

Committee’s new authority under 

FIRRMA. The Treasury Department will 

evaluate implementation of the rule and 

will provide, as appropriate, additional 

information to assist the public. 

Some comments requested 

clarification of specific provisions. 

Where appropriate, the Treasury 

Department provided additional 

clarification in the text of the rule and 

included more illustrative examples. 

Some commenters, however, requested 

greater specificity than is feasible in 

regulations of general applicability, or 


lotter on DSKBCFDHB2PROD with RULES2
3114 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

revisions that conflict with the 

Committee’s statutory authority under 

FIRRMA. The section-by-section 

analysis below includes responses to 

comments. Further edits were made to 

the rule for consistency and clarity. 

In addition to comments on the 

substance of the rule, two commenters 

requested an extension of the public 

comment period for the proposed rule. 

The Treasury Department did not 

extend the public comment period in 

light of the fixed effective date 

established by FIRRMA. The Treasury 

Department anticipates that it will 

periodically review, and as necessary, 

make changes to the regulations (and 

any appendices), consistent with 

applicable law and, when appropriate, 

will provide the public an opportunity 

to comment. 

III. Discussion of the Rule 

a. Relationship With Part 802 

Before addressing individual sections 

of the rule raised in the comments or 

otherwise revised from the proposed 

rule, it is important to address the 

relationship between this rule and the 

new rule for part 802 of this chapter, 

which as noted is being issued 

concurrently with this rule. 

The new part 802 clarifies that a 

‘‘covered transaction,’’ as defined by 

this part 800, that also includes the 

purchase, lease, or concession of 

‘‘covered real estate,’’ as that term is 

defined in part 802, is not a ‘‘covered 

real estate transaction,’’ as defined in 

part 802. If a party intends to notify 

CFIUS of a transaction as subject to this 

part 800, the transaction should not be 

notified under part 802. The concurrent 

rulemaking for part 802 discusses the 

relationship between the two rules in 

greater detail. 

b. Interim Rule: Section 800.238— 

Principal Place of Business 

This rule includes a definition of 

‘‘principal place of business’’ as an 

interim rule. The interim rule is 

effective as of February 13, 2020, and 

the Treasury Department is seeking 

public comment on the new definition 

through February 18, 2020. The 

substance of the new definition is 

discussed below in conjunction with 

comments received to § 800.220 

(definition of ‘‘foreign entity’’). 

c. Summary of Comments and Changes 

From the Proposed Rule 

1. Subpart A—General 

Section 800.104—Applicability Rule 

The rule makes clarifying edits to 

§ 800.104 by inserting the date the 

regulations become effective (February 

13, 2020), as well as clarifying that the 

Pilot Program Interim Rule will, going 

forward, apply only to transactions for 

which specified actions were taken on 

or after the effective date of the Pilot 

Program Interim Rule and prior to the 

effective date of this rule. This 

rulemaking includes conforming 

amendments to part 801 at § 801.104 to 

specify which transactions remain 

subject to part 801. As discussed further 

below, certain aspects of the mandatory 

declaration provisions of the Pilot 

Program Interim Rule have been 

incorporated into part 800 through this 

rule. 

Section 800.105—Rules of Construction 

and Interpretation 

The rule adds a new section to clarify 

that the examples included in the 

regulations are provided for 

informational purposes and should not 

be construed to alter the meaning of the 

text of the regulations in this part, as 

well as to clarify that, as used 

throughout the regulations, the term 

‘‘including’’ means ‘‘including without 

limitation.’’ 

2. Subpart B—Definitions 

The proposed rule made several 

changes to the definitions in the Prior 

Regulations and added several new 

definitions that are broadly applicable 

to both covered control transactions and 

covered investments. 

Before addressing individual 

definitions, the Treasury Department 

notes that one commenter remarked that 

the regulations do not define ‘‘national 

security.’’ The rule makes no change to 

subpart B in response to this comment. 

In evaluating any transaction, CFIUS’s 

analysis is guided by the law, including 

the applicable legislation. FIRRMA 

states that it is the sense of Congress 

that the Committee ‘‘should continue to 

review transactions for the purpose of 

protecting national security and should 

not consider issues of national interest 

absent a national security nexus.’’ See 

Section 1702(b)(9) of FIRRMA. Section 

721(f) of the DPA provides an 

illustrative list of factors for 

consideration by the Committee and the 

President in determining whether a 

covered transaction poses a national 

security risk. Additionally, the Treasury 

Department previously published 

Guidance Concerning the National 

Security Review Conducted by CFIUS, 

73 FR 74567 (December 8, 2008), which 

is still in effect. 

Section 800.206—Completion Date 

The proposed rule included a 

definition for ‘‘completion date’’ to 

clarify that, in the event that a covered 

transaction will be effectuated through 

multiple or staged closings, the 

completion date is the earliest date on 

which any transfer of interest or change 

in rights that constitutes a covered 

transaction occurs. 

Commenters expressed concern that 

parties may be required to submit a 

declaration 30 days before completing 

the acquisition of a contingent equity 

interest, but that, under § 800.308 (i.e., 

the timing rule for a contingent equity 

interest), the Committee could conclude 

that there is no covered transaction until 

the interest is converted. Commenters 

suggested that the definition of 

‘‘completion date’’ be further refined to 

explicitly exclude transfers of 

contingent equity interests that are not 

subject to CFIUS jurisdiction consistent 

with § 800.308. 

The rule makes no change to 

§ 800.206 in response to these 

comments. The acquisition of a 

contingent equity interest alone, 

without the acquisition of control or the 

access, rights, or involvement specified 

in § 800.211(b), is not a covered 

transaction. Where a party later acquires 

control or the access, rights, or 

involvement specified in § 800.211(b) in 

connection with the earlier acquisition 

of a contingent equity interest, the 

submission of a mandatory declaration, 

if applicable, is required 30 days before 

the acquisition of such control or the 

access, rights, or involvement specified 

in § 800.211(b). The timing rule under 

§ 800.308 specifies when a party will be 

considered to have acquired control or 

the access, rights, or involvement 

specified in § 800.211(b) (i.e., upon 

actual conversion of the contingent 

equity interest, or upon initial 

acquisition of the contingent equity 

interest if certain factors are present). 

Section 800.208—Control 

Although the proposed rule did not 

significantly modify the definition of 

‘‘control’’ from the Prior Regulations, 

commenters suggested that the 

threshold for control is too low, thereby 

discouraging foreign investment in U.S. 

companies. Commenters also requested 

additional clarifications, such as 

whether the rights described in 

§ 800.307(a)(4) should be added to 

§ 800.208. Finally, commenters 

suggested incorporating the excepted 

investor concept into the definition of 

‘‘control.’’ 

The rule makes no change to 

§ 800.208 in response to these 

comments. As noted in the preamble to 

the proposed rule, FIRRMA maintains 

the Committee’s jurisdiction over any 

transaction which could result in 

foreign control of any U.S. business, and 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3115 

provides no legislative direction to 

substantively narrow the existing 

definition of ‘‘control.’’ In addition, 

given the many changes to the 

regulations required by FIRRMA, the 

Treasury Department determined that 

substantive amendments to the wellestablished control standard would not 

advance the goal of transactional 

certainty at this time. The Treasury 

Department also notes that additional 

information regarding control 

transactions is available in responses to 

certain frequently asked questions that 

may be found at the Committee’s section 

of the Treasury Department website. 

Furthermore, as noted in the preamble 

to the proposed rule, the excepted 

investor concept addresses FIRRMA’s 

requirement that the Committee limit 

the application of FIRRMA’s expanded 

jurisdiction over covered investments to 

certain categories of foreign persons. 

The Treasury Department followed this 

legislative direction by limiting the 

excepted investor concept to covered 

investments, and not extending it to 

control transactions, thereby 

maintaining the same jurisdiction over 

control transactions as in the Prior 

Regulations. 

Regarding the limited partner rights 

described in § 800.307(a)(4), each of the 

rights is already substantively covered 

in § 800.208(a). While the rule makes no 

specific revisions to § 800.208 with 

respect to limited partners, the rule does 

provide additional clarification for 

investment funds in other provisions, 

including in the definitions of 

‘‘principal place of business’’ and 

‘‘substantial interest,’’ and in § 800.401. 

Finally, the rule makes a technical 

correction to § 800.208(c)(4) to clarify 

that anti-dilution protections are more 

accurately characterized as a right 

instead of a power. 

Section 800.211—Covered Investment 

The proposed rule used the term 

‘‘covered investment’’ to capture an 

investment by a foreign person in 

certain types of U.S. businesses that 

affords the foreign person certain access 

to information in the possession of, 

rights in, or involvement in the 

substantive decisionmaking of such U.S. 

businesses but that does not afford the 

foreign person control over the U.S. 

business. One commenter requested 

clarification regarding the applicability 

of the access, rights, or involvement 

described in § 800.211(b) in situations 

in which the U.S. business that 

produces, designs, tests, manufactures, 

fabricates, or develops the critical 

technology is a subsidiary of the U.S. 

business in which the foreign person 

invests. The rule adds an example 

showing the application of § 800.211(b) 

in situations where the investment 

affords a foreign person membership or 

observer rights on the board of directors 

or equivalent governing body of a U.S. 

business that operates as a TID U.S. 

business through a subsidiary. 

Other commenters requested 

additional clarification regarding the 

meaning of ‘‘access to material 

nonpublic technical information,’’ 

including the timing of access and 

whether theoretical or potential access 

should be included. The rule makes no 

change to § 800.211 in response to these 

comments. CFIUS’s new jurisdiction 

under FIRRMA is established once a 

foreign investor in a TID U.S. business 

has been afforded access to material 

nonpublic technical information, 

regardless of whether or when the 

investor exercises the right of access. 

Section 800.212—Covered Investment 

Critical Infrastructure 

To distinguish the subset of critical 

infrastructure that is relevant for the 

Committee’s jurisdiction over covered 

investments from critical infrastructure 

more broadly, the proposed rule created 

a new term, ‘‘covered investment 

critical infrastructure.’’ This definition 

references a list of specific systems and 

assets in appendix A of the rule. As 

noted in the preamble to the proposed 

rule, the subset of critical infrastructure 

identified in appendix A does not alter 

the definition of ‘‘critical infrastructure’’ 

as used in any other regulatory regime 

or context. Different commenters 

suggested either narrowing this subset 

or expanding it, for example to include 

railcars and communication equipment. 

The rule makes no change to § 800.212 

or appendix A in response to these 

comments. Appendix A reflects 

extensive consultation with subject 

matter experts at CFIUS member 

agencies, as well as other relevant U.S. 

Government agencies, who, in 

developing appendix A, considered, 

among other factors, whether other U.S. 

Government authorities provided 

adequate protections for national 

security. The Treasury Department will 

evaluate implementation of the rule, 

and when necessary, revise the 

regulations (and any appendices) to 

address changes in the national security 

landscape. 

Section 800.213—Covered Transaction 

The proposed rule defined ‘‘covered 

transactions’’ to include covered control 

transactions, covered investments, 

changes in a foreign person’s rights with 

respect to a U.S. business that could 

result in foreign control of a U.S. 

business or a covered investment in 

certain U.S. businesses, and transactions 

structured to evade or circumvent 

CFIUS review. Commenters sought 

additional information about what types 

of changes in rights trigger CFIUS’s 

jurisdiction over a covered transaction, 

including in the context of a foreign 

investor in a U.S. business exercising 

the right to purchase additional interest 

to prevent the dilution of its pro rata 

interest. Commenters also suggested that 

transactions falling below a minimum 

threshold for the investment amount or 

the annual revenue of the U.S. business 

should be exempted from the definition 

of ‘‘covered transaction.’’ 

The rule makes no change to 

§ 800.213 in response to these 

comments. With respect to a change in 

rights that results in a ‘‘covered 

transaction,’’ the rule provides examples 

in § 800.213(e)(1) and (2), respectively 

(note that these and certain other 

examples were moved to § 800.213 from 

subpart C for clarity). Additionally, the 

examples in § 800.304(f)(2) and (5) 

address the acquisition of additional 

equity interest. With respect to 

implementing a minimum threshold for 

a covered transaction, the Treasury 

Department has determined that a 

categorical exemption for transactions 

below a minimum threshold is 

unwarranted. The Committee evaluates 

each transaction based upon the 

particular facts and circumstances, 

including the size of the investment and 

other factors. 

Section 800.215—Critical Technologies 

The proposed rule defined ‘‘critical 

technologies’’ as set forth in FIRRMA. 

Commenters recommended narrowing 

the definition and noted that the 

Department of Commerce, at the time of 

the proposed rule, had yet to define 

emerging and foundational technologies 

under section 1758 of the Export 

Control Reform Act of 2018 (ECRA). The 

rule makes no change to § 800.215 in 

response to these comments. FIRRMA 

defines ‘‘critical technologies,’’ and 

FIRRMA does not give the Treasury 

Department discretion to change this 

statutory definition through these 

regulations. Accordingly, the rule does 

not independently define emerging and 

foundational technologies. Rather, it 

incorporates by cross-reference the 

emerging and foundational technologies 

that the Department of Commerce 

identifies pursuant to a separate 

rulemaking, as required by ECRA. 

Section 800.218—Excepted Foreign 

State 

The proposed rule defined ‘‘excepted 

foreign state’’ to refer to a group of 

eligible foreign states for purposes of 


lotter on DSKBCFDHB2PROD with RULES2
3116 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

implementing FIRRMA’s requirement 

that the Committee limit the application 

of FIRRMA’s expanded jurisdiction over 

covered investments to certain 

categories of foreign persons. The 

Treasury Department received several 

comments on this definition, including 

requests that the Committee publish the 

criteria by which a foreign state is 

identified as an eligible foreign state. 

Other commenters suggested that the 

Committee identify certain countries or 

certain defined lists of countries as 

excepted foreign states. Some 

commenters recommended against the 

excepted foreign state and excepted 

investor provisions and argued that the 

provisions treat allies of the United 

States differently from other countries. 

The rule makes no change to 

§ 800.218 in response to these 

comments. As noted above, FIRRMA 

directs that implementing regulations 

must limit the application of ‘‘other 

investment’’ jurisdiction to certain 

categories of foreign persons, and the 

Treasury Department therefore cannot 

eliminate the concepts of excepted 

foreign state and excepted investor 

entirely without adopting an alternative 

limitation. With respect to the eligible 

foreign states, the Committee has 

initially selected Australia, Canada, and 

the United Kingdom of Great Britain 

and Northern Ireland. The Committee 

identified these countries due to aspects 

of their robust intelligence-sharing and 

defense industrial base integration 

mechanisms with the United States. 

Additionally, as noted in the preamble 

to the proposed rule, the concept and 

definition of ‘‘excepted foreign states’’ 

are new and an expansive application 

carries potentially significant 

implications for the national security of 

the United States. Consequently, the 

Committee is initially identifying a 

limited number of eligible foreign states 

and may expand the list in the future. 

The rule revises § 800.218 to clarify 

that the definition of ‘‘excepted foreign 

state’’ operates as a two-criteria 

conjunctive test, with delayed 

effectiveness for the second criterion. 

Thus, as of February 13, 2020, each of 

the three foreign states that the 

Committee identifies as an eligible 

foreign state will be an excepted foreign 

state, without regard to the second 

criterion (i.e., favorable determination 

under § 800.1001). In order for each of 

these countries to remain an excepted 

foreign state after the end of the twoyear delayed effectiveness period (i.e., 

February 13, 2022), the Committee must 

make a determination under § 800.1001. 

This two-year period is intended to 

provide these initial eligible foreign 

states time to ensure that their national 

security-based foreign investment 

review processes and bilateral 

cooperation with the United States on 

national security-based investment 

reviews meet the requirement under 

§ 800.1001. This two-year period also 

provides the Committee time to develop 

processes and procedures for making 

determinations under § 800.1001, which 

could be applied to a broader group of 

countries in the future. In selecting the 

initial eligible foreign states, the 

Committee takes no position on whether 

the foreign states currently meet the 

determination factors discussed below 

at § 800.1001. Finally, the rule removes 

language regarding internal Committee 

processes (for which a conforming 

change was also made in § 800.1001), 

and revises note 1 to § 800.218 to clarify 

the publication mechanics for 

identifying the foreign states that have 

met each of the two separate criteria of 

the definition of ‘‘excepted foreign 

state.’’ 

Section 800.219—Excepted Investor 

The proposed rule set forth a 

definition of ‘‘excepted investor,’’ taking 

into account increasingly complex 

ownership structures and accounting for 

such structures in the application of the 

Committee’s jurisdiction. Commenters 

suggested relaxing the criteria to allow 

more entities to qualify as excepted 

investors, including the criteria related 

to the nationality of board members and 

observers, the percentage ownership 

limit for an individual investor in an 

excepted investor, and the minimum 

excepted ownership. In response to 

these comments, the rule modifies the 

definition of ‘‘excepted investor.’’ First, 

the board member nationality criterion 

is revised to allow up to 25 percent 

representation by foreign nationals of 

foreign states that are not excepted 

foreign states. Second, the percentage 

ownership limit for an individual 

investor in an excepted investor is 

revised from five to 10 percent. Third, 

the definition of ‘‘minimum excepted 

ownership’’ under § 800.233 is revised 

as discussed below. 

One commenter suggested that the 

Committee narrow the types of felonies 

that disqualify an investor from 

excepted investor status to those 

relating to national security. The rule 

makes no change to § 800.219 in 

response to this comment. Because 

excepted investor status limits the 

Committee’s jurisdiction, the 

regulations appropriately preserve 

jurisdiction over transactions by foreign 

investors that have been convicted of, or 

entered into a deferred prosecution 

agreement or non-prosecution 

agreement with the Department of 

Justice with respect to, any felony, in 

the five years prior to the completion 

date of the transaction. 

Some commenters requested that the 

Committee consider the specific 

commenters themselves to be excepted 

investors or sought additional 

information regarding the process to 

qualify as an excepted investor, 

including how an excepted investor can 

prove that status, or whether an 

excepted investor would receive a form 

or certificate from the Committee 

establishing that status. The rule makes 

no change to § 800.219 in response to 

these comments. There is no separate 

process for the Committee to provide a 

determination for a prospective investor 

on whether it qualifies as an excepted 

investor. As with other jurisdictional 

determinations, parties themselves 

should assess whether they qualify as 

excepted investors. 

Commenters suggested that the 

Committee adopt a category similar to 

excepted investor, which some termed 

‘‘trusted investor,’’ that would allow 

certain investors who are not connected 

to an excepted foreign state to receive 

the benefits of excepted investor status. 

Commenters further suggested various 

criteria for this ‘‘trusted investor’’ 

concept, including the individual 

investor’s previous interactions with the 

Committee, the investor’s record of 

compliance with mitigation agreements, 

and whether the investor is subject to an 

agreement to mitigate foreign 

ownership, control, or influence (FOCI) 

pursuant to the National Industrial 

Security Program regulations. 

The rule makes no change to 

§ 800.219 in response to these 

comments. Consistent with FIRRMA, 

the ‘‘excepted investor’’ definition 

focuses on the investor’s connection to 

an excepted foreign state, which 

provides the greatest clarity to the 

business and investment communities 

while protecting national security 

interests. Such a definition also furthers 

the Committee’s efforts to encourage 

partner countries to implement robust 

processes to review foreign investment 

in their countries and increase 

cooperation with the United States. 

Notably, the ‘‘excepted investor’’ 

definition eliminates Committee 

jurisdiction for specified transactions by 

certain investors. Therefore, some 

criteria suggested by commenters as part 

of the ‘‘trusted investor’’ concept are 

less suitable for determining jurisdiction 

and more suitable for other aspects of 

the rule, such as determining which 

parties must make mandatory filings 

under § 800.401. For example, the rule 

now provides an exception to 

mandatory filings for foreign 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3117 

investments via FOCI-mitigated entities 

under § 800.401, as discussed below. 

One commenter cautioned that the 

public may equate excepted investor 

status with trust and may misconstrue 

that an investor who does not qualify as 

an excepted investor is not trusted and 

could present greater national security 

concerns. In this regard, it is important 

to note that not qualifying as an 

excepted investor should not be 

interpreted as an individualized 

assessment that the particular foreign 

person poses a threat to national 

security. 

Commenters expressed an inaccurate 

view of the minimum excepted 

ownership criterion’s application up the 

ownership chain of the foreign person. 

All of the conditions under 

§ 800.219(a)(3), including the minimum 

excepted ownership conditions, apply 

to each ‘‘parent’’ (as defined at 

§ 800.235) of the foreign person. 

Finally, the rule revises § 800.219(b) 

to specify when the ownership interests 

of separate foreign persons will be 

aggregated for the purposes of 

§ 800.219(a)(3)(iv). The rule also 

modifies § 800.219(d) to include the 

criteria in § 800.219(c)(1)(i) through (iii) 

in order to retain jurisdiction over 

certain transactions where the foreign 

investor is deemed not to be an 

excepted investor subsequent to the 

transaction due to action by the 

President under section 721, or 

enforcement by the Committee of 

violations under this part, parts 801 or 

802, or section 721. 

Section 800.220—Foreign Entity/New 

Section 800.239—Principal Place of 

Business 

The proposed rule did not change the 

definition of ‘‘foreign entity’’ from the 

Prior Regulations. Commenters 

requested further clarification regarding 

CFIUS’s jurisdiction over transactions 

by investment funds, and recommended 

revising the definition of ‘‘foreign 

entity’’ to focus on control by foreign 

persons, rather than the amount of 

equity held by foreign persons. Other 

commenters urged the Committee to 

provide additional clarity by defining 

‘‘principal place of business.’’ The rule 

makes no change to § 800.220, but does 

include a new definition of ‘‘principal 

place of business’’ as an interim rule at 

§ 800.239 in response to these 

comments. 

The proposed rule used the term 

‘‘principal place of business’’ but did 

not define it. Commenters 

recommended that the regulations 

include a definition, and one suggested 

the ‘‘nerve center’’ test used by U.S. 

courts to evaluate federal diversity 

jurisdiction. Under the new definition at 

§ 800.239, a party’s ‘‘principal place of 

business’’ is defined as ‘‘the primary 

location where an entity’s management 

directs, controls, or coordinates the 

entity’s activities, or, in the case of an 

investment fund, where the fund’s 

activities and investments are primarily 

directed, controlled, or coordinated by 

or on behalf of the general partner, 

managing member, or equivalent,’’ 

subject to the qualification in 

§ 800.239(b). For those entities whose 

nerve center is in the United States, the 

purpose of the qualification in 

§ 800.239(b) is to nevertheless ensure 

consistent treatment of an entity’s 

principal place of business in 

accordance with its own assertions to 

government entities, provided the facts 

have not changed since those assertions. 

The Treasury Department believes that 

this definition achieves substantially the 

same result as potential revisions to the 

definition of ‘‘foreign entity’’ suggested 

by commenters to address investment 

funds managed and controlled by U.S. 

persons in the United States. 

Because the definition of ‘‘principal 

place of business’’ in § 800.239 is new, 

it is being made effective by this rule on 

an interim basis and may be amended 

based on comments received. As an 

interim rule, § 800.239 will become 

effective on the same date as the other 

provisions in this rule (i.e., February 13, 

2020) to provide clarity and certainty for 

transaction parties. The Treasury 

Department invites comments on this 

interim rule, in particular with respect 

to whether § 800.239 adequately 

addresses concerns raised by 

commenters seeking greater clarity 

concerning investment funds managed 

and controlled by U.S. persons. 

Section 800.224—Foreign Person 

The proposed rule used the definition 

of ‘‘foreign person’’ from the Prior 

Regulations. The rule adds a new 

subsection (b) to clarify that an entity 

which is controlled by a ‘‘foreign 

person’’ is itself a ‘‘foreign person.’’ 

Section 800.225—Identifiable Data 

The proposed rule defined the term 

‘‘identifiable data’’ to mean data that 

can be used to distinguish or trace an 

individual’s identity, including through 

the use of any personal identifier. The 

definition noted that, for the avoidance 

of doubt, aggregated data or anonymized 

data is ‘‘identifiable data’’ if any party 

to the transaction has, or as a result of 

the transaction will have, the ability to 

disaggregate or de-anonymize the data, 

or if the data is otherwise capable of 

being used to distinguish or trace an 

individual’s identity. Commenters 

addressed data aggregation and 

anonymization in the context of this 

definition. Some commenters suggested 

that the Treasury Department was 

incorrectly considering the ability of the 

foreign acquirer to disaggregate or deanonymize data; they suggested that the 

focus of the Committee’s inquiry should 

be on whether the U.S. business being 

acquired or invested in could 

disaggregate or de-anonymize the data. 

Similar comments were received 

regarding encryption and de-encryption 

capabilities. The rule makes no change 

in response to these comments. A 

foreign acquirer that would receive 

access to data that has been encrypted 

or anonymized, and for which the 

foreign acquirer has the ability to reidentify, is a relevant factor in the 

Committee’s risk assessment. Any 

militating effect afforded by deidentification would be lost if the 

foreign acquirer is able to re-identify the 

data. 

Section 800.232—Material Nonpublic 

Technical Information 

The proposed rule provided a 

definition of ‘‘material nonpublic 

technical information’’ consistent with 

the definition in FIRRMA. Commenters 

asked for clarification about the scope of 

the definition of material nonpublic 

technical information, such as whether 

it is limited to information necessary to 

reverse engineer a technology or 

product, whether it includes 

information typically afforded to 

minority investors such as technical 

milestones, and what is meant by ‘‘not 

available in the public domain.’’ 

The rule adds an illustrative example 

regarding technical milestones in 

response to the comments. No other 

changes were made. What constitutes 

‘‘material nonpublic technical 

information’’ will depend on particular 

facts and circumstances. ‘‘Material 

nonpublic technical information may 

include,’’ but is not limited to, 

information necessary to reverse 

engineer a component of a company’s 

product. Conversely, information that is 

readily accessible to people with no 

connections to the TID U.S. business is 

likely in the public domain and 

therefore not material nonpublic 

technical information. However, any 

such a determination requires a factspecific evaluation of the information 

that may be provided. 

Section 800.233—Minimum Excepted 

Ownership 

The proposed rule defined ‘‘minimum 

excepted ownership’’ along with other 

terms which operate together to exclude 

from CFIUS’s jurisdiction covered 


lotter on DSKBCFDHB2PROD with RULES2
3118 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

investments by certain foreign persons 

who meet certain criteria establishing 

sufficiently close ties to certain foreign 

states. Commenters suggested that the 

percentage threshold of minimum 

excepted ownership should be lowered; 

that privately held and publicly traded 

entities be treated the same; and that for 

investment funds, the minimum 

excepted ownership requirement should 

apply only to the general partner. 

Commenters also requested 

clarifications to address situations 

where the interests in an entity are not 

voting interests and to help entities 

determine whether § 800.233(a) or 

§ 800.233(b) is applicable. 

In response to these comments, the 

rule amends § 800.233 by reducing the 

minimum excepted ownership 

percentage in § 800.233(b) from 90 to 80 

percent. The rule does not adopt the 

suggestion to treat privately held and 

publicly traded entities the same. The 

different treatment reflects the 

difference in governance realities 

between publicly traded companies 

(typically one share, one vote) and 

privately held companies (which can 

vary widely and may provide minority 

shareholders outsized rights relative to 

their ownership stake). The rule also 

does not adopt the suggestion to apply 

the minimum excepted ownership 

criteria only to the general partner in a 

fund setting. Investment fund structures 

can vary significantly, and limited 

partners may have significant rights visa`-vis their investment interests. 

With regard to non-voting interests, 

note that the regulations already 

accommodate different structures by 

also considering rights to profits or 

rights to assets in the event of 

dissolution, a formulation that has 

existed in the definition of ‘‘parent’’ 

since the Prior Regulations. Finally, to 

qualify for the lower threshold in 

§ 800.233(a), which is in turn used in 

the application of the criteria in 

§ 800.219(a)(3)(v), the majority of an 

entity’s outstanding shares must be 

traded on one or more exchanges in the 

United States or in an excepted foreign 

state. 

Section 800.235—Parent 

The proposed rule did not change the 

definition of ‘‘parent’’ from the Prior 

Regulations. One commenter, however, 

asked if the regulations should clarify 

whether a general partner of a 

partnership (or equivalent) is a ‘‘parent’’ 

of that partnership. The rule adds a 

provision at § 800.235(a)(2) that 

explicitly includes a general partner, 

managing member, or equivalent of an 

entity within the definition of ‘‘parent.’’ 

The rule also makes some minor 

technical edits and adds an example 

illustrating an entity with more than one 

parent. 

Section 800.236—Party to a Transaction 

The proposed rule provided, at 

§ 800.236(a)(1), that a party to a 

transaction includes a target U.S. 

business whose ownership interest is 

being transferred between third parties. 

One commenter sought additional 

clarification about which party or 

parties to a covered transaction are 

required to submit a mandatory 

declaration under § 800.401. The rule 

makes no change to the text of § 800.236 

in response to this comment. The 

obligation to file a mandatory 

declaration is on the parties to such 

transaction. Finally, there appears to be 

confusion by some commenters about 

which entity is a party to a transaction 

in a fund context. Note that § 800.236 

provides a definition of ‘‘party to a 

transaction,’’ which includes the person 

acquiring an ownership interest. In a 

fund context, this is typically the fund 

itself (and not the general partner), 

though, as noted in § 800.401(j)(3), there 

are circumstances in which a limited 

partner may have a mandatory filing 

obligation based on its indirect 

investment while the fund itself does 

not. 

Section 800.241—Sensitive Personal 

Data 

The proposed rule set forth a detailed 

definition of ‘‘sensitive personal data.’’ 

Commenters suggested that the scope of 

‘‘sensitive personal data,’’ as defined in 

the proposed rule, may exceed what is 

necessary to protect national security. 

Commenters also noted that 

unnecessarily burdensome regulation 

negatively impacts technological 

advancements, such as artificial 

intelligence. The Treasury Department 

is cognizant of the potential impacts of 

the CFIUS process on foreign 

investment and has endeavored to be 

specific and circumspect in delineating 

the Committee’s new authorities over 

covered investments where appropriate 

and consistent with national security. 

One commenter suggested further 

narrowing the definition by focusing the 

‘‘target or tailor’’ prong on contractors or 

employees of national security agencies 

that support the national security 

functions, rather than all employees of 

such agencies. The rule makes no 

change in response to this comment. 

Certain U.S. Government employees 

may not have direct national security 

functions, but may nevertheless support 

critical missions of the agency and 

present equal sensitivity with respect to 

sensitive personal data as colleagues 

that do have direct national security 

functions. In many cases, it would be 

difficult for parties to ascertain the 

specific functions that U.S. Government 

employees may have within their 

respective agency. 

Commenters also suggested that 

CFIUS exempt from the definition data 

held by companies that meet certain 

internationally-recognized standards for 

the protection of data, such as those set 

out by the National Institute of 

Standards and Technology (NIST) or 

International Organization for 

Standardization. However, these 

standards are voluntary in nature, and 

currently no enforcement mechanism 

exists to require that businesses comply 

with them. The Treasury Department is 

not the appropriate entity to monitor 

compliance with voluntary standards 

such as these, and the rule makes no 

change in response to this comment. 

Commenters suggested that the 

‘‘demonstrated business objective’’ 

concept is vague and would deter 

investment in start-up businesses. In 

response to this comment, an example 

has been added to the rule, at 

§ 800.241(c)(5), to illustrate a case where 

a ‘‘demonstrated business objective’’ 

exists under § 800.241(a)(1)(i)(C). 

In response to a comment requesting 

clarity, the rule specifies that 

§ 800.241(a)(1)(ii)(A) applies only to 

financial data that could be used to 

determine an individual’s financial 

distress or hardship. 

Commenters also discussed the 

threshold for the number of individuals 

on whom a business collects and 

maintains data. Some suggested 

increasing the threshold for capturing 

sensitive personal data from one million 

individuals to, for example, five million 

U.S. citizens. These commenters argued 

that the lower threshold in the proposed 

rule might capture too many businesses 

that do not pose national security risks. 

Other commenters stated that these 

provisions could hinder the growth of 

social networking companies or 

financial technology start-ups. One 

commenter asked whether, for a 

company with a defined business plan 

to maintain or collect data on over one 

million people, the rule requires that the 

business plan describe with 

particularity an objective to maintain or 

collect such data, or merely the 

objective to have one million users, 

whose data is incidentally collected or 

maintained. 

The rule does not make any changes 

to the threshold of one million 

individuals. Section 800.241(a)(1)(i)(B) 

and (C) accounts for the possibility that 

a U.S. business holds sensitive personal 

data on sensitive individuals despite not 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3119 

targeting or tailoring their products or 

services to sensitive populations. In 

accordance with FIRRMA, the rule 

requires that a U.S. business collect or 

maintain ‘‘sensitive personal data’’ on 

U.S. citizens. See § 800.248(c). The 

threshold, however, refers to 

individuals, rather than U.S. citizens, 

because it is unfeasible in most cases for 

a U.S. business to confirm the 

citizenship status of individuals of 

whom it has maintained or collected 

sensitive personal data. The threshold of 

one million individuals will ensure that 

large data collectors, which in many 

industries account for the vast majority 

of data being collected, will be 

included. Conversely, the threshold will 

minimize additional regulatory burden 

for many small businesses and 

companies that incidentally collect or 

maintain data on a small number of 

individuals. 

The rule makes clarifying edits to 

§ 800.241(a)(1)(i) and adds examples in 

§ 800.241(c)(1)-(5) to further illustrate 

the rule’s application. Examples 1–3 in 

§ 800.241(c) address the timing element 

of the one million individual threshold, 

showing that if the U.S. business 

collects or maintains the applicable data 

on over one million people at any time 

over the preceding twelve months, the 

requirement in § 800.241(a)(1)(i)(A) is 

met. Example 4 clarifies that the parties 

should consider the number of 

individuals for whom sensitive personal 

data is maintained or collected in the 

aggregate across the enumerated 

categories. Example 5, as noted above, 

illustrates the scope of the 

‘‘demonstrated business objective’’ 

provision. 

Commenters also addressed the 

proposed rule’s treatment of genetic 

data. Some suggested that the scope of 

genetic information as proposed was too 

broad, and that it should be narrowed in 

a way that remains consistent with 

national security. Others suggested 

narrowing the definition to focus on, for 

example, identifiable data or 

information about a person’s full 

genome, to better tailor the definition to 

national security concerns. Other 

commenters recommended modifying 

the definition to exclude anonymized 

data obtained from drug discovery or 

clinical trials, or aggregated data from 

large heterogeneous populations. 

In response to these comments, the 

rule recalibrates this provision on 

genetic testing data and does so in two 

ways: First, by focusing the definition 

on ‘‘genetic tests’’ as that term is defined 

in the Genetic Information NonDiscrimination Act of 2008 (GINA); and 

second, by limiting the coverage of the 

rule to identifiable data. To account for 

datasets commonly used in research, the 

rule also carves out genetic testing data 

derived from databases maintained by 

the U.S. Government and routinely 

provided to private parties for the 

purposes of research. 

Section 800.244—Substantial Interest 

The proposed rule established a 

voting interest threshold for the 

definition of ‘‘substantial interest.’’ 

Commenters requested additional 

clarification on its application, 

including with respect to limited 

partners of investment funds, asked 

whether this provision applies to only a 

single foreign government, and inquired 

about the mechanics of § 800.244 

regarding the voting interests of parents. 

The rule revises § 800.244 in response 

to these comments. It clarifies, in 

§ 800.244(a), that substantial interest 

applies to a single foreign government, 

which is consistent with the definition 

of ‘‘foreign government’’ at § 800.222, 

which, in turn, includes both national 

and subnational governments, including 

their respective departments, agencies, 

and instrumentalities. In § 800.244(a), 

the rule also excludes governments of 

excepted foreign states in order to better 

synchronize the application of the two 

mandatory filing requirements under 

§ 800.401. 

Additionally, the rule revises 

§ 800.244(b) to define ‘‘substantial 

interest,’’ in certain circumstances, as a 

foreign government’s interests in the 

general partner (or equivalent) only, 

disregarding its limited partner 

interests. This provides clarity to parties 

in the investment fund context and 

focuses the substantial interest analysis 

on the entity that typically is 

responsible for the day-to-day 

decisionmaking regarding the 

investment fund. Finally, the rule adds 

illustrative examples. 

Section 800.248—TID U.S. Business 

The proposed rule defined the types 

of businesses with certain involvement 

in critical technology, critical 

infrastructure, and sensitive personal 

data in which an investment may 

constitute a covered investment. 

Commenters requested clarification 

regarding the application of this rule to 

a U.S. business that indirectly maintains 

or collects sensitive personal data. In 

response to these comments, the rule 

adds examples addressing scenarios in 

which a U.S. business is maintaining or 

collecting sensitive personal data 

indirectly via an intermediary. 

Additionally, the rule adds 

illustrative examples with respect to 

critical technology, informed by the 

Committee’s experience with respect to 

the pilot program on certain 

transactions involving foreign persons 

and critical technologies. One example 

illustrates that the mere verification of 

the fit and form of a relevant critical 

technology is not ‘‘testing’’ under 

§ 800.248(a). Another example 

illustrates that a U.S. business that 

ceases performing one of the actions 

listed in § 800.248(a) but retains the 

ability to perform the relevant action 

with regard to a critical technology, is 

a TID U.S. business. 

Finally, with respect to TID U.S. 

businesses described in § 800.252(a) 

(i.e., those related to critical technology) 

it is important for parties to be aware 

that the rule establishes the Committee’s 

jurisdiction over covered investments in 

any U.S. business that ‘‘produces, 

designs, tests, manufactures, fabricates, 

or develops’’ one or more critical 

technologies. However, as discussed 

below in connection with § 800.401, the 

rule requires mandatory declarations for 

transactions involving only a subset of 

these TID U.S. businesses. 

Section 800.251—United States 

The rule revises the definition of 

‘‘United States’’ for consistency with the 

definition in FIRRMA. 

Section 800.252—U.S. Business 

The proposed rule revised the 

definition of ‘‘U.S. business’’ from the 

Prior Regulations by excluding the 

phrase ‘‘but only to the extent of its 

activities in interstate commerce in the 

United States.’’ Commenters requested 

that the Committee restore the prior 

definition of ‘‘U.S. business’’ or provide 

clarity with respect to the Committee’s 

intended interpretation of that term. The 

rule makes no change to the proposed 

definition. The proposed definition 

tracks the language of FIRRMA and is 

not intended to suggest that the extent 

of a business’s activities in interstate 

commerce in the United States is 

irrelevant to the Committee’s analysis of 

national security risk. 

The rule also makes amendments to 

example 2 of § 800.252(b) to illustrate 

that a business may export and license 

technology and provide services into the 

United States, yet not qualify as a U.S. 

business for purposes of the rule. 

Section 800.254—Voting Interest 

The proposed rule did not change the 

definition of ‘‘voting interest’’ from the 

Prior Regulations. Commenters sought 

additional clarification about the scope 

of the voting interest involved, 

including whether it includes consent, 

veto, or other special rights, or how 

parties should calculate voting interest 

in situations where there are different 


lotter on DSKBCFDHB2PROD with RULES2
3120 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

levels of voting interest types (e.g., 

preferred stock). Commenters also 

suggested the term be limited to voting 

interests in major decisions. 

The rule makes no change to 

§ 800.254 in response to these 

comments. The definition of ‘‘voting 

interest’’ is long-established, and, as 

many commenters noted, any revisions 

will have wide-ranging effects 

throughout the regulations because 

voting interest is incorporated into other 

defined terms, such as parent. Where 

appropriate, the Treasury Department 

provided clarification through revisions 

to other sections of the regulations, for 

instance, with respect to the definition 

of ‘‘substantial interest’’ in § 800.244, 

discussed above. 

3. Subpart C—Coverage 

Subpart C of the proposed rule 

included provisions that described with 

particularity transactions that are, or are 

not, ‘‘covered control transactions’’ or 

‘‘covered investments.’’ These 

provisions contain several examples 

illustrating different scenarios, and 

commenters requested additional 

examples, including particular 

examples illustrating the rule’s 

treatment of export agreements or 

technology transfers. 

In response to these comments, the 

rule revises and supplements the 

examples in § 800.305 through 

§ 800.307, as further discussed below. 

The rule also makes technical revisions 

to § 800.301 through § 800.304, and 

§ 800.308. Note that technology transfers 

are separately addressed by export 

control regulations promulgated by the 

Department of Commerce and the 

Department of State. The Treasury 

Department refers the public to the 

Export Administration Regulations, at 

15 CFR parts 730–774, and the 

International Traffic in Arms 

Regulations, at 22 CFR parts 120–130. 

Section 800.305—Incremental 

Acquisitions 

The proposed rule provided 

affirmative assurance that certain 

transactions subsequent to a covered 

control transaction for which the 

Committee concluded all action under 

section 721 on the basis of a notice are 

not covered transactions. Commenters 

requested a number of clarifications, 

including regarding whether an 

incremental investment or acquisition of 

additional rights in a U.S. business by 

a foreign person that already controls 

that business would constitute a 

covered transaction. Other commenters 

asked whether the Committee will 

communicate to parties whether the 

Committee found jurisdiction over a 

particular investment as a covered 

control transaction or a covered 

investment, or how the incremental 

acquisition rule applies to related but 

not wholly owned entities. 

Revisions were made in response to 

some of the comments. The rule 

expands the incremental acquisition 

rule to apply to transactions made 

subsequent to a covered control 

transaction submitted to the Committee 

via declaration, and for which the 

Committee concludes action based upon 

that declaration. The rule also makes 

technical edits and adds an example 

regarding related entities. Additionally, 

note that the Committee, in response to 

a notice, currently informs parties 

whether an investment is a covered 

control transaction or a covered 

investment. 

Section 800.306—Lending Transactions 

The proposed rule expanded the Prior 

Regulations’ provision on ‘‘lending 

transactions’’ to address covered 

investments. A commenter noted that 

the mandatory declaration requirement 

may present challenges in the context of 

lending transactions and recommended 

that the Treasury Department not 

subject lenders to the mandatory 

declaration requirement for transactions 

involving a default on a loan, or, in the 

alternative, the parties in such a 

situation be required to file as soon as 

practicable. 

The rule makes no change in response 

to this comment. Lenders typically do 

not automatically acquire title to assets 

in the event of a default on a loan. In 

these cases, the lender must first 

perform an affirmative act, such as 

transferring ownership interests using a 

stock power, thus allowing the lender to 

comply with the mandatory declaration 

provision in § 800.401, if applicable, 

before performing such act. Moreover, 

even in the event of a default on a loan, 

lenders typically use commercially 

reasonable efforts to cure the event of 

default with the borrower, and only 

resort to taking title of assets as a last 

resort. These efforts typically last longer 

than the 30-day advance notification 

time requirement for mandatory 

declarations under § 800.401. If, 

however, parties to a transaction subject 

to the mandatory declaration 

requirement are unable to timely file a 

submission due to circumstances of a 

default, the Committee will consider the 

circumstances in assessing any potential 

civil monetary penalty determination. 

The rule does, however, revise 

§ 800.306, including its examples, to 

further clarify and illustrate its 

application to covered investments. 

Section 800.307—Specific Clarification 

for Investment Funds 

The proposed rule implemented 

FIRRMA’s provisions relating to 

investment funds. Commenters to the 

investment fund provisions supported 

the limitation on the application of 

CFIUS’s review authority over certain 

investment funds. Other commenters 

requested clarification on the scope of 

CFIUS’s jurisdiction with respect to 

investment funds. For example, a 

commenter asked if CFIUS’s jurisdiction 

extends to an investment fund 

organized outside of the United States 

but which has U.S. general and limited 

partners. The rule makes no change in 

response to these comments in 

§ 800.307 because the Treasury 

Department cannot provide 

confirmation of commenters’ legal 

interpretations, clarifications, or 

examples based on hypothetical 

scenarios that are highly fact-specific. 

Note that, as discussed further below, 

additional examples have been added in 

§ 800.401 addressing investment funds 

in the context of mandatory 

declarations. 

Another commenter suggested 

including additional examples 

illustrating certain rights that would not 

provide a limited partner with the 

ability to control the fund, or in the 

alternative, narrowing the statutorily 

enumerated examples of rights that 

would constitute control. The 

Committee’s authority in this respect is 

limited by the provision in FIRRMA 

relating to investment funds, and the 

rule makes no change in response to this 

comment. 

One commenter noted that the 

Committee’s section of the Treasury 

Department website describing the pilot 

program (which features responses to 

frequently asked questions) clarifies that 

failure to meet all of the criteria in 

§ 801.304(a) does not necessarily mean 

that an indirect investment by the 

foreign person in a TID U.S. business 

through an investment fund is a covered 

transaction. Consistent with § 801.304, 

§ 800.307(a) is not intended to create a 

presumption that any investment by a 

foreign person in a TID U.S. business 

through an investment fund is a covered 

transaction if the criteria in § 800.307(a) 

are not met; the particular facts and 

circumstances of the investment would 

need to be considered. 

A commenter suggested that the 

definition is intended as a barrier to 

investment by foreign-government 

owned investment funds, because 

foreign-government owned or controlled 

funds cannot seek exemption to the 

mandatory declaration requirements, 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3121 

while some investment funds that are 

not state-owned or controlled may seek 

this waiver. The investment fund 

clarification addresses scenarios 

involving foreign limited partners in 

investment funds that are managed 

exclusively by another party. A foreigngovernment owned or controlled 

investment fund is inconsistent with 

such scenarios, which typically involve 

passive limited partners. The rule makes 

no change in response to this comment. 

Finally, the rule revises the lead-in of 

§ 800.307(a) and criteria in 

§ 800.307(a)(2) regarding a general 

partner of an entity, in both instances to 

conform with the language of FIRRMA. 

Section 800.308—Timing Rule for a 

Contingent Equity Interest 

The Treasury Department received 

comments regarding the interaction of 

the timing rule in § 800.308 with 

mandatory filings required under 

§ 800.401, including suggestions to 

revise the definition of ‘‘completion 

date’’ in § 800.206, discussed above. The 

rule makes no change in response to 

these comments. In cases where the 

conversion of a contingent equity 

interest may result in a covered 

transaction that requires the submission 

of a filing under § 800.401, parties are 

advised to carefully consider whether 

§ 800.308 is applicable to avoid 

potential penalties. 

4. Subpart D—Declarations 

The proposed rule set out an 

abbreviated filing process through the 

submission of a declaration, as directed 

by FIRRMA. Commenters stated that the 

declaration process impacts foreign 

direct investment by putting foreign 

firms at a competitive disadvantage visa`-vis U.S. investors, especially in the 

context of competitive auctions. 

Commenters also proposed that CFIUS 

commit to notify parties of specific 

national security concerns, if any, in a 

transaction to enable the parties to 

promptly address such concerns. 

Commenters also requested that the 

Treasury Department create an 

expedited review process for evaluating 

declarations (or notices) submitted by 

parties with whom the Committee is 

already familiar through having 

reviewed and cleared prior transactions 

involving the same foreign person. One 

commenter suggested the Committee 

provide ‘‘comfort letters’’ to certain 

investors who have been reviewed by 

the Committee previously and found not 

to pose a national security threat. 

Finally, commenters requested that 

CFIUS make available a list of factors it 

considers when reviewing declarations 

that, if addressed by the parties, would 

lead to the Committee concluding all 

action on the transaction in 30 days. 

The rule makes no change to the 

process and procedures for declarations 

in response to these comments. The 

Treasury Department is aware of the 

importance of timing to transaction 

parties and notes that the declaration 

process itself is an expedited review. 

The Committee must evaluate each 

transaction based upon the particular 

facts and circumstances, including the 

identity of the parties involved. As a 

result, the DPA provided for a specific 

review period to enable CFIUS agencies 

to carry out their national security 

responsibilities, and it would not be in 

the interest of national security for the 

Committee to further accelerate the 

assessment period. Similarly, it is not 

appropriate for the Committee to 

prescribe in regulations a list of factors 

that will expedite the Committee’s 

assessment of a declaration, given the 

fact-specific nature of each assessment 

conducted by the Committee. 

Section 800.401—Mandatory 

Declarations 

The proposed rule included a 

mandatory declaration requirement for 

transactions involving a ‘‘substantial 

interest’’ by a foreign government. 

Comments related to the mandatory 

filing requirement under § 800.401(b) 

are addressed in the discussion of the 

definition of ‘‘substantial interest’’ 

under § 800.244, above. The Pilot 

Program Interim Rule set forth a 

mandatory declaration requirement for 

covered transactions involving certain 

critical technology TID U.S. businesses. 

The Treasury Department received 

comments on the Pilot Program Interim 

Rule, both in response to the October 

2018 publication of the Pilot Program 

Interim Rule and in response to the 

September 2019 publication of the 

proposed rule for part 800. 

Commenters noted the complexity 

involved in assessing which 

investments require mandatory filings 

under the Pilot Program Interim Rule, 

including with respect to assessing 

whether a certain U.S. business’s 

connection to certain industries 

identified by NAICS codes meets the 

requirements of § 801.213 in the Pilot 

Program Interim Rule. Some 

commenters suggested that the 

Committee not continue to exercise its 

authority under FIRRMA to require 

mandatory declarations for transactions 

involving certain U.S. businesses with 

activities relating to critical 

technologies. Other commenters 

recommended that the regulations 

require mandatory declarations only for 

transactions involving a defined subset 

of critical technologies (e.g., only 

emerging and foundational 

technologies), or remove the mandatory 

filing requirement for certain other 

critical technologies that do not raise 

national security concerns (e.g., nonsensitive encryption software) or certain 

sectors (e.g., biotechnology) in order to 

encourage foreign investment in those 

sectors. 

Commenters also suggested that 

certain categories of investors, such as 

excepted investors or FOCI-mitigated 

entities, be exempted from the 

mandatory declaration requirement for 

control transactions or, as applicable, 

covered investments, or that the 

Committee waive mandatory filings for 

transactions involving the acquisition of 

certain rights—such as a board seat—in 

a U.S. business so as not to impact 

foreign investment. 

The rule integrates the mandatory 

declaration requirement from the Pilot 

Program Interim Rule, which is based 

upon whether a transaction involves 

certain U.S. businesses with a nexus to 

specified industries identified by NAICS 

codes. However, the Treasury 

Department anticipates issuing a 

separate notice of proposed rulemaking 

that would replace this requirement 

with a mandatory declaration 

requirement based upon export control 

licensing requirements. Additionally, in 

response to public comments, the rule 

exempts certain transactions from the 

critical technology mandatory 

declaration requirement. These 

exemptions relate to excepted investors, 

FOCI-mitigated entities, certain 

encryption technology, and investment 

funds managed exclusively by, and 

ultimately controlled by, U.S. nationals. 

The Treasury Department anticipates 

that these exemptions would continue 

to apply even if the scope of the 

mandatory declaration requirement is 

modified as described above. 

Commenters also requested the 

inclusion of a mechanism to the 

mandatory declaration requirements, 

through which the Committee would 

grant waivers to individual foreign 

investors (which some commenters 

described as ‘‘trusted investors’’) after 

evaluating such investors pursuant to 

various criteria. Some commenters 

suggested that this mechanism only 

apply to parties that have filed a notice 

that was cleared by the Committee, 

noting that the Committee will have 

already examined the investor and any 

national security concerns it presents 

through its review of the notice. The 

rule makes no change in response to 

these comments. The Treasury 

Department will continue to consider 

instituting a potential waiver 


lotter on DSKBCFDHB2PROD with RULES2
3122 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

mechanism in the future. Once the 

Committee has more data on mandatory 

declarations under this rule, it can 

better assess the potential for a waiver 

program and mechanisms for 

implementation and administration. 

Finally, one commenter requested 

clarification about the commencement 

of the 30-day advance notification 

requirement for mandatory declarations. 

As stated in § 800.401(g), this 30-day 

period begins when a declaration or 

notice, as applicable, is submitted, and 

not upon acceptance by the Staff 

Chairperson. Under § 800.401(i), in the 

event the Committee rejects or permits 

a withdrawal of the declaration (or 

notice), the 30-day period resets from 

the date of resubmission, absent written 

approval of the Staff Chairperson. The 

rule also includes an exception from 

mandatory declarations for air carriers 

to conform to FIRRMA. 

Section 800.403—Procedures for 

Declarations 

The proposed rule set forth the 

procedures for declarations. 

Commenters requested that CFIUS begin 

assessments of declarations, or provide 

feedback on a declaration, within five 

days of receiving it. The rule makes no 

change in response to these comments. 

The Committee makes every effort to 

provide feedback to the parties and 

initiate review of a transaction as 

quickly as possible. Consistent with 

FIRRMA, the rule does prescribe that 

the Committee respond within a set 

timeframe to voluntary notices that 

include certain stipulations. 

Section 800.404—Contents of 

Declarations 

The proposed rule set forth the 

information requirements for a 

declaration, consistent with FIRRMA’s 

requirement that CFIUS establish 

declarations as ‘‘abbreviated notices that 

would not generally exceed five pages 

in length.’’ As part of a declaration, 

parties may voluntarily stipulate that 

the transaction is a covered transaction 

and, if so, whether the transaction is a 

foreign-government controlled 

transaction. 

One commenter objected to the 

provision in § 800.404(e) that parties 

stipulate in a declaration that a 

transaction is a covered investment, 

covered transaction, or a foreign 

government-controlled transaction. Note 

that, under § 800.404(e), stipulations are 

not required from parties submitting 

declarations, but are available as an 

option and may help expedite the 

Committee’s review. Making a 

stipulation does not affect judicial 

review of CFIUS’s final decision 

regarding a transaction. Rather, parties 

that make a stipulation may not 

challenge a decision as to whether the 

transaction is a covered investment, 

covered transaction, or foreign 

government-controlled transaction, 

where that decision is based on the 

stipulation. 

While no change was made to the 

declaration content requirement as a 

result of this comment, the rule makes 

modifications in this section to require 

additional information, including to 

allow the Committee to more efficiently 

assess whether a transaction is a 

covered transaction. For example, for 

declarations involving the acquisition of 

a U.S. business that produces, designs, 

tests, manufactures, fabricates, or 

develops one or more critical 

technologies, parties must describe the 

item(s) and the applicable export 

control classification/category. 

Section 800.407—Committee Actions 

The rule clarifies that the Committee 

may request that parties file a written 

notice under subpart E if it has reason 

to believe that the transaction may raise 

national security considerations. 

5. Subpart E—Notices 

The proposed rule set out the process 

for filing notices. 

Section 800.501—Procedures For 

Notices 

One commenter suggested that the 

Committee be prohibited from 

reviewing a transaction after a certain 

time period following its completion. 

The rule makes no change in response 

to this comment. Parties that wish to 

obtain safe harbor from the Committee 

with respect to previously completed 

transactions can undertake to do so by 

filing a voluntary notice or submitting a 

declaration. 

Section 800.502—Contents of Voluntary 

Notices 

One commenter suggested that asking 

parties for a cyber-security plan is 

insufficient to determine whether the 

party’s information technology systems 

are adequately protected. The 

commenter recommended that the 

Committee rely on cyber-security 

standards promulgated by other federal 

agencies, such as the Department of 

Homeland Security, or NIST within the 

Department of Commerce. Alternatively, 

the commenter recommended using an 

algorithm to assess a filing party’s cybersecurity vulnerabilities and suggested 

requiring parties to meet certain cyber 

security standards. The rule makes no 

change in response to these comments. 

A company’s cyber-security plan is 

relevant information for the Committee 

to consider. Adherence by a party to 

government or industry standards could 

be a relevant factor in the Committee’s 

risk assessment, but is not necessary to 

prescribe in regulations. Revisions were 

made to § 800.502, which are similar to 

the revisions discussed above under 

§ 800.404, as well as other clarifying 

edits. 

6. Subpart G—Finality of Action 

Section 721 maintains that a covered 

transaction that has been notified to 

CFIUS and on which CFIUS has 

concluded action under section 721 

after determining that there are no 

unresolved national security concerns, 

qualifies for safe harbor from further 

action by the Committee. A commenter 

noted the rule lacked a safe harbor 

provision and requested additional 

guidance on how to structure a 

transaction to ensure it is not altered or 

overturned by the Committee. 

In accordance with section 721, the 

rule provides a safe harbor to parties, 

under § 800.701, and through the 

incremental acquisition rule discussed 

above. Neither section 721 nor this rule 

prescribes transaction structures, 

allowing parties to structure 

transactions in the most appropriate 

manner based on the facts and 

circumstances of the particular 

transaction. As described above, section 

721(f) of the DPA provides an 

illustrative list of factors for 

consideration by the Committee and the 

President in determining whether a 

covered transaction poses a national 

security risk. Additionally, the Treasury 

Department’s previously published 

Guidance Concerning the National 

Security Review Conducted by CFIUS, 

73 FR 74567 (December 8, 2008), is still 

in effect. 

7. Subpart I—Penalties and Damages 

Commenters requested that the 

Treasury Department promulgate 

guidelines on when it will assess civil 

monetary penalties. The Treasury 

Department is considering whether it 

can make additional information 

available to assist the public in 

understanding the Committee’s 

enforcement priorities. A number of 

clarifying and technical edits were made 

to this subpart. Additionally, the rule 

revises § 800.901(f) to allow tolling of 

the Committee’s deadline to respond to 

a petition, upon written agreement with 

the party, to facilitate further 

negotiations, including for settlement of 

the potential civil monetary penalty. 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3123 

8. Subpart J—Foreign National Security 

Investment Review Regimes 

Section 800.1001—Determinations 

The proposed rule provided for 

Committee determinations regarding a 

foreign state’s process to review foreign 

investment for national security in its 

own country and its cooperation with 

the United States with respect to review 

of foreign investment. Commenters 

recommended that the Committee, in 

making these determinations, recognize 

that differing systems can achieve the 

same outcomes, and avoid insisting that 

foreign states adopt procedures that 

mirror those of CFIUS. 

The rule makes no change to 

§ 800.1001 in response to these 

comments. The Treasury Department 

will in the near term publish on the 

Committee’s section of its website the 

factors the Committee will take into 

consideration when making 

determinations, which focus on the 

substance of a foreign state’s process 

and cooperation with the United States 

to address national security risks arising 

from foreign investment, and do not 

prescribe a specific form. Finally, such 

determinations are relevant only to the 

status of a foreign state as an excepted 

foreign state under the rule. They do not 

imply any broader U.S. Government 

approval of a foreign state’s investment 

review regime, including aspects of a 

foreign state’s investment review regime 

that may incorporate factors beyond 

national security. 

9. Other Comments 

The Treasury Department also 

received comments on topics not 

specifically addressed in the proposed 

rule. Commenters noted that the 

proposed rule did not address 

independent monitors for mitigation 

agreements, and recommended that the 

Committee provide additional 

clarification, including on monitor 

qualifications or whether monitors may 

provide additional services without 

violating the conflict of interest 

provision in FIRRMA. The rule makes 

no change in response to these 

comments. The Treasury Department 

takes seriously the importance of 

ensuring the integrity and qualifications 

of monitors, including avoidance of 

conflicts of interest. The Committee has 

extensive experience with the use of 

monitors for mitigation agreements and 

has found that appropriate safeguards 

can be incorporated into the mitigation 

agreement itself, which is dependent on 

facts and circumstances of each 

transaction. 

IV. Rulemaking Requirements 

Executive Order 12866 

These regulations are not subject to 

the general requirements of Executive 

Order 12866, which governs review of 

regulations by the Office of Information 

and Regulatory Affairs (OIRA) in the 

Office of Management and Budget 

(OMB), because they relate to a foreign 

affairs function of the United States, 

pursuant to section 3(d)(2) of that order. 

In addition, these regulations are not 

subject to review under section 6(b) of 

Executive Order 12866 pursuant to 

section 7(c) of the April 11, 2018 

Memorandum of Agreement between 

the Treasury Department and OMB, 

which states that CFIUS regulations are 

not subject to OMB’s standard 

centralized review process under 

Executive Order 12866. 

Justification for Interim Rule 

The proposed rule, and the proposed 

rule at 84 FR 50214, included 

provisions that use the term ‘‘principal 

place of business.’’ The Treasury 

Department received comments on these 

provisions, including recommendations 

to add a definition for the term. 

In response to these comments, a 

definition for ‘‘principal place of 

business’’ has been included. The 

Treasury Department believes it would 

benefit the public and the Committee to 

receive comments from the public on 

this definition before it is made final. 

This rule therefore contains an interim 

rule that implements a definition for the 

term ‘‘principal place of business’’ that 

will become effective with the rest of 

the rule, and the Treasury Department is 

providing the public 30 days to 

comment on the new definition of 

‘‘principal place of business.’’ 

It is in the public interest to make the 

‘‘principal place of business’’ definition 

effective on the same date as the rule. 

Commenters requested greater clarity 

concerning which parties are subject to 

the mandatory declaration requirements 

and to CFIUS jurisdiction more 

generally. The new definition directly 

addresses those requests and provides 

greater transactional certainty. If the 

definition were not effective with this 

rule, some parties that, under the new 

definition, may not need to submit a 

declaration (or choose to file a notice in 

lieu of a mandatory declaration) with 

the Committee would nonetheless have 

to (or choose to) do so. By clarifying that 

certain parties need not submit 

declarations and that certain 

transactions are not subject to CFIUS 

jurisdiction, the addition of the 

definition of ‘‘principal place of 

business’’ reduces the regulatory burden 

on the public, allowing some parties to 

forego the expense, time, and 

uncertainty involved in submitting a 

declaration or filing a notice with the 

Committee. Because of the added clarity 

and potential reduction in regulatory 

burden the definition provides to the 

public, having it become effective 

immediately is in the public’s interest. 

Nonetheless, the Treasury Department is 

requesting comments to that definition 

and will consider them before finalizing 

the interim rule. 

Paperwork Reduction Act 

The collections of information 

contained in this rule were submitted to 

OMB for review along with the 

proposed rule, in accordance with the 

Paperwork Reduction Act of 1995 (PRA, 

44 U.S.C. 3507(d)). No comments were 

received to the PRA estimates. However, 

and as noted above, the Treasury 

Department has modified some of the 

information requests associated with 

notices and on the declarations form. 

These changes represent clarifications 

that the Treasury Department identified 

in its review of the information 

requirements, as well as changes 

necessary to implement certain 

provisions that were modified from the 

proposed rule. The additional 

information requested is not 

substantially different from the 

information that was proposed to be 

collected, and the Treasury 

Department’s estimates of burden hours 

for completing declarations and notices 

do not differ from those estimated at the 

proposed rule stage. These collections 

have been submitted to OMB under 

control number 1505–0121. 

Under the PRA, an agency may not 

conduct or sponsor, and a person is not 

required to respond to, a collection of 

information unless it displays a valid 

control number assigned by OMB. 

Regulatory Flexibility Act 

Regardless of whether the provisions 

of the Regulatory Flexibility Act (RFA, 

5 U.S.C. 601 et seq.), apply to this 

rulemaking, for reasons noted in the 

preamble to the proposed rule, the 

Treasury Department prepared for 

public comment an Initial Regulatory 

Flexibility Analysis and determined 

through that analysis that the proposed 

rule would most likely not affect a 

substantial number of small entities. 

The Treasury Department specifically 

requested comments on the proposed 

rule’s effect on small entities; no such 

public comments were received. The 

Secretary of the Treasury hereby 

certifies that the rule will not have a 

significant economic impact on a 


lotter on DSKBCFDHB2PROD with RULES2
3124 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

substantial number of small entities 

based on the following. 

The rule expands the jurisdiction of 

the Committee to include additional 

types of transactions not previously 

subject to CFIUS review. Additionally, 

the Committee will retain its existing 

jurisdiction over any transaction 

through which any foreign person could 

acquire control of any U.S. business. 

Accordingly, the rule may impact any 

U.S. business, including a small U.S. 

business that engages in a covered 

transaction. 

There is no single source for 

information on the number of small U.S. 

businesses that receive foreign 

investment (direct or indirect), 

including those involved with critical 

technologies, critical infrastructure, or 

sensitive personal data, such that they 

would be directly impacted by this rule. 

However, the Bureau of Economic 

Analysis (BEA) within the Department 

of Commerce collects, on an annual 

basis, data on new foreign direct 

investment in the United States through 

its Survey of New Foreign Direct 

Investment in the United States (Form 

BE–13). While these data are selfreported, and include only direct 

investments in U.S. businesses in which 

the foreign person acquires at least 10 

percent of the voting shares (and 

consequently, do not capture 

investments below 10 percent, which 

may nevertheless be covered 

transactions), they nonetheless provide 

relevant information on a category of 

U.S. businesses that receive foreign 

investment, some of which may be 

covered by the proposed rule. 

According to the BEA, in 2018, the 

most current year for which data is 

available, foreign persons obtained at 

least a 10 percent voting share in 832 

U.S. businesses. See U.S. Bureau of 

Economic Analysis, ‘‘Number of 

Investments Initiated in 2018, 

Distribution of Planned Total 

Expenditures, Size by Type of 

Investment,’’ https://apps.bea.gov/ 

international/xls/Table15-14-15-16-17- 

18.xls (last visited January 6, 2020). The 

BEA only reports the general size of the 

investment transaction, not the type of 

the U.S. business involved, nor whether 

the U.S. business is considered a ‘‘small 

business’’ by the Small Business 

Administration (SBA), which defines 

small businesses based on annual 

revenue or number of employees. The 

smallest foreign investment transactions 

that the BEA reports are those with a 

dollar value below $50 million. While 

not all U.S. businesses receiving a 

foreign investment of less than $50 

million are considered ‘‘small’’ for the 

purposes of the RFA, many might be, 

and the number of U.S. businesses 

receiving foreign investments of less 

than $50 million can serve as a proxy 

for the number of transactions involving 

small U.S. businesses that might be 

subject to CFIUS’s jurisdiction. 

Of the above mentioned 832 U.S. 

businesses receiving foreign investment 

in 2018, 576 were involved in 

transactions valued at less than $50 

million. Although this figure is under 

inclusive because it does not capture all 

transactions that could potentially fall 

under the rule, it also is over inclusive 

because it is not limited to any 

particular type of U.S. business. We 

believe the figure of 576 is the best 

estimate based on the available data of 

the number of small U.S. businesses that 

may be impacted by this rule. 

According to the SBA, there are 30.2 

million small businesses (defined as 

‘‘firms employing fewer than 500 

employees’’) in the United States as of 

2018. https://www.sba.gov/sites/default/ 

files/advocacy/2018-Small-BusinessProfiles-US.pdf (last visited January 6, 

2020). If approximately 600 small U.S. 

businesses will be potentially impacted 

by this rule, then the rule may 

potentially impact less than one percent 

of all small U.S. businesses. 

Accordingly, the Department of the 

Treasury does not believe the rule will 

impact a ‘‘substantial number of small 

entities.’’ 

Nonetheless, the rule includes 

provisions that would reduce the costs 

to all businesses, including small 

businesses. For example, the availability 

of a shorter declaration for covered 

transactions may result in smaller cost 

to entities than having to prepare a 

lengthier notice. Additionally, having a 

fillable form for declarations may 

reduce some of the cost for parties. 

Congressional Review Act 

This rule has been submitted to OIRA, 

which has determined that the rule is a 

‘‘major’’ rule under the Congressional 

Review Act. However, the Treasury 

Department has determined there is 

good cause under 5 U.S.C. 808(2) to 

publish the rule notwithstanding the 

timing requirements for major rules 

under 5 U.S.C. 801(a)(3) because 

delaying the effectiveness of this rule 

beyond 30 days is impracticable, 

unnecessary, and contrary to the public 

interest. Under FIRRMA, the provisions 

expanding jurisdiction and establishing 

declarations, among others, will become 

effective on February 13, 2020, 

regardless of whether this rule is 

published and effective. See Section 

1727(b)(1)(A) of FIRRMA. Without the 

processes, procedures and definitions 

provided by the rule as directed by 

FIRRMA, market participants will face 

substantial hardship, delay, and 

expense in complying with the 

requirements of FIRRMA. Accordingly, 

the Treasury Department finds good 

cause that notice and public procedure 

under 5 U.S.C. 801(a)(3) are 

impracticable, unnecessary, and 

contrary to the public interest. This rule 

will become effective on February 13, 

2020, notwithstanding 5 U.S.C. 

801(a)(3). 

List of Subjects 

31 CFR Part 800 

Foreign investments in the United 

States, Investigations, Investments, 

Investment companies, National 

defense, Reporting and recordkeeping 

requirements. 

31 CFR Part 801 

Foreign investments in the United 

States, Investigations, Investments, 

Investment companies, National 

defense, Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Treasury Department 

amends parts 800 and 801 of title 31 of 

the Code of Federal Regulations as 

follows: 

■ 1. Revise part 800 to read as follows: 

PART 800—REGULATIONS 

PERTAINING TO CERTAIN 

INVESTMENTS IN THE UNITED 

STATES BY FOREIGN PERSONS 

Subpart A—General 

Sec. 

800.101 Scope. 

800.102 Risk-based analysis. 

800.103 Effect on other law. 

800.104 Applicability rule. 

800.105 Rules of construction and 

interpretation. 

Subpart B—Definitions 

800.201 Aggregated data. 

800.202 Anonymized data. 

800.203 Business day. 

800.204 Certification. 

800.205 Committee; Chairperson of the 

Committee; Staff Chairperson. 

800.206 Completion date. 

800.207 Contingent equity interest. 

800.208 Control. 

800.209 Conversion. 

800.210 Covered control transaction. 

800.211 Covered investment. 

800.212 Covered investment critical 

infrastructure. 

800.213 Covered transaction. 

800.214 Critical infrastructure. 

800.215 Critical technologies. 

800.216 Encrypted data. 

800.217 Entity. 

800.218 Excepted foreign state. 

800.219 Excepted investor. 

800.220 Foreign entity. 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3125 

800.221 Foreign government. 

800.222 Foreign government-controlled 

transaction. 

800.223 Foreign national. 

800.224 Foreign person. 

800.225 Hold. 

800.226 Identifiable data. 

800.227 Investment. 

800.228 Investment fund. 

800.229 Involvement. 

800.230 Lead agency. 

800.231 Manufacture. 

800.232 Material nonpublic technical 

information. 

800.233 Minimum excepted ownership. 

800.234 Own. 

800.235 Parent. 

800.236 Party to a transaction. 

800.237 Person. 

800.238 Personal identifier. 

800.239 Principal place of business. 

800.240 Section 721. 

800.241 Sensitive personal data. 

800.242 Service. 

800.243 Solely for the purpose of passive 

investment. 

800.244 Substantial interest. 

800.245 Substantive decisionmaking. 

800.246 Supply. 

800.247 Targets or tailors. 

800.248 TID U.S. business. 

800.249 Transaction. 

800.250 Unaffiliated TID U.S. business. 

800.251 United States. 

800.252 U.S. business. 

800.253 U.S. national. 

800.254 Voting interest. 

Subpart C—Coverage 

800.301 Transactions that are covered 

control transactions. 

800.302 Transactions that are not covered 

control transactions. 

800.303 Transactions that are covered 

investments. 

800.304 Transactions that are not covered 

investments. 

800.305 Incremental acquisitions. 

800.306 Lending transactions. 

800.307 Specific clarification for 

investment funds. 

800.308 Timing rule for a contingent equity 

interest. 

Subpart D—Declarations 

800.401 Mandatory declarations. 

800.402 Voluntary declarations. 

800.403 Procedures for declarations. 

800.404 Contents of declarations. 

800.405 Beginning of 30-day assessment 

period. 

800.406 Rejection, disposition, or 

withdrawal of declarations. 

800.407 Committee actions. 

Subpart E—Notices 

800.501 Procedures for notices. 

800.502 Contents of voluntary notices. 

800.503 Beginning of 45-day review period. 

800.504 Deferral, rejection, or disposition of 

certain voluntary notices. 

800.505 Determination of whether to 

undertake an investigation. 

800.506 Determination not to undertake an 

investigation. 

800.507 Commencement of investigation. 

800.508 Completion or termination of 

investigation and report to the President. 

800.509 Withdrawal of notices. 

Subpart F—Committee Procedures 

800.601 General. 

800.602 Role of the Secretary of Labor. 

800.603 Materiality. 

800.604 Tolling of deadlines during lapse 

in appropriations. 

Subpart G—Finality of Action 

800.701 Finality of actions under section 

721. 

Subpart H—Provision and Handling of 

Information 

800.801 Obligation of parties to provide 

information. 

800.802 Confidentiality. 

Subpart I—Penalties and Damages 

800.901 Penalties and damages. 

800.902 Effect of lack of compliance. 

Subpart J—Foreign National Security 

Investment Review Regimes 

800.1001 Determinations. 

800.1002 Effect of determinations. 

Appendix A to Part 800—Covered 

Investment Critical Infrastructure 

and Functions Related to Covered 

Investment Critical Infrastructure 

Appendix B to Part 800—Industries 

Authority: 50 U.S.C. 4565; E.O. 11858, as 

amended, 73 FR 4677. 

Subpart A—General 

§ 800.101 Scope. 

(a) Section 721 of title VII of the 

Defense Production Act of 1950, as 

amended (50 U.S.C. 4565), authorizes 

the Committee on Foreign Investment in 

the United States to review any covered 

transaction, as defined in § 800.213 of 

this part, and to mitigate any risk to the 

national security of the United States 

that arises as a result of such 

transactions. Section 721 also authorizes 

the President to suspend or prohibit any 

covered transaction when, in the 

President’s judgment, there is credible 

evidence that leads the President to 

believe that the foreign person engaging 

in a covered transaction might take 

action that threatens to impair the 

national security of the United States, 

and when provisions of law other than 

section 721 and the International 

Emergency Economic Powers Act (50 

U.S.C. 1701 et seq.) do not, in the 

judgment of the President, provide 

adequate and appropriate authority for 

the President to protect the national 

security of the United States in the 

matter before the President. 

(b) This part implements regulations 

pertaining to covered transactions. 

Regulations pertaining to ‘‘covered real 

estate transactions’’ are addressed in 

part 802 of this chapter. 

§ 800.102 Risk-based analysis. 

Any determination of the Committee 

with respect to a covered transaction to 

suspend, refer to the President, or to 

negotiate, enter into or impose, or 

enforce any agreement or condition 

under section 721 shall be based on a 

risk-based analysis, conducted by the 

Committee, of the effects on the national 

security of the United States of the 

covered transaction. Any such riskbased analysis shall include credible 

evidence demonstrating the risk and an 

assessment of the threat, vulnerabilities, 

and consequences to national security 

related to the transaction. For purposes 

of this part, any such analysis of risk 

shall include and be informed by 

consideration of the following elements: 

(a) The threat, which is a function of 

the intent and capability of a foreign 

person to take action to impair the 

national security of the United States; 

(b) The vulnerabilities, which are the 

extent to which the nature of the U.S. 

business presents susceptibility to 

impairment of national security; and 

(c) The consequences to national 

security, which are the potential effects 

on national security that could 

reasonably result from the exploitation 

of the vulnerabilities by the threat actor. 

§ 800.103 Effect on other law. 

Nothing in this part shall be 

construed as altering or affecting any 

other authority, process, regulation, 

investigation, enforcement measure, or 

review provided by or established under 

any other provision of federal law, 

including the International Emergency 

Economic Powers Act, or any other 

authority of the President or the 

Congress under the Constitution of the 

United States. 

§ 800.104 Applicability rule. 

(a) Except as provided in paragraphs 

(b) and (c) of this section and otherwise 

in this part, the regulations in this part 

apply from February 13, 2020. 

(b) Subject to paragraph (c) of this 

section, for any transaction for which 

the following has occurred before 

February 13, 2020, the corresponding 

provisions of the regulations in this part 

that were in effect on February 12, 2020, 

will apply: 

(1) The completion date; 

(2) The parties to the transaction have 

executed a binding written agreement, 

or other binding document, establishing 

the material terms of the transaction; 

(3) A party has made a public offer to 

shareholders to buy shares of a U.S. 

business; or 

(4) A shareholder has solicited 

proxies in connection with an election 

of the board of directors of a U.S. 


lotter on DSKBCFDHB2PROD with RULES2
3126 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

business or an owner or holder of a 

contingent equity interest has requested 

the conversion of the contingent equity 

interest. 

(c) For any transaction to which part 

801 of this title was applicable from 

November 10, 2018, through February 

12, 2020, the regulations in part 801 in 

effect during that time will continue to 

apply. 

Note 1 to § 800.104: See subpart I 

(Penalties and Damages) of this part for 

specific applicability rules pertaining to that 

subpart. 

§ 800.105 Rules of construction and 

interpretation. 

(a) The examples included in this part 

are provided for informational purposes 

and should not be construed to alter the 

meaning of the text of the regulations in 

this part. 

(b) As used in this part, the term 

‘‘including’’ means ‘‘including but not 

limited to.’’ 

Subpart B—Definitions 

§ 800.201 Aggregated data. 

The term aggregated data means data 

that have been combined or collected 

together in summary or other form such 

that the data cannot be identified with 

any individual. 

§ 800.202 Anonymized data. 

The term anonymized data means 

data from which all personal identifiers 

have been completely removed. 

§ 800.203 Business day. 

The term business day means Monday 

through Friday, except the legal public 

holidays specified in 5 U.S.C. 6103, any 

day declared to be a holiday by federal 

statute or executive order, or any day 

with respect to which the U.S. Office of 

Personnel Management has announced 

that Federal agencies in the Washington, 

DC, area are closed. For purposes of 

calculating any deadline imposed by 

this part triggered by the submission of 

a party to a transaction under 

§ 800.401(g)(2) or § 800.501(i), any 

submissions received after 5 p.m. 

Eastern Time are deemed to be 

submitted on the next business day. 

Note 1 to § 800.203: See § 800.604 

regarding the tolling of deadlines during a 

lapse in appropriations. 

§ 800.204 Certification. 

(a) The term certification means a 

written statement signed by the chief 

executive officer or other duly 

authorized designee of a party filing a 

notice, declaration, or information, 

certifying under the penalties provided 

in the False Statements Accountability 

Act of 1996, as amended (18 U.S.C. 

1001) that the notice, declaration, or 

information filed: 

(1) Fully complies with the 

requirements of section 721, the 

regulations in this part, and any 

agreement or condition entered into 

with the Committee or any member of 

the Committee, and 

(2) Is accurate and complete in all 

material respects, as it relates to: 

(i) The transaction; and 

(ii) The party providing the 

certification, including its parents, 

subsidiaries, and any other related 

entities described in the notice, 

declaration, or information. 

(b) For purposes of this section, a duly 

authorized designee is: 

(1) In the case of a partnership, any 

general partner thereof; 

(2) In the case of a corporation, any 

officer or director thereof; 

(3) In the case of any entity lacking 

partners, officers, and directors, any 

individual within the organization 

exercising executive functions similar to 

those of a general partner of a 

partnership or an officer or director of 

a corporation; and 

(4) In the case of an individual, such 

individual or his or her legal 

representative. 

(c) In each case described in 

paragraphs (b)(1) through (4) of this 

section, such designee must possess 

actual authority to make the 

certification on behalf of the party filing 

a notice, declaration, or information. 

Note 1 to § 800.204: A sample certification 

may be found at the Committee’s section of 

the Department of the Treasury website. 

§ 800.205 Committee; Chairperson of the 

Committee; Staff Chairperson. 

The term Committee means the 

Committee on Foreign Investment in the 

United States. The Chairperson of the 

Committee is the Secretary of the 

Treasury. The Staff Chairperson of the 

Committee is the Department of the 

Treasury official so designated by the 

Secretary of the Treasury or by the 

Secretary’s designee. 

§ 800.206 Completion date. 

The term completion date means, 

with respect to a transaction, the earliest 

date upon which any ownership 

interest, including a contingent equity 

interest, is conveyed, assigned, 

delivered, or otherwise transferred to a 

person, or a change in rights that could 

result in a covered control transaction or 

covered investment occurs. 

Note 1 to § 800.206: See § 800.308 

regarding the timing rule for a contingent 

equity interest. 

§ 800.207 Contingent equity interest. 

The term contingent equity interest 

means a financial instrument that 

currently does not constitute an equity 

interest but is convertible into, or 

provides the right to acquire, an equity 

interest upon the occurrence of a 

contingency or defined event. 

§ 800.208 Control. 

(a) The term control means the power, 

direct or indirect, whether or not 

exercised, through the ownership of a 

majority or a dominant minority of the 

total outstanding voting interest in an 

entity, board representation, proxy 

voting, a special share, contractual 

arrangements, formal or informal 

arrangements to act in concert, or other 

means, to determine, direct, or decide 

important matters affecting an entity; in 

particular, but without limitation, to 

determine, direct, take, reach, or cause 

decisions regarding the following 

matters, or any other similarly 

important matters affecting an entity: 

(1) The sale, lease, mortgage, pledge, 

or other transfer of any of the tangible 

or intangible principal assets of the 

entity, whether or not in the ordinary 

course of business; 

(2) The reorganization, merger, or 

dissolution of the entity; 

(3) The closing, relocation, or 

substantial alteration of the production, 

operational, or research and 

development facilities of the entity; 

(4) Major expenditures or 

investments, issuances of equity or debt, 

or dividend payments by the entity, or 

approval of the operating budget of the 

entity; 

(5) The selection of new business 

lines or ventures that the entity will 

pursue; 

(6) The entry into, termination, or 

non-fulfillment by the entity of 

significant contracts; 

(7) The policies or procedures of the 

entity governing the treatment of nonpublic technical, financial, or other 

proprietary information of the entity; 

(8) The appointment or dismissal of 

officers or senior managers or, in the 

case of a partnership, the general 

partner; 

(9) The appointment or dismissal of 

employees with access to critical 

technology or other sensitive technology 

or classified U.S. Government 

information; or 

(10) The amendment of the Articles of 

Incorporation, constituent agreement, or 

other organizational documents of the 

entity with respect to the matters 

described in paragraphs (a)(1) through 

(9) of this section. 

(b) In examining questions of control 

in situations where more than one 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3127 

foreign person has an ownership 

interest in an entity, consideration will 

be given to factors such as whether the 

foreign persons are related or have 

formal or informal arrangements to act 

in concert, whether they are agencies or 

instrumentalities of the national or 

subnational governments of a single 

foreign state, and whether a given 

foreign person and another person that 

has an ownership interest in the entity 

are both controlled by any of the 

national or subnational governments of 

a single foreign state. 

(c) The following minority 

shareholder protections shall not in 

themselves be deemed to confer control 

over an entity: 

(1) The power to prevent the sale or 

pledge of all or substantially all of the 

assets of an entity or a voluntary filing 

for bankruptcy or liquidation; 

(2) The power to prevent an entity 

from entering into contracts with 

majority investors or their affiliates; 

(3) The power to prevent an entity 

from guaranteeing the obligations of 

majority investors or their affiliates; 

(4) The right to purchase an 

additional interest in an entity to 

prevent the dilution of an investor’s pro 

rata interest in that entity in the event 

that the entity issues additional 

instruments conveying interests in the 

entity; 

(5) The power to prevent the change 

of existing legal rights or preferences of 

the particular class of stock held by 

minority investors, as provided in the 

relevant corporate documents governing 

such shares; and 

(6) The power to prevent the 

amendment of the Articles of 

Incorporation, constituent agreement, or 

other organizational documents of an 

entity with respect to the matters 

described in paragraphs (c)(1) through 

(5) of this section. 

(d) The Committee will consider, on 

a case-by-case basis, whether minority 

shareholder protections other than those 

listed in paragraph (c) of this section do 

not confer control over an entity. 

(e) Examples: 

(1) Example 1. Corporation A is a U.S. 

business. A U.S. investor owns 50 percent of 

the voting interest in Corporation A, and the 

remaining voting interest is owned in equal 

shares by five unrelated foreign investors. 

The foreign investors jointly financed their 

investment in Corporation A and vote as a 

single block on matters affecting Corporation 

A. The foreign investors have an informal 

arrangement to act in concert with regard to 

Corporation A, and, as a result, the foreign 

investors control Corporation A. 

(2) Example 2. Same facts as the example 

in paragraph (e)(1) of this section with regard 

to the composition of Corporation A’s 

shareholders. The foreign investors in 

Corporation A have no contractual or other 

commitments to act in concert, and have no 

informal arrangements to do so. Assuming no 

other relevant facts, the foreign investors do 

not control Corporation A. 

(3) Example 3. Corporation A, a foreign 

person, is a private equity fund that routinely 

acquires equity interests in companies and 

manages them for a period of time. 

Corporation B is a U.S. business. In addition 

to its acquisition of seven percent of 

Corporation B’s voting shares, Corporation A 

acquires the right to terminate significant 

contracts of Corporation B. Corporation A 

controls Corporation B. 

(4) Example 4. Corporation A, a foreign 

person, acquires a nine percent interest in the 

shares of Corporation B, a U.S. business. As 

part of the transaction, Corporation A also 

acquires certain veto rights that determine 

important matters affecting Corporation B, 

including the right to veto the dismissal of 

senior executives of Corporation B. 

Corporation A controls Corporation B. 

(5) Example 5. Corporation A, a foreign 

person, acquires a 13 percent interest in the 

shares of Corporation B, a U.S. business, and 

the right to appoint one member of 

Corporation B’s seven-member board of 

directors. Corporation A receives minority 

shareholder protections listed in paragraph 

(c) of this section but receives no other 

positive or negative rights with respect to 

Corporation B. Assuming no other relevant 

facts, Corporation A does not control 

Corporation B. 

(6) Example 6. Corporation A, a foreign 

person, acquires a 20 percent interest in the 

shares of Corporation B, a U.S. business. 

Corporation A has negotiated an irrevocable 

passivity agreement that completely 

precludes it from controlling Corporation B. 

Corporation A does, however, receive the 

right to prevent Corporation B from entering 

into contracts with majority investors or their 

affiliates and to prevent Corporation B from 

guaranteeing the obligations of majority 

investors or their affiliates. Assuming no 

other relevant facts, Corporation A does not 

control Corporation B. 

(7) Example 7. Limited Partnership A 

comprises two limited partners, each of 

which holds 49 percent of the interest in the 

partnership, and a general partner, which 

holds two percent of the interest. The general 

partner has sole authority to determine, 

direct, and decide all important matters 

affecting the partnership and a fund operated 

by the partnership. The general partner alone 

controls Limited Partnership A and the fund. 

(8) Example 8. Same facts as the example 

in paragraph (e)(7) of this section, except that 

each of the limited partners has the authority 

to veto major investments proposed by the 

general partner and to choose the fund’s 

representatives on the boards of the fund’s 

portfolio companies. The general partner and 

the limited partners each have control over 

Limited Partnership A and the fund. 

Note 1 to § 800.208: See § 800.302(b) 

regarding the Committee’s treatment of 

transactions in which a foreign person holds 

or acquires 10 percent or less of the 

outstanding voting interest in a U.S. business 

solely for the purpose of passive investment. 

See § 800.303 regarding the Committee’s 

treatment of transactions that do not result in 

control over a U.S. business by a foreign 

person, but may be covered investments. See 

§ 800.305 regarding the Committee’s 

treatment of a subsequent transaction 

involving a foreign person that previously 

acquired control of the U.S. business. 

§ 800.209 Conversion. 

The term conversion means the 

exercise of a right inherent in the 

ownership or holding of a particular 

financial instrument to exchange any 

such instrument for an equity interest. 

§ 800.210 Covered control transaction. 

The term covered control transaction 

means any transaction that is proposed 

or pending after August 23, 1988, by or 

with any foreign person that could 

result in foreign control of any U.S. 

business, including such a transaction 

carried out through a joint venture. 

§ 800.211 Covered investment. 

The term covered investment means 

an investment, direct or indirect, by a 

foreign person other than an excepted 

investor, in an unaffiliated TID U.S. 

business that is proposed or pending on 

or after February 13, 2020, and that: 

(a) Is not a covered control 

transaction; and 

(b) Affords the foreign person: 

(1) Access to any material nonpublic 

technical information in the possession 

of the TID U.S. business; 

(2) Membership or observer rights on, 

or the right to nominate an individual 

to a position on, the board of directors 

or equivalent governing body of the TID 

U.S. business; or 

(3) Any involvement, other than 

through voting of shares, in substantive 

decisionmaking of the TID U.S. business 

regarding: 

(i) The use, development, acquisition, 

safekeeping, or release of sensitive 

personal data of U.S. citizens 

maintained or collected by the TID U.S. 

business; 

(ii) The use, development, 

acquisition, or release of critical 

technologies; or 

(iii) The management, operation, 

manufacture, or supply of covered 

investment critical infrastructure. 

(c) Notwithstanding paragraphs (a) 

and (b) of this section, no investment 

involving an air carrier, as defined in 49 

U.S.C. 40102(a)(2), that holds a 

certificate issued under 49 U.S.C. 41102 

shall be a covered investment. 

(d) Example: Corporation A, a foreign 

person that is not an excepted investor, 

makes a non-controlling investment in 

Corporation B, a U.S. business, that 

affords Corporation A the right to 

nominate one of the directors on 

Corporation B’s board of directors. 


lotter on DSKBCFDHB2PROD with RULES2
3128 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

Corporation B, through its whollyowned subsidiary Corporation X, 

designs and manufactures a critical 

technology. Corporation A’s investment 

in Corporation B is a covered 

investment. 

§ 800.212 Covered investment critical 

infrastructure. 

The term covered investment critical 

infrastructure means, in the context of a 

particular covered investment, the 

systems and assets, whether physical or 

virtual, set forth in column 1 of 

appendix A to this part. 

§ 800.213 Covered transaction. 

The term covered transaction means 

any of the following: 

(a) A covered control transaction; 

(b) A covered investment; 

(c) A change in the rights that a 

foreign person has with respect to a U.S. 

business in which the foreign person 

has an investment, if that change could 

result in a covered control transaction or 

a covered investment; or 

(d) Any other transaction, transfer, 

agreement, or arrangement, the structure 

of which is designed or intended to 

evade or circumvent the application of 

section 721. 

(e) Examples: 

(1) Example 1. Corporation A, a foreign 

person, acquires a 10 percent non-controlling 

equity interest in Corporation X, a U.S. 

business. Corporation X subsequently 

provides Corporation A the right to appoint 

the Chief Executive Officer and the Chief 

Technical Officer of Corporation X. 

Corporation A does not acquire any 

additional equity interest in Corporation X. 

Assuming no other relevant facts, the change 

in rights is a covered transaction. 

(2) Example 2. Corporation A, a foreign 

person that is not an excepted investor, 

acquires a 10 percent non-controlling equity 

interest in Corporation X, an unaffiliated TID 

U.S. business, but Corporation A is not 

afforded any of the access, rights, or 

involvement specified in § 800.211(b) at the 

time of its investment. Corporation X later 

expands its board of directors and provides 

Corporation X with the right to appoint a 

director. Assuming no other relevant facts, 

the change in rights is a covered transaction. 

(3) Example 3. Corporation A is organized 

under the laws of a foreign state and is 

wholly owned and controlled by a foreign 

national. With a view towards circumventing 

section 721, Corporation A transfers money 

to a U.S. citizen, who, pursuant to informal 

arrangements with Corporation A and on its 

behalf, purchases all the shares in 

Corporation X, a U.S. business. The 

transaction is a covered transaction. 

(4) Example 4. Corporation A is organized 

under the laws of a foreign state, is wholly 

owned and controlled by a foreign national, 

and is not an excepted investor. With a view 

towards circumventing section 721, 

Corporation A transfers money to a U.S. 

citizen, who, pursuant to informal 

arrangements with Corporation A and on its 

behalf, makes a non-controlling minority 

equity investment in Corporation X, an 

unaffiliated TID U.S. business that maintains 

and collects sensitive personal data of U.S. 

citizens. In connection with the investment, 

the U.S. citizen is afforded the right to be 

involved in substantive decisionmaking 

regarding the release of sensitive personal 

data of U.S. citizens maintained by 

Corporation X. The transaction is a covered 

transaction. 

Note 1 to § 800.213: Any transaction 

described in (a) through (d) of this section 

that arises pursuant to a bankruptcy 

proceeding or other form of default on debt 

is a covered transaction. See also § 800.306 

for the treatment of certain lending 

transactions. 

§ 800.214 Critical infrastructure. 

The term critical infrastructure 

means, in the context of a particular 

covered control transaction, systems 

and assets, whether physical or virtual, 

so vital to the United States that the 

incapacity or destruction of such 

systems or assets would have a 

debilitating impact on national security. 

§ 800.215 Critical technologies. 

The term critical technologies means 

the following: 

(a) Defense articles or defense services 

included on the United States 

Munitions List (USML) set forth in the 

International Traffic in Arms 

Regulations (ITAR) (22 CFR parts 120– 

130); 

(b) Items included on the Commerce 

Control List (CCL) set forth in 

Supplement No. 1 to part 774 of the 

Export Administration Regulations 

(EAR) (15 CFR parts 730–774), and 

controlled— 

(1) Pursuant to multilateral regimes, 

including for reasons relating to 

national security, chemical and 

biological weapons proliferation, 

nuclear nonproliferation, or missile 

technology; or 

(2) For reasons relating to regional 

stability or surreptitious listening; 

(c) Specially designed and prepared 

nuclear equipment, parts and 

components, materials, software, and 

technology covered by 10 CFR part 810 

(relating to assistance to foreign atomic 

energy activities); 

(d) Nuclear facilities, equipment, and 

material covered by 10 CFR part 110 

(relating to export and import of nuclear 

equipment and material); 

(e) Select agents and toxins covered 

by 7 CFR part 331, 9 CFR part 121, or 

42 CFR part 73; and 

(f) Emerging and foundational 

technologies controlled under section 

1758 of the Export Control Reform Act 

of 2018 (50 U.S.C. 4817). 

§ 800.216 Encrypted data. 

The term encrypted data means data 

to which National Institute of Standards 

and Technology (NIST)-allowed 

cryptographic techniques, as identified 

in the most current NIST special 

publication 800–175B, or superseding 

publication, have been applied. 

§ 800.217 Entity. 

The term entity means any branch, 

partnership, group or sub-group, 

association, estate, trust, corporation or 

division of a corporation, or 

organization (whether or not organized 

under the laws of any State or foreign 

state); assets (whether or not organized 

as a separate legal entity) operated by 

any one of the foregoing as a business 

undertaking in a particular location or 

for particular products or services; and 

any government (including a foreign 

national or subnational government, the 

U.S. Government, a subnational 

government within the United States, 

and any of their respective departments, 

agencies, or instrumentalities). (See 

examples in § 800.301(g)(5) through (14) 

and § 800.302(g)(5) through (10).) 

§ 800.218 Excepted foreign state. 

The term excepted foreign state 

means, until February 13, 2022, a 

foreign state that meets the criteria in 

paragraph (a) of this section, and, 

beginning on February 13, 2022, a 

foreign state that meets both the criteria 

in paragraphs (a) and (b) of this section: 

(a) Is identified by the Committee as 

an eligible foreign state, and 

(b) Is a foreign state for which the 

Committee has made a determination 

under § 800.1001(a). 

Note 1 to § 800.218: The name of each 

foreign state identified by the Committee as 

an eligible foreign state will be available at 

the Committee’s section of the Department of 

the Treasury website. See § 800.1001(c) 

regarding the publication of a notice in the 

Federal Register of a determination under 

§ 800.1001(a). The list of excepted foreign 

states will also be available at the 

Committee’s section of the Department of the 

Treasury website. 

§ 800.219 Excepted investor. 

(a) The term excepted investor means 

a foreign person who is, as of the 

completion date of the transaction and 

subject to paragraphs (c) and (d) of this 

section: 

(1) A foreign national who is a 

national of one or more excepted foreign 

states and is not also a national of any 

foreign state that is not an excepted 

foreign state; 

(2) A foreign government of an 

excepted foreign state; or 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3129 

(3) A foreign entity that meets each of 

the following conditions with respect to 

itself and each of its parents (if any): 

(i) Such entity is organized under the 

laws of an excepted foreign state or in 

the United States; 

(ii) Such entity has its principal place 

of business in an excepted foreign state 

or in the United States; 

(iii) Seventy-five percent or more of 

the members and 75 percent or more of 

the observers of the board of directors or 

equivalent governing body of such 

entity are: 

(A) U.S. nationals; or 

(B) Nationals of one or more excepted 

foreign states who are not also nationals 

of any foreign state that is not an 

excepted foreign state; 

(iv) Any foreign person that 

individually, and each foreign person 

that is part of a group of foreign persons 

that in the aggregate, holds 10 percent 

or more of the outstanding voting 

interest of such entity; holds the right to 

10 percent or more of the profits of such 

entity; holds the right in the event of 

dissolution to 10 percent or more of the 

assets of such entity; or otherwise could 

exercise control over such entity, is: 

(A) A foreign national who is a 

national of one or more excepted foreign 

states and is not also a national of any 

foreign state that is not an excepted 

foreign state; 

(B) A foreign government of an 

excepted foreign state; or 

(C) A foreign entity that is organized 

under the laws of an excepted foreign 

state and has its principal place of 

business in an excepted foreign state or 

in the United States; and 

(v) The minimum excepted ownership 

of such entity is held, individually or in 

the aggregate, by one or more persons 

each of whom is: 

(A) Not a foreign person; 

(B) A foreign national who is a 

national of one or more excepted foreign 

states and is not also a national of any 

foreign state that is not an excepted 

foreign state; 

(C) A foreign government of an 

excepted foreign state; or 

(D) A foreign entity that is organized 

under the laws of an excepted foreign 

state and has its principal place of 

business in an excepted foreign state or 

in the United States. 

(b) For purposes of paragraph 

(a)(3)(iv) of this section, foreign persons 

who are related, have formal or informal 

arrangements to act in concert, or are 

agencies or instrumentalities of, or 

controlled by, the national or 

subnational governments of a single 

foreign state are considered part of a 

group of foreign persons and their 

individual ownerships are aggregated. 

(c) Notwithstanding paragraph (a) of 

this section, a foreign person is not an 

excepted investor with respect to a 

transaction if: 

(1) In the five years prior to the 

completion date of the transaction the 

foreign person, any of its parents, or any 

entity of which it is a parent: 

(i) Has received written notice from 

the Committee that it has submitted a 

material misstatement or omission in a 

notice or declaration or made a false 

certification under this part or part 801 

or 802 of this title; 

(ii) Has received written notice from 

the Committee that it has violated a 

material provision of a mitigation 

agreement entered into with, material 

condition imposed by, or an order 

issued by, the Committee or a lead 

agency under section 721(l); 

(iii) Has been subject to action by the 

President under section 721(d); 

(iv) Has: 

(A) Received a written Finding of 

Violation or Penalty Notice imposing a 

civil monetary penalty from the 

Department of the Treasury, Office of 

Foreign Assets Control (OFAC); or 

(B) Entered into a settlement 

agreement with OFAC with respect to 

apparent violations of U.S. sanctions 

laws administered by OFAC, including 

the International Emergency Economic 

Powers Act, the Trading With the 

Enemy Act, the Foreign Narcotics 

Kingpin Designation Act, each as 

amended, or of any executive order, 

regulation, order, directive, or license 

issued pursuant thereto; 

(v) Has received a written notice of 

debarment from the Department of 

State, Directorate of Defense Trade 

Controls, as described in 22 CFR parts 

127 and 128; 

(vi) Has been a respondent or party in 

a final order, including a settlement 

order, issued by the Department of 

Commerce, Bureau of Industry and 

Security (BIS) regarding violations of 

U.S. export control laws administered 

by BIS, including the Export Control 

Reform Act of 2018 (50 U.S.C. 4801 et 

seq.), the EAR, or of any executive 

order, regulation, order, directive, or 

license issued pursuant thereto; 

(vii) Has received a final decision 

from the Department of Energy, National 

Nuclear Security Administration 

imposing a civil penalty with respect to 

a violation of section 57b. of the Atomic 

Energy Act of 1954, as implemented 

under 10 CFR part 810; or 

(viii) Has been convicted of, or has 

entered into a deferred prosecution 

agreement or non-prosecution 

agreement with the Department of 

Justice with respect to, any felony in 

any jurisdiction within the United 

States; or 

(2) The foreign person, any of its 

parents, or any entity of which it is a 

parent is, on the date on which the 

parties to the transaction first execute a 

binding written agreement, or other 

binding document, establishing the 

material terms of the transaction, listed 

on either the BIS Unverified List or 

Entity List in 15 CFR part 744. 

(d) Irrespective of whether the foreign 

person satisfies the criteria in paragraph 

(a)(1) or (2), (a)(3)(i) through (iii), or 

(c)(1)(i) through (iii) of this section as of 

the completion date, if at any time 

during the three-year period following 

the completion date, the foreign person 

no longer meets all the criteria set forth 

in paragraph (a)(1) or (2), (a)(3)(i) 

through (iii), or (c)(1)(i) through (iii) of 

this section, the foreign person is not an 

excepted investor with respect to the 

transaction from the completion date 

onward. This paragraph does not apply 

when an excepted investor no longer 

meets any of the criteria solely due to 

a rescission of a determination under 

§ 800.1001(b) or if the relevant foreign 

state otherwise ceases to be an excepted 

foreign state. 

(e) A foreign person may waive its 

status as an excepted investor with 

respect to a transaction at any time by 

submitting a declaration under 

§ 800.403 or filing a notice under 

§ 800.501 regarding the transaction in 

which it explicitly waives such status. 

In such case, the foreign person will be 

deemed not to be an excepted investor 

with respect to the transaction and the 

relevant provisions of subpart D or E 

will apply. 

Note 1 to § 800.219: See § 800.501(c)(2) 

regarding an agency notice where a foreign 

person is not an excepted investor solely due 

to § 800.219(d). 

§ 800.220 Foreign entity. 

(a) The term foreign entity means any 

branch, partnership, group or sub-group, 

association, estate, trust, corporation or 

division of a corporation, or 

organization organized under the laws 

of a foreign state if either its principal 

place of business is outside the United 

States or its equity securities are 

primarily traded on one or more foreign 

exchanges. 

(b) Notwithstanding paragraph (a) of 

this section, any branch, partnership, 

group or sub-group, association, estate, 

trust, corporation or division of a 

corporation, or organization that can 

demonstrate that a majority of the equity 

interest in such entity is ultimately 

owned by U.S. nationals is not a foreign 

entity. 


lotter on DSKBCFDHB2PROD with RULES2
3130 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

§ 800.221 Foreign government. 

The term foreign government means 

any government or body exercising 

governmental functions, other than the 

U.S. Government or a subnational 

government of the United States. The 

term includes, but is not limited to, 

national and subnational governments, 

including their respective departments, 

agencies, and instrumentalities. 

§ 800.222 Foreign government-controlled 

transaction. 

The term foreign governmentcontrolled transaction means any 

covered control 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. 

§ 800.223 Foreign national. 

The term foreign national means any 

individual other than a U.S. national. 

§ 800.224 Foreign person. 

(a) The term foreign person means: 

(1) Any foreign national, foreign 

government, or foreign entity; or 

(2) Any entity over which control is 

exercised or exercisable by a foreign 

national, foreign government, or foreign 

entity. 

(b) Any entity over which control is 

exercised or exercisable by a foreign 

person is a foreign person. 

(c) Examples: 

(1) Example 1. Corporation A is organized 

under the laws of a foreign state and is 

engaged in business only outside the United 

States. All of its shares are held by 

Corporation X, which solely controls 

Corporation A. Corporation X is organized in 

the United States and is wholly owned and 

controlled by U.S. nationals. Assuming no 

other relevant facts, Corporation A, although 

organized and operating only outside the 

United States, is not a foreign entity due to 

§ 800.220(b) and is not a foreign person. 

(2) Example 2. Same facts as the first 

sentence of the example in paragraph (c)(1) 

of this section. The government of the foreign 

state under whose laws Corporation A is 

organized exercises control over Corporation 

A because a law establishing Corporation A 

gives the foreign state the right to appoint 

Corporation A’s board members. Corporation 

A is a foreign person. 

(3) Example 3. Corporation A is organized 

in the United States, is engaged in interstate 

commerce in the United States, and is 

controlled by Corporation X. Corporation X 

is organized under the laws of a foreign state, 

its principal place of business is located 

outside the United States, and 50 percent of 

its shares are held by foreign nationals and 

50 percent of its shares are held by U.S. 

nationals. Both Corporation A and 

Corporation X are foreign persons. 

Corporation A is also a U.S. business. 

(4) Example 4. Corporation A is organized 

under the laws of a foreign state and is 

owned and controlled by a foreign national. 

A branch of Corporation A engages in 

interstate commerce in the United States. 

Corporation A (including its branch) is a 

foreign person. The branch is also a U.S. 

business. 

(5) Example 5. Corporation A is organized 

under the laws of a foreign state and its 

principal place of business is located outside 

the United States. Forty-five percent of the 

equity interest in Corporation A is owned in 

equal shares by numerous unrelated foreign 

investors, none of whom has control. The 

foreign investors have no formal or informal 

arrangement with any other holder of equity 

interest in Corporation A to act in concert 

regarding Corporation A. Corporation A can 

demonstrate that the remainder of the equity 

interest in Corporation A is ultimately held 

by U.S. nationals. Assuming no other 

relevant facts, Corporation A is not a foreign 

entity or foreign person. 

(6) Example 6. Same facts as the example 

in paragraph (c)(5) of this section, except that 

one of the foreign investors, a foreign 

national, controls Corporation A. Assuming 

no other relevant facts, Corporation A is not 

a foreign entity due to § 800.220(b), but it is 

a foreign person under paragraph (a)(2) of 

this section because it is controlled by a 

foreign national. 

§ 800.225 Hold. 

The terms hold(s) and holding mean 

legal or beneficial ownership, whether 

direct or indirect, whether through 

fiduciaries, agents, or other means. 

§ 800.226 Identifiable data. 

The term identifiable data means data 

that can be used to distinguish or trace 

an individual’s identity, including 

through the use of any personal 

identifier. Aggregated data or 

anonymized data is identifiable data if 

any party to the transaction has, or as 

a result of the transaction will have, the 

ability to disaggregate or de-anonymize 

the data, or if the data is otherwise 

capable of being used to distinguish or 

trace an individual’s identity. 

Identifiable data does not include 

encrypted data, unless the U.S. business 

that maintains or collects the encrypted 

data has the means to de-encrypt the 

data so as to distinguish or trace an 

individual’s identity. 

§ 800.227 Investment. 

The term investment means the 

acquisition of equity interest, including 

contingent equity interest. 

§ 800.228 Investment fund. 

The term investment fund means any 

entity that is an ‘‘investment company,’’ 

as defined in section 3(a) of the 

Investment Company Act of 1940 (15 

U.S.C. 80a–1 et seq.), or would be an 

‘‘investment company’’ but for one or 

more of the exemptions provided in 

section 3(b) or 3(c) thereunder. 

§ 800.229 Involvement. 

The term involvement means the right 

or ability to participate, whether or not 

exercised, including by doing any of the 

following: 

(a) Providing input into a final 

decision; 

(b) Consulting with or providing 

advice to a decisionmaker; 

(c) Exercising special approval or veto 

rights; 

(d) Participating on a committee with 

decisionmaking authority; or 

(e) Advising on the appointment 

officers or selecting employees who are 

engaged in substantive decisionmaking. 

§ 800.230 Lead agency. 

The term lead agency means the 

Department of the Treasury and any 

other agency designated by the 

Chairperson of the Committee to have 

primary responsibility, on behalf of the 

Committee, for the specific activity for 

which the Chairperson designates it as 

a lead agency, including all or a portion 

of an assessment, a review, an 

investigation, or the negotiation or 

monitoring of a mitigation agreement or 

condition. 

§ 800.231 Manufacture. 

Solely for the purposes of column 2 

of appendix A to this part, the term 

manufacture means to produce or 

reproduce, whether physically or 

virtually. 

§ 800.232 Material nonpublic technical 

information. 

(a) The term material nonpublic 

technical information means 

information that: 

(1) Provides knowledge, know-how, 

or understanding, in each case not 

available in the public domain, of the 

design, location, or operation of covered 

investment critical infrastructure, 

including vulnerability information 

such as that related to physical security 

or cybersecurity; or 

(2) Is not available in the public 

domain and is necessary to design, 

fabricate, develop, test, produce, or 

manufacture a critical technology, 

including processes, techniques, or 

methods. 

(b) The term material nonpublic 

technical information does not include 

financial information regarding the 

performance of an entity. 

(c) Examples: 

(1) Example 1. Corporation A, a foreign 

person that is not an excepted investor, 

proposes to acquire a four percent, noncontrolling equity interest in Corporation B. 

Corporation B is a U.S. business that services 

an industrial control system utilized by an 

interstate oil pipeline that has the capacity to 

transport 600,000 barrels per day of crude oil 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3131 

(ICS B). ICS B is covered investment critical 

infrastructure as set forth in column 1 of 

appendix A to this part. The source code for 

ICS B is not available in the public domain. 

Pursuant to the terms of the investment, 

Corporation A will have access to the source 

code for ICS B. The proposed investment 

therefore affords Corporation A access to 

material nonpublic technical information in 

the possession of Corporation B regarding the 

design and operation of covered investment 

critical infrastructure. 

(2) Example 2. Fund A, a foreign person 

that is not an excepted investor, proposes to 

acquire a five percent, non-controlling equity 

interest in Corporation B. Corporation B is an 

unaffiliated TID U.S. business that develops 

a critical technology (Technology Z). 

Pursuant to the terms of the investment, 

Corporation B will notify Fund A when it 

achieves the developmental milestone of 

completing a demonstration prototype of 

Technology Z. The notification will only set 

out the milestone achieved and will not 

include technical details. Assuming no other 

facts, the proposed investment does not 

afford Fund A access to material nonpublic 

technical information in the possession of 

Corporation B necessary to design, fabricate, 

develop, test, produce, or manufacture a 

critical technology. 

§ 800.233 Minimum excepted ownership. 

The term minimum excepted 

ownership means: 

(a) With respect to an entity whose 

equity securities are primarily traded on 

an exchange in an excepted foreign state 

or the United States, a majority of its 

voting interest, the right to a majority of 

its profits, and the right in the event of 

dissolution to a majority of its assets; 

and 

(b) With respect to an entity whose 

equity securities are not primarily 

traded on an exchange in an excepted 

foreign state or the United States, 80 

percent or more of its voting interest, 

the right to 80 percent or more of its 

profits, and the right in the event of 

dissolution to 80 percent or more of its 

assets. 

§ 800.234 Own. 

Solely for the purposes of column 2 

of appendix A to this part, the term own 

means to directly possess the applicable 

covered investment critical 

infrastructure. 

§ 800.235 Parent. 

(a) The term parent means, with 

respect to an entity: 

(1) A person who or which directly or 

indirectly: 

(i) Holds or will hold at least 50 

percent of the outstanding voting 

interest in the entity; or 

(ii) Holds or will hold the right to at 

least 50 percent of the profits of the 

entity, or has or will have the right in 

the event of dissolution to at least 50 

percent of the assets of the entity; or 

(2) The general partner, managing 

member, or equivalent of the entity. 

(b) Any entity that meets the 

conditions of paragraph (a)(1) or (2) of 

this section with respect to another 

entity (i.e., the intermediate parent) is 

also a parent of any other entity of 

which the intermediate parent is a 

parent. 

(c) Examples: 

(1) Example 1. Corporation P holds 50 

percent of the voting interest in Corporations 

R and S; Corporation R holds 40 percent of 

the voting interest in Corporation X; and 

Corporation S holds 50 percent of the voting 

interest in Corporation Y, which in turn 

holds 50 percent of the voting interest in 

Corporation Z. Corporation P is a parent of 

Corporations R, S, Y, and Z, but not of 

Corporation X. Corporation S is a parent of 

Corporation Y and Z, and Corporation Y is 

a parent of Corporation Z. 

(2) Example 2. Corporation A holds 

warrants which when exercised will entitle 

it to vote 50 percent of the outstanding shares 

of Corporation B. Corporation A is a parent 

of Corporation B. 

(3) Example 3. Investor A holds 60 percent 

of the outstanding voting interest in 

Corporation B. Investor C holds the right to 

80 percent of the profits of Corporation B. 

Each of Investor A and Investor C is a parent 

of Corporation B. 

§ 800.236 Party to a transaction. 

(a) The term party to a transaction 

means: 

(1) In the case of an acquisition of an 

ownership interest in an entity, the 

person acquiring the ownership interest, 

the person from whom such ownership 

interest is acquired, and the entity 

whose ownership interest is being 

acquired, without regard to any person 

providing brokerage or underwriting 

services for the transaction; 

(2) In the case of a merger, the 

surviving entity, and the entity or 

entities that are merged with or into that 

entity in the transaction; 

(3) In the case of a consolidation, the 

entities being consolidated, and the new 

consolidated entity; 

(4) In the case of a proxy solicitation, 

the person soliciting proxies, and the 

person who issued the voting interest; 

(5) In the case of the acquisition or 

conversion of contingent equity 

interests, the issuer and the person 

holding the contingent equity interests; 

(6) In the case of a change in rights 

that a person has with respect to an 

entity in which that person has an 

investment, the person whose rights 

change as a result of the transaction and 

the entity to which those rights apply; 

(7) In the case of any other 

transaction, transfer, agreement, or 

arrangement, the structure of which is 

designed or intended to evade or 

circumvent the application of section 

721, any person that participates in such 

transaction, transfer, agreement, or 

arrangement; 

(8) In the case of any other type of 

transaction, any person who is in a role 

comparable to that of a person described 

in paragraphs (a)(1) through (7) of this 

section; and 

(9) In all cases, each party that 

submitted a declaration or notice to the 

Committee regarding a transaction. 

(b) For purposes of section 721(l), the 

term party to a transaction includes any 

affiliate of any party described in 

paragraph (a) of this section that the 

Committee, or a lead agency acting on 

behalf of the Committee, determines is 

relevant to mitigating a risk to the 

national security of the United States. 

§ 800.237 Person. 

The term person means any 

individual or entity. 

§ 800.238 Personal identifier. 

The term personal identifier means 

name, physical address, email address, 

social security number, phone number, 

or other information that identifies a 

specific individual. 

§ 800.239 Principal place of business. 

(a) The term principal place of 

business means, subject to paragraph (b) 

of this section, the primary location 

where an entity’s management directs, 

controls, or coordinates the entity’s 

activities, or, in the case of an 

investment fund, where the fund’s 

activities and investments are primarily 

directed, controlled, or coordinated by 

or on behalf of the general partner, 

managing member, or equivalent. 

(b) If the location determined under 

paragraph (a) of this section is in the 

United States and the entity has 

represented to the U.S. Government or 

a subnational government of the United 

States or any foreign government, in the 

most recent submission or filing to such 

government (other than a submission or 

filing to the Committee) in which the 

entity has identified its principal place 

of business, principal office and place of 

business, address of principal executive 

offices, address of headquarters, or 

equivalent, that any of the foregoing is 

outside the United States, then the 

location identified in such submission 

or filing is deemed for purposes of this 

definition to be the entity’s principal 

place of business unless the entity can 

demonstrate that such location has 

changed to the United States since such 

submission or filing. 

§ 800.240 Section 721. 

The term section 721 means section 

721 of title VII of the Defense 


lotter on DSKBCFDHB2PROD with RULES2
3132 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

Production Act of 1950, as amended (50 

U.S.C. 4565). 

§ 800.241 Sensitive personal data. 

(a) The term sensitive personal data 

means, except as provided in paragraph 

(b) of this section: 

(1) Identifiable data that is: 

(i) Maintained or collected by a U.S. 

business that: 

(A) Targets or tailors products or 

services to any U.S. executive branch 

agency or military department with 

intelligence, national security, or 

homeland security responsibilities, or to 

personnel and contractors thereof; 

(B) Has maintained or collected any 

identifiable data within one or more 

categories described in paragraph 

(a)(1)(ii) of this section on greater than 

one million individuals at any point 

over the twelve (12) months preceding 

the earliest of the completion date, the 

date of any of the events described in 

§ 800.104(b)(2) through (4) (as 

applicable), or the date of filing of a 

written notice or submission of a 

declaration, unless the U.S. business 

can demonstrate that at the time of the 

completion date of the transaction it had 

or will have neither the capability to 

maintain nor the capability to collect 

any identifiable data within one or more 

categories described in paragraph 

(a)(1)(ii) of this section on greater than 

one million individuals; or 

(C) Has a demonstrated business 

objective to maintain or collect any 

identifiable data within one or more 

categories described in paragraph 

(a)(1)(ii) of this section on greater than 

one million individuals and such data is 

an integrated part of the U.S. business’s 

primary products or services; and 

(ii) Within any of the following 

categories: 

(A) Financial data that could be used 

to analyze or determine an individual’s 

financial distress or hardship; 

(B) The set of data in a consumer 

report, as defined under 15 U.S.C. 

1681a, unless such data is obtained from 

a consumer reporting agency for one or 

more purposes identified in 15 U.S.C. 

1681b(a) and such data is not 

substantially similar to the full contents 

of a consumer file as defined under 15 

U.S.C. 1681a; 

(C) The set of data in an application 

for health insurance, long-term care 

insurance, professional liability 

insurance, mortgage insurance, or life 

insurance; 

(D) Data relating to the physical, 

mental, or psychological health 

condition of an individual; 

(E) Non-public electronic 

communications, including email, 

messaging, or chat communications, 

between or among users of a U.S. 

business’s products or services if a 

primary purpose of such product or 

service is to facilitate third-party user 

communications; 

(F) Geolocation data collected using 

positioning systems, cell phone towers, 

or WiFi access points such as via a 

mobile application, vehicle GPS, other 

onboard mapping tool, or wearable 

electronic device; 

(G) Biometric enrollment data 

including facial, voice, retina/iris, and 

palm/fingerprint templates; 

(H) Data stored and processed for 

generating a state or federal government 

identification card; 

(I) Data concerning U.S. Government 

personnel security clearance status; or 

(J) The set of data in an application for 

a U.S. Government personnel security 

clearance or an application for 

employment in a position of public 

trust; and 

(2) The results of an individual’s 

genetic tests, including any related 

genetic sequencing data, whenever such 

results constitute identifiable data. Such 

results shall not include data derived 

from databases maintained by the U.S. 

Government and routinely provided to 

private parties for purposes of research. 

For purposes of this paragraph, ‘‘genetic 

test’’ shall have the meaning provided 

in 42 U.S.C. 300gg–91(d)(17). 

(b) The term sensitive personal data 

shall not include, regardless of the 

applicability of the criteria described in 

paragraph (a) of this section: 

(1) Data maintained or collected by a 

U.S. business concerning the employees 

of that U.S. business, unless the data 

pertains to employees of U.S. 

Government contractors who hold U.S. 

Government personnel security 

clearances; or 

(2) Data that is a matter of public 

record, such as court records or other 

government records that are generally 

available to the public. 

(c) Examples: 

(1) Example 1. Corporation A, a U.S. 

business, periodically collects geolocation 

data as described in paragraph (a)(1)(ii)(F) of 

this section on its customers for marketing 

and customer experience purposes. 

Corporation A maintains the geolocation data 

for a short period, then purges the data from 

its systems. When Corporation A and a 

foreign person notify the Committee of a 

transaction, Corporation A maintains the 

geolocation data of only 200,000 individuals. 

However, in the 12 months prior to filing the 

notification to the Committee, Corporation A 

has collected the geolocation data of greater 

than one million individuals. Because 

Corporation A collected the geolocation data 

of greater than one million individuals in the 

12 months prior to the filing date of the 

notice, it meets the criteria in paragraph 

(a)(1)(i)(B) of this section. 

(2) Example 2. Corporation A, a U.S. 

business, collects data relating to physical 

health conditions as described in paragraph 

(a)(1)(ii)(D) from new customers, which 

numbered fewer than one million over the 12 

months prior to executing a definitive 

binding agreement to be acquired by a foreign 

person. Under its data retention policy, 

Corporation A maintains the health data for 

a long period of time. Accordingly, 

Corporation A maintains the health data from 

new customers (those from whom the data 

was collected in the previous 12 months) and 

older customers (those from whom the data 

was collected in prior years). In total, 

Corporation A maintains the health data of 

three million individuals. Because 

Corporation A maintains health data of 

greater than one million individuals, it meets 

the criteria in paragraph (a)(1)(i)(B) of this 

section. 

(3) Example 3. Same facts as the example 

in paragraph (c)(2) of this section, except 

that, under its data retention policy, the 

number of individuals for whom Corporation 

A maintains the health data fluctuates. Over 

the 12 months prior to executing a definitive 

binding agreement to be acquired by a foreign 

person, Corporation A usually maintained 

the health data of 900,000 individuals. 

However, at one point during the prior 12 

months, it maintained the health data of 

1,100,000 individuals. Corporation A 

currently maintains the health data of fewer 

than one million individuals. Because 

Corporation A maintained the health data of 

greater than one million individuals during 

the 12 months prior to executing a definitive 

binding agreement to be acquired by a foreign 

person, it meets the criteria in paragraph 

(a)(1)(i)(B) of this section. 

(4) Example 4. Corporation A, a U.S. 

business, maintains data under multiple 

categories in paragraph (a)(1)(ii) of this 

section on over one million individuals. 

Specifically, Corporation A maintains 

financial data described by paragraph 

(a)(1)(ii)(A) of this section on 400,000 

individuals, and health data described by 

paragraph (a)(1)(ii)(D) of this section on 

another 700,000 individuals. Because 

Corporation A maintains the data described 

in the categories in paragraph (a)(1)(ii) on 

greater than one million individuals, despite 

not maintaining or collecting data of greater 

than one million individuals in any one 

category, it meets the criteria in paragraph 

(a)(1)(i)(B) of this section. 

(5) Example 5. Corporation A, a U.S. 

business, is a start-up mobile mapping 

venture that has maintained or collected 

geolocation data described by paragraph 

(a)(1)(ii)(F) of this section on substantially 

fewer than one million individual 

subscribers over the 12 months prior to 

completing a transaction with a foreign 

person. The geolocation data is an integrated 

part of Corporation A’s primary product, 

mobile mapping services. Corporation A, in 

connection with attempting to secure an 

additional round of financing, has prepared 

and distributed to potential investors pitch 

materials that include Corporation A’s 

projection that, within the next two years, it 

will have greater than one million active 

individual subscribers. Corporation A also 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3133 

has made plans to substantially increase its 

workforce and enhance its IT infrastructure 

in anticipation of obtaining the additional 

subscribers. Corporation A meets the criteria 

of paragraph (a)(1)(i)(C) of this section of 

having a demonstrated business objective to 

maintain or collect data described in 

paragraphs (a)(1)(ii)(A) through (J) of this 

section on greater than one million 

individuals. 

§ 800.242 Service. 

Solely for the purposes of column 2 

of appendix A to this part, the term 

service means to repair, maintain, 

refurbish, replace, overhaul, or update. 

§ 800.243 Solely for the purpose of 

passive investment. 

(a) Ownership interests are held or 

acquired solely for the purpose of 

passive investment if the person holding 

or acquiring such interests does not plan 

or intend to exercise control and— 

(1) Is not afforded any rights that if 

exercised would constitute control; 

(2) Does not acquire any access, 

rights, or involvement specified 

§ 800.211(b); 

(3) Does not possess or develop any 

purpose other than passive investment; 

and 

(4) Does not take any action 

inconsistent with holding or acquiring 

such interests solely for the purpose of 

passive investment. (See § 800.302(b).) 

(b) Example: Corporation A, a foreign 

person, acquires a voting interest in 

Corporation B, a U.S. business. In 

addition to the voting interest, 

Corporation A negotiates the right to 

appoint a member of Corporation B’s 

board of directors. The acquisition by 

Corporation A of a voting interest in 

Corporation B is not solely for the 

purpose of passive investment. 

§ 800.244 Substantial interest. 

(a) The term substantial interest 

means, in the context of an acquisition 

of an interest in a U.S. business by a 

foreign person, a voting interest, direct 

or indirect, of 25 percent or more, and, 

in the context of a foreign person in 

which the national or subnational 

governments of a single foreign state 

have an interest, subject to paragraph (b) 

of this section, a voting interest, direct 

or indirect, of 49 percent or more. 

(b) In the case of entity with a general 

partner, managing member, or 

equivalent, the national or subnational 

governments of a single foreign state 

will be considered to have a substantial 

interest in such entity only if they hold 

49 percent or more of the interest in the 

general partner, managing member, or 

equivalent of the entity. 

(c) For purposes of determining the 

percentage of voting interest held 

indirectly by one entity in another 

entity, any voting interest of a parent 

will be deemed to be a 100 percent 

voting interest in any entity of which it 

is a parent. 

(d) Examples: 

(1) Example 1. Corporation A, a foreign 

person, plans to acquire a 30 percent voting 

interest in Corporation X, an unaffiliated TID 

U.S. business. Corporation B holds 51 

percent of the voting interest in, and is a 

parent of, Corporation A. A foreign 

government holds 75 percent of the voting 

interest in Corporation B, and private, nongovernment controlled individuals hold the 

remaining 25 percent. Under paragraph (c) of 

this section, Corporation B is deemed to have 

100 percent of the voting interest in 

Corporation A because it is Corporation A’s 

parent, and therefore the foreign 

government’s indirect voting interest in 

Corporation A is imputed to be 75 percent. 

Corporation A is acquiring a substantial 

interest in Corporation X, and a foreign 

government has a substantial interest in 

Corporation A. 

(2) Example 2. Same facts as the example 

in paragraph (d)(1) of this section, except that 

Corporation B holds only 49 percent of the 

voting interest in Corporation A and is not 

Corporation A’s parent. Because Corporation 

B is not a parent of Corporation A, paragraph 

(c) of this section is not applicable. The 

foreign government’s indirect voting interest 

in Corporation A for purposes of this section 

is only 36.75 percent. Corporation A is 

acquiring a substantial interest in 

Corporation X; however, the foreign 

government does not have a substantial 

interest in Corporation A. 

§ 800.245 Substantive decisionmaking. 

(a) The term substantive 

decisionmaking means the process 

through which decisions regarding 

significant matters affecting an entity 

are undertaken, including, as 

applicable: 

(1) Pricing, sales, and specific 

contracts, including the license, sale, or 

transfer of sensitive personal data to any 

third party, including pursuant to a 

customer, vendor, or joint venture 

agreement; 

(2) Supply arrangements; 

(3) Corporate strategy and business 

development; 

(4) Research and development, 

including location and budget 

allocation; 

(5) Manufacturing locations; 

(6) Access to critical technologies, 

covered investment critical 

infrastructure, material nonpublic 

technical information, or sensitive 

personal data, including pursuant to a 

customer, vendor, or joint venture 

agreement; 

(7) Physical and cyber security 

protocols, including the storage and 

protection of critical technologies, 

covered investment critical 

infrastructure, or sensitive personal 

data; 

(8) Practices, policies, and procedures 

governing the collection, use, or storage 

of sensitive personal data, including: 

(i) The establishment or maintenance 

of, or changes to, the architecture of 

information technology systems and 

networks used in collecting or 

maintaining sensitive personal data; or 

(ii) Privacy policies and agreements 

for individuals from whom sensitive 

personal data is collected setting forth 

parameters regarding whether and how 

sensitive personal data may be 

collected, maintained, accessed, or 

disseminated; or 

(9) Strategic partnerships. 

(b) The term substantive 

decisionmaking does not include 

strictly administrative decisions. 

(c) Examples: 

(1) Example 1. Corporation A, a foreign 

person that is not an excepted investor, 

proposes to acquire a four percent, noncontrolling equity interest in Corporation B. 

Corporation B is an unaffiliated TID U.S. 

business that operates a container terminal at 

a strategic seaport within the National Port 

Readiness Network (Terminal B). Pursuant to 

the terms of the investment, Corporation A 

will have approval rights over which 

customers may utilize Terminal B. The 

proposed investment therefore affords 

Corporation A involvement in substantive 

decisionmaking of Corporation B regarding 

the management, operation, manufacture, or 

supply of covered investment critical 

infrastructure. 

(2) Example 2. Same facts as the example 

in paragraph (c)(1) of this section, except that 

instead of customer approval rights, 

Corporation A has the right to decide 

whether to claim certain tax credits with 

respect to Terminal B on its own income tax 

filing, which prevents Corporation B from 

claiming such credits. Assuming no other 

relevant facts, the proposed investment does 

not afford Corporation A involvement in 

substantive decisionmaking of Corporation B 

regarding the management, operation, 

manufacture, or supply of covered 

investment critical infrastructure. 

§ 800.246 Supply. 

Solely for the purposes of column 2 

of appendix A to this part, the term 

supply means to provide third-party 

physical or cyber security. 

§ 800.247 Targets or tailors. 

(a) The term targets or tailors means 

customizing products or services for use 

by a person or group of persons or 

actively marketing to or soliciting a 

person or group of persons. 

(b) Examples: 

(1) Example 1. Corporation A, a U.S. 

business, operates facilities throughout the 

United States that offer healthcare-related 

products and services. Some of Corporation 

A’s facilities are located within metropolitan 


lotter on DSKBCFDHB2PROD with RULES2
3134 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

areas that also include U.S. military facilities. 

Assuming no other relevant facts, 

Corporation A does not target or tailor its 

products or services for purposes of 

§ 800.241(a)(1)(i)(A). 

(2) Example 2. Same facts as the example 

in paragraph (b)(1) of this section, except that 

Corporation A operates a facility on the 

premises of a U.S. military facility. 

Corporation A targets or tailors its products 

or services for purposes of 

§ 800.241(a)(1)(i)(A). 

(3) Example 3. Corporation A, a U.S. 

business, offers a discount to all customers 

that are employed in the public sector 

broadly, including active duty U.S. military 

personnel. Assuming no other relevant facts, 

Corporation A does not target or tailor its 

products or services for purposes of 

§ 800.241(a)(1)(i)(A). 

(4) Example 4. Same facts as the example 

in paragraph (b)(3) of this section, except that 

Corporation A offers a discount solely to 

uniformed U.S. military personnel and 

distributes marketing materials that promote 

the particular usefulness of Corporation A’s 

products to military personnel. Corporation 

A targets or tailors its products or services for 

purposes of § 800.241(a)(1)(i)(A). 

§ 800.248 TID U.S. business. 

The term TID U.S. business means 

any U.S. business that: 

(a) Produces, designs, tests, 

manufactures, fabricates, or develops 

one or more critical technologies; 

(b) Performs the functions as set forth 

in column 2 of appendix A to this part 

with respect to covered investment 

critical infrastructure; or 

(c) Maintains or collects, directly or 

indirectly, sensitive personal data of 

U.S. citizens. 

(d) Examples: 

(1) Example 1. Corporation A, a U.S. 

business, operates a munitions plant in the 

United States that produces a variety of 

military grade explosives. Some of the 

explosives manufactured by Corporation A 

are listed on the USML. Corporation A 

manufactures critical technologies and is 

therefore a TID U.S. business. 

(2) Example 2. Corporation A, a U.S. 

business, produces an item (Item A) by 

purchasing various components from thirdparty suppliers and integrating them into 

Item A. One of these components 

(Component X) is a critical technology, but 

Item A is not a critical technology. Before 

integrating Component X into Item A, 

Corporation A merely verifies the fit and 

form of Component X solely as part of Item 

A. Assuming no other relevant facts, 

Corporation A does not test critical 

technologies and is therefore not a TID U.S. 

business. 

(3) Example 3. Corporation A is a U.S. 

business that owns intellectual property 

rights and equipment for manufacturing a 

critical technology and maintains the knowhow to manufacture that critical technology. 

It has been six months since Corporation A 

manufactured the critical technology. 

Because Corporation A retains the ability to 

manufacture the critical technology, 

Corporation A is a TID U.S. business. 

(4) Example 4. Facility A is a crude oil 

storage facility with the capacity to hold 50 

million barrels of crude oil. Corporation A is 

a U.S. business that operates Facility A. 

Corporation B is a U.S. business that 

provides third-party physical security to 

Facility A by guarding the gate to Facility A 

and patrolling the fence surrounding Facility 

A. Corporation C produces the fencing used 

by Facility A. Corporation D produces the 

commercially available off-the-shelf cyber 

security software utilized in Facility A. 

Corporation E provides third-party cyber 

security to Facility A by running Facility A’s 

cyber security defenses. Facility A is covered 

investment critical infrastructure as set forth 

in column 1 of appendix A to this part. 

Corporation A, Corporation B, and 

Corporation E each perform one of the 

functions as set forth in column 2 of 

appendix A to this part with respect to 

Facility A, and each is therefore a TID U.S. 

business. Assuming no other relevant facts, 

neither Corporation C nor Corporation D 

performs one of the functions as set forth in 

column 2 of appendix A to this part with 

respect to Facility A, and neither is therefore 

a TID U.S. business. 

(5) Example 5. Pipeline A is an interstate 

natural gas pipeline with an outside diameter 

of 36 inches. Corporation A is a U.S. business 

that owns Pipeline A. Corporation B is a U.S. 

business that manufactures the pipe 

segments with an outside diameter of 36 

inches that are used in Pipeline A. Pipeline 

A is covered investment critical 

infrastructure as set forth in column 1 of 

appendix A to this part. Corporation A 

performs one of the functions as set forth in 

column 2 of appendix A to this part with 

respect to Pipeline A and is therefore a TID 

U.S. business. Assuming no other relevant 

facts, Corporation B does not perform one of 

the functions as set forth in column 2 of 

appendix A to this part with respect to 

Pipeline A and is therefore not a TID U.S. 

business. 

(6) Example 6. IXP A is an internet 

exchange point that supports public peering. 

Corporation A is a U.S. business that operates 

IXP A. Corporation B is a U.S. business that 

maintains the physical premises of IXP A. 

IXP A is covered investment critical 

infrastructure as set forth in column 1 of 

appendix A to this part. Corporation A 

performs one of the functions as set forth in 

column 2 of appendix A to this part with 

respect to IXP A and is therefore a TID U.S. 

business. Assuming no other relevant facts, 

Corporation B does not perform one of the 

functions as set forth in column 2 of 

appendix A to this part with respect to IXP 

A and is therefore not a TID U.S. business. 

(7) Example 7. SCADA System A is a 

supervisory control and data acquisition 

system utilized by a public water system, as 

defined in section 1401(4) of the Safe 

Drinking Water Act, as amended (42 U.S.C. 

300f(4)(A)), that regularly serves 15,000 

individuals. Corporation A is a U.S. business 

that produces SCADA System A by building 

the hardware and integrating all the software. 

Corporation B is a U.S. business that 

produces commercially available off-the-shelf 

software that is sold to Corporation A and 

used as a component in SCADA System A. 

SCADA System A is covered investment 

critical infrastructure as set forth in column 

1 of appendix A to this part. Corporation A, 

as the manufacturer of SCADA System A, 

performs one of the functions as set forth in 

column 2 of appendix A to this part with 

respect to SCADA System A and is therefore 

a TID U.S. business. Assuming no other 

relevant facts, Corporation B does not 

perform one of the functions as set forth in 

column 2 of appendix A to this part with 

respect to SCADA System A and is therefore 

not a TID U.S. business. 

(8) Example 8. Same facts as the example 

in paragraph (d)(7) of this section. 

Corporation B later releases a patch that 

updates the commercially available off-theshelf software that is a component of SCADA 

System A. As the software is only a 

component of SCADA System A, the software 

itself is not covered investment critical 

infrastructure as set forth in column 1 of 

appendix A to this part. Assuming no other 

relevant facts, Corporation B does not 

perform one of the functions as set forth in 

column 2 of appendix A to this part with 

respect to SCADA System A and is therefore 

not a TID U.S. business. 

(9) Example 9. Alloy A is a steel alloy 

containing two percent manganese. 

Corporation A is a U.S. business that 

manufactures Alloy A in Facility A by 

melting the constituent metals. Facility A is 

in the United States. Corporation B is a U.S. 

business that purchases Alloy A from 

Corporation A and resells it to a prime 

contractor of the Department of Defense. 

Facility A is covered investment critical 

infrastructure as set forth in column 1 of 

appendix A to this part. Corporation A 

performs one of the functions as set forth in 

column 2 of appendix A to this part with 

respect to Alloy A and is therefore a TID U.S. 

business. Assuming no other relevant facts, 

Corporation B does not perform one of the 

functions as set forth in column 2 of 

appendix A to this part with respect to Alloy 

A and is therefore not a TID U.S. business. 

(10) Example 10. Corporation A, a U.S. 

business, is a credit reporting agency and 

maintains consumer reports meeting the 

description under § 800.241(a)(1)(ii)(B) on 

greater than one million individuals, 

including U.S. citizens. Corporation A 

maintains sensitive personal data and is 

therefore a TID U.S. business. 

(11) Example 11. Same facts as the 

example in paragraph (d)(10) of this section, 

except that Corporation A maintains the 

sensitive personal data through its whollyowned subsidiary, Corporation X. 

Corporation A is a TID U.S. business because 

it indirectly maintains sensitive personal 

data. Corporation X is also a TID U.S. 

business because it directly maintains 

sensitive personal data. 

(12) Example 12. Corporation A, a U.S. 

business, manufactures and sells specialty 

medical devices to patients with various 

health conditions. Corporation A solicits 

certain patient medical information on its 

five million customers, including U.S. 

citizens, which is sensitive personal data 

under § 800.241(a)(1)(ii)(D), for R&D, 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3135 

marketing, and quality assurance purposes. 

However, Corporation A does not directly 

maintain or collect this information, but 

instead outsources this function to a third 

party, Corporation X, which collects the data 

according to Corporation A’s instructions and 

maintains the data on Corporation X’s 

corporate servers for Corporation A to access. 

Corporation A is a TID U.S. business because 

it indirectly maintains and collects sensitive 

personal data, and Corporation X is a TID 

U.S. business because it directly maintains 

and collects sensitive personal data. 

§ 800.249 Transaction. 

The term transaction means any of 

the following, whether proposed or 

completed: 

(a) A merger, acquisition, or takeover, 

including: 

(1) The acquisition of an ownership 

interest in an entity; 

(2) The acquisition of proxies from 

holders of a voting interest in an entity; 

(3) A merger or consolidation; 

(4) The formation of a joint venture; 

or 

(5) A long-term lease or concession 

arrangement under which a lessee (or 

equivalent) makes substantially all 

business decisions concerning the 

operation of a leased entity (or 

equivalent), as if it were the owner; 

(b) An investment; or 

(c) The conversion of a contingent 

equity interest. 

(d) Example: Corporation A, a foreign 

person, signs a concession agreement to 

operate the toll road business of 

Corporation B, a U.S. business, for 99 

years. Corporation B, however, is 

required under the agreement to 

perform safety and security functions 

with respect to the business and to 

monitor compliance by Corporation A 

with the operating requirements of the 

agreement on an ongoing basis. 

Corporation B may terminate the 

agreement or impose other penalties for 

breach of these operating requirements. 

Assuming no other relevant facts, this is 

not a transaction. 

Note 1 to § 800.249: See § 800.308 

regarding factors the Committee will consider 

in determining whether to include the access, 

rights, or involvement to be acquired by a 

foreign person upon the conversion of 

contingent equity interests as part of the 

Committee’s analysis of whether a 

transaction that involves such interests is a 

covered transaction. 

§ 800.250 Unaffiliated TID U.S. business. 

The term unaffiliated TID U.S. 

business means, with respect to a 

foreign person, a TID U.S. business in 

which that foreign person does not 

directly hold more than 50 percent of 

the outstanding voting interest or have 

the right to appoint more than half of 

the members of the board of directors or 

equivalent governing body. 

§ 800.251 United States. 

The term United States or U.S. means 

the United States of America, the States 

of the United States, the District of 

Columbia, and any commonwealth, 

territory, dependency, or possession of 

the United States, or any subdivision of 

the foregoing, and includes the 

territorial sea of the United States. For 

purposes of these regulations and their 

examples in this part, an entity 

organized under the laws of the United 

States of America, one of the States, the 

District of Columbia, or a 

commonwealth, territory, dependency, 

or possession of the United States is an 

entity organized ‘‘in the United States.’’ 

§ 800.252 U.S. business. 

(a) The term U.S. business means any 

entity, irrespective of the nationality of 

the persons that control it, engaged in 

interstate commerce in the United 

States. 

(b) Examples: 

(1) Example 1. Corporation A is organized 

under the laws of a foreign state and is 

wholly owned and controlled by a foreign 

national. It engages in interstate commerce in 

the United States through a branch or 

subsidiary. Its branch or subsidiary is a U.S. 

business. Corporation A and its branch or 

subsidiary are each also a foreign person. 

(2) Example 2. Corporation A is organized 

under the laws of a foreign state and is 

wholly owned and controlled by a foreign 

national. Corporation A does not have a 

branch office, subsidiary, or fixed place of 

business in the United States. It exports and 

licenses technology to an unrelated company 

in the United States. It also provides remote 

technical support services to customers that 

are in the United States, but does not have 

any assets or personnel located in the United 

States. Assuming no other relevant facts, 

Corporation A is not a U.S. business. 

(3) Example 3. Corporation A, a company 

organized under the laws of a foreign state, 

is wholly owned and controlled by 

Corporation X. Corporation X is organized in 

the United States and is wholly owned and 

controlled by U.S. nationals. Corporation A 

does not have a branch office, subsidiary, or 

fixed place of business in the United States. 

It exports goods to Corporation X and to 

unrelated companies in the United States. 

Assuming no other relevant facts, 

Corporation A is not a U.S. business. 

§ 800.253 U.S. national. 

The term U.S. national means an 

individual who is a U.S. citizen or an 

individual who, although not a U.S. 

citizen, owes permanent allegiance to 

the United States. 

§ 800.254 Voting interest. 

The term voting interest means any 

interest in an entity that entitles the 

owner or holder of that interest to vote 

for the election of directors of the entity 

(or, with respect to unincorporated 

entities, individuals exercising similar 

functions) or to vote on other matters 

affecting the entity. 

Subpart C—Coverage 

§ 800.301 Transactions that are covered 

control transactions. 

Transactions that are covered control 

transactions include: 

(a) A transaction which, irrespective 

of the actual arrangements for control 

provided for in the terms of the 

transaction, results or could result in 

control of a U.S. business by a foreign 

person. (See the examples in paragraphs 

(e)(1), (2), and (3) of this section.) 

(b) A transaction in which a foreign 

person conveys its control of a U.S. 

business to another foreign person. (See 

the example in paragraph (e)(4) of this 

section.) 

(c) A transaction that results or could 

result in control by a foreign person of 

any part of an entity or of assets, if such 

part of an entity or assets constitutes a 

U.S. business. (See § 800.302(c) and the 

examples in paragraphs (e)(5) through 

(14) of this section.) 

(d) A joint venture in which the 

parties enter into a contractual or other 

similar arrangement, including an 

agreement on the establishment of a 

new entity, but only if one or more of 

the parties contributes a U.S. business 

and a foreign person could control that 

U.S. business by means of the joint 

venture. (See the examples in 

paragraphs (e)(15) through (17) of this 

section.) 

(e) Examples: 

(1) Example 1. Corporation A, a foreign 

person, proposes to purchase all of the shares 

of Corporation X, which is a U.S. business. 

As the sole owner, Corporation A will have 

the right to elect directors and appoint other 

primary officers of Corporation X, and those 

directors will have the right to make 

decisions about the closing and relocation of 

particular production facilities and the 

termination of significant contracts. The 

directors also will have the right to propose 

to Corporation A, the sole shareholder, the 

dissolution of Corporation X and the sale of 

its principal assets. The proposed transaction 

is a covered control transaction. 

(2) Example 2. Same facts as the example 

(e)(1) of this section, except that Corporation 

A plans to retain the existing directors of 

Corporation X, all of whom are U.S. 

nationals. Although Corporation A may 

choose not to exercise its power to elect new 

directors for Corporation X, Corporation A 

nevertheless will have that exercisable 

power. The proposed transaction is a covered 

control transaction. 

(3) Example 3. Corporation A, a foreign 

person, proposes to purchase 50 percent of 


lotter on DSKBCFDHB2PROD with RULES2
3136 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

the voting shares in Corporation X, a U.S. 

business, from Corporation B, also a U.S. 

business. The governance documents of 

Corporation X provide that important 

decisions require the affirmative vote of more 

than half of the votes cast. Corporation B 

would retain the other 50 percent of the 

shares in Corporation X, and Corporation A 

and Corporation B would contractually agree 

that Corporation A would not exercise its 

voting and other rights for 10 years. The 

proposed transaction is a covered control 

transaction. 

(4) Example 4. Corporation X is a U.S. 

business, but is wholly owned and controlled 

by Corporation Y, a foreign person. 

Corporation Z, also a foreign person, but not 

related to Corporation Y, seeks to acquire 

Corporation X from Corporation Y. The 

proposed transaction is a covered control 

transaction because it could result in control 

of Corporation X, a U.S. business, by another 

foreign person, Corporation Z. 

(5) Example 5. Corporation X, a foreign 

person, has a branch office located in the 

United States. Corporation A, a foreign 

person, proposes to buy that branch office. 

The proposed transaction is a covered control 

transaction. 

(6) Example 6. Corporation A, a foreign 

person, buys a branch office located entirely 

outside the United States of Corporation Y, 

which is incorporated in the United States. 

Assuming no other relevant facts, the branch 

office of Corporation Y is not a U.S. business, 

and the transaction is not a covered control 

transaction. 

(7) Example 7. Corporation A, a foreign 

person, makes a start-up, or ‘‘greenfield,’’ 

investment in the United States. That 

investment involves activities such as the 

foreign person separately arranging for the 

financing of and the construction of a plant 

to make a new product, buying supplies and 

inputs, hiring personnel, and purchasing the 

necessary technology. The investment 

involves incorporating a newly formed 

subsidiary of the foreign person. Assuming 

no other relevant facts, Corporation A will 

not have acquired a U.S. business, and its 

greenfield investment is not a covered 

control transaction. However, this transaction 

may be subject to the provisions of part 802 

of this title, which addresses certain 

transactions concerning real estate. 

(8) Example 8. Corporation A, a foreign 

person, intends to make an early-stage 

investment in a start-up company in the 

United States. Prior to the investment by the 

foreign person, the start-up has engaged in 

interstate commerce, including 

incorporating, establishing a domain name, 

hiring personnel, developing business plans, 

seeking financing, and renting office space, 

without the involvement of the foreign 

person. As a result of the investment, 

Corporation A could control the U.S. 

business. Corporation A is acquiring a U.S. 

business and the proposed transaction is a 

covered control transaction. 

(9) Example 9. Corporation A, a foreign 

person, purchases substantially all of the 

assets of Corporation B. Corporation B, which 

is incorporated in the United States, was in 

the business of producing industrial 

equipment, but stopped producing and 

selling such equipment one week before 

Corporation A purchased substantially all of 

its assets. At the time of the transaction, 

Corporation B continued to have employees 

on its payroll, maintained know-how in 

producing the industrial equipment it 

previously produced, and maintained 

relationships with its prior customers, all of 

which were transferred to Corporation A. 

Corporation A has acquired a U.S. business 

and the acquisition is a covered control 

transaction. 

(10) Example 10. Corporation X, a foreign 

person, seeks to acquire from Corporation A, 

a U.S. business, an empty warehouse facility 

located in the United States. The acquisition 

would be limited to the physical facility, and 

would not include customer lists, intellectual 

property, or other proprietary information, or 

other intangible assets or the transfer of 

personnel. Assuming no other relevant facts, 

the facility is not an entity and therefore not 

a U.S. business, and the proposed acquisition 

of the facility is not a covered control 

transaction. However, this transaction may be 

subject to the provisions of part 802 of this 

chapter, which addresses certain transactions 

concerning real estate. 

(11) Example 11. Same facts as the 

example in paragraph (e)(10) of this section, 

except that, in addition to the proposed 

acquisition of Corporation A’s warehouse 

facility, Corporation X would acquire the 

personnel, customer list, equipment, and 

inventory management software used to 

operate the facility. Under these facts, 

Corporation X is acquiring a U.S. business, 

and the proposed acquisition is a covered 

control transaction. 

(12) Example 12. Corporation A, a foreign 

person, seeks to acquire from Corporation X, 

a U.S. business, certain tangible and 

intangible assets that Corporation X operates 

as a business in the United States. 

Corporation A intends to use the assets to 

establish a business undertaking in a foreign 

country. Under these facts, Corporation X is 

acquiring a U.S. business, and the proposed 

acquisition is a covered control transaction. 

(13) Example 13. Corporation A, a foreign 

person, seeks to acquire from Corporation X, 

a U.S. business, proprietary software 

developed by Corporation X. The acquisition 

would be limited to the software and would 

not include customer lists, marketing 

material, or other proprietary information; 

any other tangible or intangible assets; or the 

transfer of personnel. Assuming no other 

relevant facts, the software does not 

constitute an entity and is therefore not a 

U.S. business, and the proposed acquisition 

of the software is not a covered control 

transaction. 

(14) Example 14. Same facts as the 

example in paragraph (e)(13) of this section, 

except that, in addition to the proposed 

acquisition of Corporation X’s proprietary 

software, Corporation A would acquire 

Corporation X’s customer lists, advertising 

and promotional material, branding, 

trademarks, domain names, and internet 

presence. Under these facts, Corporation A is 

acquiring a U.S. business, and the proposed 

acquisition is a covered control transaction. 

(15) Example 15. Corporation A, a foreign 

person, and Corporation X, a U.S. business, 

form a separate corporation, JV Corporation, 

to which Corporation A contributes only cash 

and Corporation X contributes a U.S. 

business. Each owns 50 percent of the shares 

of JV Corporation and, under the Articles of 

Incorporation of JV Corporation, both 

Corporation A and Corporation X have veto 

power over matters affecting JV Corporation 

identified under § 800.208, giving them both 

control over JV Corporation. The place of 

incorporation of JV Corporation is not 

relevant to the determination of whether the 

transaction is a covered control transaction. 

The formation of JV Corporation is a covered 

control transaction. 

(16) Example 16. Corporation A, a foreign 

person, and Corporation X, a U.S. business, 

form a separate corporation, JV Corporation, 

to which Corporation A contributes funding 

and managerial and technical personnel, 

while Corporation X contributes certain land 

and equipment that do not in this example 

constitute a U.S. business. Corporations A 

and X each have a 50 percent interest in the 

joint venture. Assuming no other relevant 

facts, the formation of JV Corporation is not 

a covered control transaction. However, this 

transaction may be subject to the provisions 

of part 802 of this title, which addresses 

certain transactions concerning real estate. 

(17) Example 17. Same facts as the 

example in paragraph (e)(16) of this section, 

except that, in addition to contributing 

certain land and equipment, Corporation X 

also contributes intellectual property, other 

proprietary information, and other intangible 

assets, that together with the land and 

equipment constitute a U.S. business, to JV 

Corporation. Under these facts, Corporation 

X has contributed a U.S. business, and the 

formation of JV Corporation is a covered 

control transaction. 

§ 800.302 Transactions that are not 

covered control transactions. 

Transactions that are not covered 

control transactions include: 

(a) A stock split or pro rata stock 

dividend that does not involve a change 

in control. See the example in paragraph 

(f)(1) of this section. 

(b) A transaction that results in a 

foreign person holding 10 percent or 

less of the outstanding voting interest in 

a U.S. business (regardless of the dollar 

value of the interest so acquired), but 

only if the transaction is solely for the 

purpose of passive investment. (See 

§ 800.243 and the examples in 

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

section.) 

(c) An acquisition of any part of an 

entity or of assets, if such part of an 

entity or assets do not constitute a U.S. 

business. (See § 800.301(c) and the 

examples in paragraphs (f)(5) through 

(10) of this section.) 

(d) An acquisition of securities by a 

person acting as a securities 

underwriter, in the ordinary course of 

business and in the process of 

underwriting. 

(e) An acquisition pursuant to a 

condition in a contract of insurance 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3137 

relating to fidelity, surety, or casualty 

obligations if the contract was made by 

an insurer in the ordinary course of 

business. 

(f) Examples: 

(1) Example 1. Corporation A, a foreign 

person, holds 10,000 shares of Corporation B, 

a U.S. business, constituting 10 percent of the 

stock of Corporation B. Corporation B pays a 

2-for-1 stock dividend. As a result of this 

stock split, Corporation A holds 20,000 

shares of Corporation B, still constituting 10 

percent of the stock of Corporation B. 

Assuming no other relevant facts, the 

acquisition of additional shares is not a 

covered control transaction. 

(2) Example 2. In an open market purchase 

solely for the purpose of passive investment, 

Corporation A, a foreign person, acquires 

seven percent of the voting securities of 

Corporation X, which is a U.S. business. 

Assuming no other relevant facts, the 

acquisition of the securities is not a covered 

control transaction. 

(3) Example 3. Corporation A, a foreign 

person, acquires nine percent of the voting 

shares of Corporation X, a U.S. business. 

Corporation A also negotiates contractual 

rights that give it the power to control 

important matters of Corporation X. The 

acquisition by Corporation A of the voting 

shares of Corporation X is not solely for the 

purpose of passive investment and is a 

covered control transaction. 

(4) Example 4. Corporation A, a foreign 

person, acquires five percent of the voting 

shares in Corporation B, a U.S. business. In 

addition to the securities, Corporation A 

obtains the right to appoint one out of eleven 

seats on Corporation B’s board of directors. 

The acquisition by Corporation A of 

Corporation B’s securities is not solely for the 

purpose of passive investment. Whether the 

transaction is a covered control transaction 

would depend on whether Corporation A 

obtains control of Corporation B as a result 

of the transaction. See § 800.303 for 

transactions that are covered investments. 

(5) Example 5. Corporation A, a foreign 

person, acquires, from separate U.S. nationals 

products held in inventory, land, and 

machinery for export. Assuming no other 

relevant facts, Corporation A has not 

acquired a U.S. business, and this acquisition 

is not a covered control transaction. 

(6) Example 6. Corporation X, a U.S. 

business, produces armored personnel 

carriers in the United States. Corporation A, 

a foreign person, seeks to acquire the annual 

production of those carriers from Corporation 

X under a long-term contract. Assuming no 

other relevant facts, this transaction is not a 

covered control transaction. 

(7) Example 7. Same facts as the example 

in paragraph (f)(6) of this section, except that 

Corporation X, a U.S. business, has 

developed important technology in 

connection with the production of armored 

personnel carriers. Corporation A seeks to 

negotiate an agreement under which it would 

be licensed to manufacture using that 

technology. Assuming no other relevant facts, 

neither the proposed acquisition of 

technology pursuant to that license 

agreement, nor the actual acquisition, is a 

covered control transaction. 

(8) Example 8. Same facts as the example 

in paragraph (f)(6) of this section, except that 

Corporation A enters into a contractual 

arrangement to acquire the entire armored 

personnel carrier business operations of 

Corporation X, including production 

facilities, customer lists, technology, and 

staff, which together constitute a U.S. 

business. This transaction is a covered 

control transaction. 

(9) Example 9. Same facts as the example 

in paragraph (f)(6) of this section, except that 

Corporation X suspended all activities of its 

armored personnel carrier business a year ago 

and currently is in bankruptcy proceedings. 

Existing equipment provided by Corporation 

X is being serviced by another company, 

which purchased the service contracts from 

Corporation X. The business’s production 

facilities are idle but still in working 

condition, some of its key former employees 

have agreed to return if the business is 

resuscitated, and its technology and customer 

and vendor lists are still current. Corporation 

X’s personnel carrier business constitutes a 

U.S. business, and its purchase by 

Corporation A is a covered control 

transaction. 

(10) Example 10. Same facts as the 

example in paragraph (f)(6) of this section, 

except that Corporation A and Corporation X 

establish a joint venture that will be 

controlled by Corporation A to manufacture 

armored personnel carriers outside the 

United States, and Corporation X contributes 

assets constituting a U.S. business, including 

intellectual property and other intangible 

assets required to manufacture the armored 

personnel carriers, to the joint venture. 

Corporation X has contributed a U.S. 

business to the joint venture, and the 

establishment of the joint venture is a 

covered control transaction. 

(11) Example 11. Corporation A, a foreign 

person, holds a 10 percent ownership interest 

in Corporation X, a U.S. business. 

Corporation A and Corporation X enter into 

a contractual arrangement pursuant to which 

Corporation A gains the right to purchase an 

additional interest in Corporation X to 

prevent the dilution of Corporation A’s pro 

rata interest in Corporation X in the event 

that Corporation X issues additional 

instruments conveying interests in 

Corporation X. Corporation A does not 

acquire any additional rights or ownership 

interest in Corporation X pursuant to the 

contractual arrangement. Assuming no other 

relevant facts, the transaction is not a covered 

control transaction. 

§ 800.303 Transactions that are covered 

investments. 

Transactions that are covered 

investments include: 

(a) A transaction that meets the 

requirements of § 800.211 irrespective of 

the percentage of voting interest 

acquired. (See the examples in 

paragraphs (d)(1) through (3) of this 

section.) 

(b) A transaction that meets the 

requirements of § 800.211, irrespective 

of the fact that the Committee 

concluded all action under section 721 

for a previous covered investment by 

the same foreign person in the same TID 

U.S. business, where such transaction 

involves the acquisition of access, 

rights, or involvement specified in 

§ 800.211 in addition to those notified to 

the Committee in the transaction for 

which the Committee previously 

concluded action. (See the example in 

paragraph (d)(4) of this section.) 

(c) A transaction that meets the 

requirements of § 800.211, irrespective 

of the fact that the critical technology 

produced, designed, tested, 

manufactured, fabricated, or developed 

by the TID U.S. business became 

controlled under section 1758 of the 

Export Control Reform Act of 2018 after 

February 13, 2020, unless any of the 

criteria set forth in § 800.104(b) are 

satisfied with respect to the transaction 

prior to the critical technology 

becoming controlled. (See the example 

in paragraph (d)(5) of this section.) 

(d) Examples: 

(1) Example 1. Corporation A, a foreign 

person that is not an excepted investor, 

proposes to acquire a four percent, noncontrolling equity interest in Corporation B, 

an entity in which Corporation A has no 

voting interests or any rights. Corporation B 

is a U.S. business that manufactures a critical 

technology. Corporation B is therefore an 

unaffiliated TID U.S. business. Pursuant to 

the terms of the investment, a designee of 

Corporation A will have the right to observe 

the meetings of the board of directors of 

Corporation B. The proposed transaction is a 

covered investment. 

(2) Example 2. Same facts as the example 

in paragraph (d)(1) of this section, except 

that, pursuant to the terms of the investment, 

instead of observer rights, Corporation A has 

consultation rights with respect to 

Corporation B’s licensing of a critical 

technology to third parties. Corporation A is 

therefore involved in substantive 

decisionmaking with respect to Corporation 

B, and the proposed transaction is a covered 

investment. 

(3) Example 3. Corporation A is a foreign 

person that is an excepted investor. 

Corporation B, a foreign person that is not an 

excepted investor, owns a three percent, noncontrolling equity interest in Corporation A. 

Corporation A proposes to acquire a four 

percent, non-controlling equity interest in 

Corporation C, an unaffiliated TID U.S. 

business. Pursuant to the terms of the 

investment in Corporation C and Corporation 

A’s governance documents, Corporation A 

and Corporation B will each have access to 

material nonpublic technical information in 

Corporation C’s possession. The transaction 

is a covered investment because Corporation 

B is making an investment that will result in 

access to material nonpublic technical 

information under § 800.211(b). 

(4) Example 4. The Committee concludes 

all action under section 721 with respect to 

a covered investment by Corporation A, a 

foreign person that is not an excepted 

investor, in which Corporation A acquires a 


lotter on DSKBCFDHB2PROD with RULES2
3138 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

four percent, non-controlling equity interest 

with access to material non-public 

information in Corporation B, an unaffiliated 

TID U.S. business. One year later, 

Corporation A proposes to acquire an 

additional five percent equity interest in 

Corporation B, resulting in Corporation A 

holding a nine percent, non-controlling 

equity interest in Corporation B. Pursuant to 

the terms of the additional investment, 

Corporation A will receive the right to 

appoint a member to the board of directors 

of Corporation B. The proposed transaction is 

a covered investment because the transaction 

involves both an acquisition of an equity 

interest in an unaffiliated TID U.S. business 

and a new right under § 800.211. 

(5) Example 5. Corporation A, a foreign 

person that is not an excepted investor, has 

executed a binding written agreement 

establishing the material terms of a proposed 

non-controlling investment in Corporation B, 

an unaffiliated TID U.S. business. The 

proposed investment will afford Corporation 

A access to material nonpublic technical 

information in the possession of Corporation 

B. The only controlled technology produced, 

designed, tested, manufactured, fabricated, or 

developed by Corporation B became 

controlled under section 1758 of the Export 

Control Reform Act of 2018 after February 13, 

2020, but prior to the date upon which the 

binding written agreement establishing the 

material terms of the investment was 

executed. The proposed transaction is a 

covered investment. 

§ 800.304 Transactions that are not 

covered investments. 

Transactions that are not covered 

investments include: 

(a) An investment by a foreign person 

in an unaffiliated TID U.S. business that 

does not afford the foreign person any 

of the access, rights, or involvement 

specified in § 800.211(b). (See the 

examples in paragraphs (f)(1) and (2) of 

this section.) 

(b) An investment by a foreign person 

who is an excepted investor in an 

unaffiliated TID U.S. business. (See the 

example in paragraph (f)(3) of this 

section.) 

(c) A transaction that results or could 

result in control by a foreign person of 

an unaffiliated TID U.S. business. (See 

the example in paragraph (f)(4) of this 

section.) 

(d) A stock split or pro rata stock 

dividend that does not afford the foreign 

person any of the access, rights, or 

involvement specified in § 800.211(b). 

(See the example in paragraph (f)(5) of 

this section.) 

(e) An acquisition of securities by a 

person acting as a securities 

underwriter, in the ordinary course of 

business and in the process of 

underwriting. 

(f) Examples: 

(1) Example 1. In an open market purchase 

solely for the purpose of passive investment, 

Corporation A, a foreign person that is not an 

excepted investor, acquires seven percent of 

the voting securities of Corporation X, an 

unaffiliated TID U.S. business. Assuming no 

other relevant facts, the acquisition of the 

securities is not a covered investment. 

(2) Example 2. The Committee concluded 

all action under section 721 with respect to 

a covered investment in which Corporation 

A, a foreign person that is not an excepted 

investor, acquired a four percent, noncontrolling equity interest with board 

observer rights in Corporation B, an 

unaffiliated TID U.S. business. One year 

later, Corporation A proposes to acquire an 

additional five percent equity interest in 

Corporation B, which would result in 

Corporation A holding a nine percent, noncontrolling equity interest in Corporation B. 

The proposed investment does not afford 

Corporation A any additional access, rights, 

or involvement with respect to Corporation 

B, including the access, rights, or 

involvement specified in § 800.211(b). 

Assuming no other relevant facts, the 

proposed transaction is not a covered 

investment. 

(3) Example 3. Corporation A, a foreign 

person who is an excepted investor, proposes 

to acquire a four percent, non-controlling 

equity interest in Corporation B, an 

unaffiliated TID U.S. business. Pursuant to 

the terms of the investment, a designee of 

Corporation A will have the right to observe 

the meetings of the board of directors of 

Corporation B. Assuming no other relevant 

facts, the proposed transaction is not a 

covered investment. 

(4) Example 4. Corporation A, a foreign 

person who is an excepted investor, proposes 

to purchase all of the shares of Corporation 

B, an unaffiliated TID U.S. business. As the 

sole owner, Corporation A will have the right 

to elect directors and appoint other primary 

officers of Corporation B. Assuming no other 

relevant facts, the proposed transaction is not 

a covered investment. It is, however, a 

covered control transaction. Whether 

Corporation A is an excepted investor and 

whether Corporation B is an unaffiliated TID 

U.S. business are not relevant to the 

determination of whether the transaction is a 

covered control transaction. (See § 800.301.) 

(5) Example 5. Corporation A, a foreign 

person that is not an excepted investor, holds 

10,000 shares and board observer rights in 

Corporation B, an unaffiliated TID U.S. 

business, constituting 10 percent of the stock 

of Corporation B. Corporation B pays a 2-for1 stock dividend. As a result of this stock 

split, Corporation A holds 20,000 shares of 

Corporation B, still constituting 10 percent of 

the stock of Corporation B. The investment 

does not afford Corporation A any additional 

access, rights, or involvement with respect to 

Corporation B, including those specified in 

§ 800.211(b). Assuming no other relevant 

facts, the acquisition of additional shares is 

not a covered investment. 

§ 800.305 Incremental acquisitions. 

(a) Any transaction in which a foreign 

person acquires an additional interest 

in, or for which a change in rights of the 

foreign person occurs with respect to, a 

U.S. business over which the same 

foreign person, or any entity that it 

wholly owns directly or indirectly, 

previously acquired direct control as a 

result of a covered control transaction 

for which the Committee concluded all 

action under section 721 shall be 

deemed not to be a covered transaction. 

If, however, a foreign person that did 

not acquire control of the U.S. business 

in the prior transaction is a party to the 

later transaction, the later transaction 

may be a covered transaction. 

(b) Examples: 

(1) Example 1. Corporation A, a foreign 

person, directly acquires a 40 percent voting 

interest and important rights with respect to 

Corporation B, a U.S. business. The 

documentation pertaining to the transaction 

gives no indication that Corporation A’s 

interest in Corporation B may increase at a 

later date. Corporation A and Corporation B 

file a voluntary notice of the transaction with 

the Committee. Following its review of the 

transaction, the Committee informs the 

parties that the notified transaction is a 

covered control transaction, and concludes 

action under section 721. Three years later, 

Corporation A acquires the remainder of the 

voting interest in Corporation B. Assuming 

no other relevant facts, because the 

Committee concluded all action with respect 

to Corporation A’s earlier direct acquisition 

of control in the same U.S. business, and 

because no other foreign person is a party to 

this subsequent transaction, this subsequent 

transaction is not a covered transaction. 

(2) Example 2. Corporation A, a foreign 

person that is not an excepted investor, 

makes a covered investment in Corporation 

B, an unaffiliated U.S. TID business, 

pursuant to which Corporation A acquires a 

five percent non-controlling equity interest in 

Corporation B that affords it access to 

material nonpublic technical information of 

Corporation B. Following its review of the 

transaction, the Committee informs the 

parties that the notified transaction is a 

covered investment, and concludes action 

under section 721. Two years later, 

Corporation A, in a subsequent investment, 

acquires an additional five percent noncontrolling equity interest in Corporation B, 

which affords Corporation A the right to 

appoint one board member of Corporation A. 

The subsequent investment is a covered 

investment. 

(3) Example 3. Same facts as the example 

in paragraph (b)(1) of this section, except that 

instead of Corporation A acquiring the 

remainder of the voting interest in 

Corporation B three years after the initial 

acquisition, the remaining 60 percent voting 

interest is acquired by Corporation X. 

Corporation X is wholly owned by 

Corporation Y. Corporation Y also owns 100 

percent of Corporation A. The subsequent 

transaction may be a covered transaction 

because, while Corporation A and 

Corporation X are both under common 

ownership of Corporation Y, Corporation A 

(the direct acquirer in the initial transaction) 

does not wholly own Corporation X. 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3139 

§ 800.306 Lending transactions. 

(a) The extension of a loan or a similar 

financing arrangement by a foreign 

person to a U.S. business, regardless of 

whether accompanied by the creation in 

favor of the foreign person of a secured 

interest over securities or other assets of 

the U.S. business, shall not, by itself, 

constitute a covered transaction. 

(1) The Committee will accept notices 

or declarations concerning a loan or a 

similar financing arrangement that does 

not, by itself, constitute a covered 

transaction only at the time that, 

because of imminent or actual default or 

other condition, there is a significant 

possibility that the foreign person may 

obtain control of a U.S. business, or 

acquire equity interest and access, 

rights, or involvement specified in 

§ 800.211(b) over a TID U.S. business, as 

a result of the default or other condition. 

(2) Where the Committee accepts a 

notice or declaration concerning a loan 

or a similar financing arrangement 

under paragraph (a)(1) of this section, 

and a party to the transaction is a 

foreign person that makes loans in the 

ordinary course of business, the 

Committee will take into account 

whether the foreign person has made 

any arrangements to transfer 

management decisions, or day-to-day 

control over the U.S. business to U.S. 

nationals or, as applicable, excepted 

investors for purposes of determining 

whether such loan or financing 

arrangement constitutes a covered 

transaction. 

(b) Notwithstanding paragraph (a) of 

this section, a loan or a similar 

financing arrangement through which a 

foreign person acquires an interest in 

profits of a U.S. business, the right to 

appoint members of the board of 

directors of the U.S. business, or other 

comparable financial or governance 

rights characteristic of an equity 

investment but not of a typical loan may 

constitute a covered transaction. 

(c) An acquisition of voting interest in 

or assets of a U.S. business by a foreign 

person upon default or other condition 

involving a loan or a similar financing 

arrangement does not constitute a 

covered transaction, provided that the 

loan was made by a syndicate of banks 

in a loan participation where the foreign 

lender (or lenders) in the syndicate: 

(1) Needs the majority consent of the 

U.S. participants in the syndicate to take 

action, and cannot on its own initiate 

any action vis-a`-vis the debtor; or 

(2) Does not have a lead role in the 

syndicate, and is subject to a provision 

in the loan or financing documents 

limiting its ability to: 

(i) Control the debtor such that 

control for purposes of § 800.208 could 

not be acquired; and 

(ii) Exercise any access, rights, or 

involvement specified in § 800.211(b). 

(d) Examples: 

(1) Example 1. Corporation A, which is a 

U.S. business, borrows funds from 

Corporation B, a bank organized under the 

laws of a foreign state and controlled by 

foreign persons. As a condition of the loan, 

Corporation A agrees not to sell or pledge its 

principal assets to any person. Assuming no 

other relevant facts, this lending arrangement 

does not alone constitute a covered 

transaction. 

(2) Example 2. Same facts as the example 

in paragraph (d)(1) of this section, except that 

Corporation A defaults on its loan from 

Corporation B and seeks bankruptcy 

protection. Corporation A has no funds with 

which to satisfy Corporation B’s claim, which 

is greater than the value of Corporation A’s 

principal assets. Corporation B’s secured 

claim constitutes the only secured claim 

against Corporation A’s principal assets, 

creating a high probability that Corporation 

B will receive title to Corporation A’s 

principal assets, which constitute a U.S. 

business. Assuming no other relevant facts, 

the Committee would accept a notice of the 

impending bankruptcy court adjudication 

transferring control of Corporation A’s 

principal assets to Corporation B, which 

would constitute a covered control 

transaction. 

(3) Example 3. Corporation A, a foreign 

bank, makes a loan to Corporation B, a U.S. 

business. The loan documentation provides 

Corporation A the right to appoint a majority 

of the board of directors of Corporation B and 

the right to be paid dividends by Corporation 

B. These rights are characteristic of an equity 

interest but not of a typical loan. Also, as a 

result of the transaction, under the terms of 

the loan documentation, Corporation A has 

the power to determine, direct, or decide 

important matters affecting Corporation B. 

This loan is a covered control transaction. 

(4) Example 4. Corporation A, a foreign 

bank that is not an excepted investor, makes 

a loan to Corporation B, an unaffiliated TID 

U.S. business. The loan documentation 

provides Corporation A the right to appoint 

one out of fifteen seats on Corporation B’s 

board of directors and the right to be paid 

dividends by Corporation B. These rights are 

characteristic of an equity interest but not of 

a typical loan. However, assuming no other 

relevant facts under the terms of the loan 

documentation, Corporation A does not have 

the power to determine, direct, or decide 

important matters affecting Corporation B. 

This loan is a covered investment. 

§ 800.307 Specific clarification for 

investment funds. 

(a) Notwithstanding § 800.303, an 

indirect investment by a foreign person 

in a TID U.S. business through an 

investment fund that affords the foreign 

person (or a designee of the foreign 

person) membership as a limited partner 

or equivalent on an advisory board or a 

committee of the fund shall not be 

considered a covered investment if: 

(1) The fund is managed exclusively 

by a general partner, a managing 

member, or an equivalent; 

(2) The general partner, managing 

member, or equivalent of the fund is not 

a foreign person; 

(3) The advisory board or committee 

does not have the ability to approve, 

disapprove, or otherwise control: 

(i) Investment decisions of the 

investment fund; or 

(ii) Decisions made by the general 

partner, managing member, or 

equivalent related to entities in which 

the investment fund is invested; 

(4) The foreign person does not 

otherwise have the ability to control the 

investment fund, including the 

authority: 

(i) To approve, disapprove, or 

otherwise control investment decisions 

of the investment fund; 

(ii) To approve, disapprove, or 

otherwise control decisions made by the 

general partner, managing member, or 

equivalent related to entities in which 

the investment fund is invested; or 

(iii) To unilaterally dismiss, prevent 

the dismissal of, select, or determine the 

compensation of the general partner, 

managing member, or equivalent; 

(5) The foreign person does not have 

access to material nonpublic technical 

information as a result of its 

participation on the advisory board or 

committee; and 

(6) The investment does not afford the 

foreign person any of the access, rights, 

or involvement specified in 

§ 800.211(b). 

(b) For the purposes of paragraphs 

(a)(3) and (4) of this section, and except 

as provided in paragraph (c) of this 

section, a waiver of a potential conflict 

of interest, a waiver of an allocation 

limitation, or a similar activity, 

applicable to a transaction pursuant to 

the terms of an agreement governing an 

investment fund shall not be considered 

to constitute control of investment 

decisions of the investment fund or 

decisions relating to entities in which 

the investment fund is invested. 

(c) In extraordinary circumstances, 

the Committee may consider the waiver 

of a potential conflict of interest, the 

waiver of an allocation limitation, or a 

similar activity, applicable to a 

transaction pursuant to the terms of an 

agreement governing an investment 

fund, to constitute control of investment 

decisions of the investment fund or 

decisions relating to entities in which 

the investment fund is invested. 

(d) Example: Limited Partner A, a 

foreign person, is a limited partner in an 

investment fund that invests in 


lotter on DSKBCFDHB2PROD with RULES2
3140 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

Corporation B, an unaffiliated TID U.S. 

business. The investment fund is 

managed exclusively by a general 

partner, who is not a foreign person. 

The investment affords Limited Partner 

A membership on an advisory board of 

the investment fund. The advisory 

board provides industry expertise, but it 

does not control investment decisions of 

the fund or decisions made by the 

general partner related to entities in 

which the fund is invested. Limited 

Partner A does not otherwise have the 

ability to control the fund. Limited 

Partner A’s investment in Corporation B 

does not afford it access to any material 

nonpublic technical information in the 

possession of Corporation B, the right to 

be a member or observer, or to nominate 

a member or observer, to the board of 

Corporation B, nor any involvement in 

the substantive decisionmaking of 

Corporation B. Assuming no other facts, 

the indirect investment by Limited 

Partner A is not a covered investment. 

§ 800.308 Timing rule for a contingent 

equity interest. 

(a) For purposes of determining 

whether to include the rights that a 

holder of a contingent equity interest 

will acquire upon conversion of, or 

exercise of a right provided by, that 

interest in the Committee’s analysis of 

whether a notified transaction is a 

covered transaction, the Committee will 

consider factors that include: 

(1) The imminence of conversion or 

satisfaction of contingent conditions; 

(2) Whether conversion or satisfaction 

of contingent conditions depends on 

factors within the control of the 

acquiring party; and 

(3) Whether the amount of interest 

and the rights that would be acquired 

upon conversion or satisfaction of 

contingent conditions can be reasonably 

determined at the time of acquisition. 

(b) When the Committee, applying 

paragraph (a) of this section, determines 

that the rights that the holder will 

acquire upon conversion or satisfaction 

of contingent condition will not be 

included in the Committee’s analysis of 

whether a notified or submitted 

transaction is a covered transaction, the 

Committee will disregard the contingent 

equity interest for purposes of that 

transaction except to the extent that 

they convey immediate rights to the 

holder with respect to the entity that 

issued the interest. 

(c) Examples: 

(1) Example 1. Corporation A, a foreign 

person, notifies the Committee that it intends 

to buy common stock and debentures of 

Corporation X, a U.S. business. By their 

terms, the debentures are convertible into 

common stock only upon the occurrence of 

an event the timing of which is not in the 

control of Corporation A, and the number of 

common shares that would be acquired upon 

conversion cannot now be determined. 

Assuming no other relevant facts, the 

Committee will disregard the debentures in 

the course of its covered transaction analysis 

at the time that Corporation A acquires the 

debentures. In the event that it determines 

that the acquisition of the common stock is 

not a covered transaction, the Committee will 

so inform the parties. Once the conversion of 

the instruments becomes imminent, it may be 

appropriate for the Committee to consider the 

rights that would result from the conversion 

and whether the conversion is a covered 

transaction. The conversion of those 

debentures into common stock could be a 

covered transaction, depending on what 

percentage of Corporation X’s voting 

securities Corporation A would receive and 

what powers those securities would confer 

on Corporation A. 

(2) Example 2. Same facts as the example 

in paragraph (c)(1) of this section, except that 

the debentures at issue are convertible at the 

sole discretion of Corporation A after six 

months, and if converted, would represent a 

50 percent interest in Corporation X. The 

Committee may consider the rights that 

would result from the conversion as part of 

its analysis. 

Subpart D—Declarations 

§ 800.401 Mandatory declarations. 

(a) Except as provided in paragraph 

(d), (e), or (f) of this section, the parties 

to a transaction described in paragraph 

(b) or (c) of this section shall submit to 

the Committee a declaration with 

information regarding the transaction in 

accordance with § 800.403. 

(b) A covered transaction that results 

in the acquisition of a substantial 

interest in a TID U.S. business by a 

foreign person in which the national or 

subnational governments of a single 

foreign state (other than an excepted 

foreign state) have a substantial interest. 

(c) A covered transaction that is a 

covered investment in, or that could 

result in foreign control of, a TID U.S. 

business that produces, designs, tests, 

manufactures, fabricates, or develops 

one or more critical technologies: 

(1) Utilized in connection with the 

TID U.S. business’s activity in one or 

more industries identified in appendix 

B to this part by reference to the North 

American Industry Classification 

System (NAICS); or 

(2) Designed by the TID U.S. business 

specifically for use in one or more 

industries identified in appendix B to 

this part by reference to the NAICS, 

regardless of whether the critical 

technology also has application for 

other industries. (See the example in 

paragraph (j)(1) of this section.) 

(d) The submission of a declaration 

shall not be required under paragraph 

(b) of this section with respect to: 

(1) A covered transaction by an 

investment fund if: 

(i) The fund is managed exclusively 

by a general partner, a managing 

member, or an equivalent; 

(ii) The general partner, managing 

member, or equivalent is not a foreign 

person; and 

(iii) The investment fund satisfies, 

with respect to any foreign person with 

membership as a limited partner on an 

advisory board or a committee of the 

fund, the criteria specified in 

§ 800.307(a)(3) and (4) (See the 

examples in paragraphs (j)(2) and (3) of 

this section); or 

(2) A covered control transaction 

involving an air carrier, as defined in 49 

U.S.C. 40102(a)(2), that holds a 

certificate issued under 49 U.S.C. 41102. 

(e) The submission of a declaration 

shall not be required under paragraph 

(c) of this section with respect to: 

(1) A covered control transaction by 

an excepted investor; 

(2) A covered transaction in which the 

foreign person’s indirect investment in 

the TID U.S. business is held solely and 

directly via an entity that as of the 

completion date is: 

(i) Subject to a security control 

agreement, special security agreement, 

voting trust agreement, or proxy 

agreement approved by a cognizant 

security agency to offset foreign 

ownership, control, or influence 

pursuant to the National Industrial 

Security Program regulations (32 CFR 

part 2004); and 

(ii) Operating under a valid facility 

security clearance pursuant to the 

National Industrial Security Program 

regulations (32 CFR part 2004); 

(3) A covered transaction by an 

investment fund if: 

(i) The fund is managed exclusively 

by a general partner, a managing 

member, or an equivalent; 

(ii) The general partner, managing 

member, or equivalent is: 

(A) Ultimately controlled exclusively 

by U.S. nationals; or 

(B) Not a foreign person; and 

(iii) The investment fund satisfies, 

with respect to any foreign person with 

membership as a limited partner on an 

advisory board or a committee of the 

fund, the criteria specified in 

§ 800.307(a)(3) and (4) (See the 

examples in paragraphs (j)(2) and (3) of 

this section); 

(4) An investment that is a covered 

investment solely due to the application 

of § 800.219(d); or 

(5) A covered control transaction 

involving an air carrier, as defined in 49 

U.S.C. 40102(a)(2), that holds a 

certificate issued under 49 U.S.C. 41102. 

(6) A covered transaction that is a 

covered investment in, or that could 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3141 

result in foreign control of, a U.S. 

business that is a TID U.S. business 

solely because such TID U.S. business 

produces, designs, tests, manufactures, 

fabricates, or develops one or more 

critical technologies that is-eligible for 

export, reexport, or transfer (in country) 

pursuant to License Exception ENC of 

the EAR (15 CFR 740.17); 

(f) Notwithstanding paragraph (a) of 

this section, parties to a covered 

transaction may elect to submit a 

written notice under subpart E of this 

part regarding the transaction instead of 

a declaration. 

(g) Parties shall submit to the 

Committee the declaration required 

under paragraph (a) of this section, or a 

written notice under paragraph (f) of 

this section, no later than: 

(1) February 13, 2020, or promptly 

thereafter, if the completion date of the 

transaction is between February 13, 

2020 and March 14, 2020; or 

(2) Thirty days before the completion 

date of the transaction, if the completion 

date of the transaction is after March 14, 

2020. 

(h) Notwithstanding paragraph (g) of 

this section, the parties to a covered 

transaction may complete a transaction 

subject to a mandatory declaration or 

notice under this section at any time 

after having been informed in writing by 

the Committee that the Committee has 

concluded all action under section 721 

or that the Committee is not able to 

complete action under § 800.407(a)(2). 

(i) In the event that the Committee 

rejects or permits a withdrawal of a 

declaration or notice required under this 

section, the parties shall not complete 

the transaction earlier than 30 days after 

the date of the resubmission, except 

with the written approval of the Staff 

Chairperson. 

(j) Examples: 

(1) Example 1. Corporation A, a foreign 

person that is not an excepted investor and 

in which no foreign government has a 

substantial interest, proposes to acquire a 

four percent, non-controlling equity interest 

in Corporation B, an unaffiliated TID U.S. 

business that manufactures a critical 

technology. Under the terms of the 

investment, a designee of Corporation A will 

have the right to observe the meetings of the 

board of directors of Corporation B. 

Corporation B manufactures the critical 

technology for commercial off-the-shelf use 

by businesses in various industries, 

including some identified in appendix B to 

this part. Assuming no other relevant facts, 

the proposed transaction is a covered 

investment, but is not subject to a mandatory 

declaration or notice under § 800.401 because 

Corporation B does not produce, design, test, 

manufacture, fabricate, or develop the critical 

technology specifically for use in one or more 

industries identified in appendix B to this 

part. 

(2) Example 2. Investment Fund A, a 

foreign person that is not an excepted 

investor, acquires a 10 percent equity interest 

in Corporation A, an unaffiliated TID U.S. 

business, and the right to appoint one 

member of Corporation A’s board of 

directors. Corporation A is manufacturing 

critical technologies utilized in Corporation 

A’s activity in one or more industries 

identified in appendix B to this part. 

Investment Fund A satisfies the requirements 

under paragraph (e)(3) of this section. 

Investment Fund A’s investment in 

Corporation A is a covered investment, but 

the transaction is not subject to the 

mandatory declaration requirement. 

(3) Example 3. Same facts as the example 

in paragraph (j)(2) of this section, except that 

in connection with Investment Fund A’s 

transaction, Limited Partner X, a limited 

partner of Investment Fund A and a foreign 

national that is not an excepted investor, 

receives access to the material non-public 

technical information of Corporation A. 

Limited Partner X’s indirect investment in 

Corporation A is a covered investment. While 

Investment Fund A’s direct investment is not 

subject to a mandatory declaration, Limited 

Partner X’s indirect investment in 

Corporation A is subject to a mandatory 

declaration. 

§ 800.402 Voluntary declarations. 

Except as otherwise prohibited under 

§ 800.403(e), a party to any proposed or 

completed transaction may submit to 

the Committee a declaration regarding 

the transaction in accordance with the 

procedures and requirements set forth 

in §§ 800.403 and 800.404 instead of a 

written notice. 

§ 800.403 Procedures for declarations. 

(a) A party or parties submitting a 

declaration of a transaction under 

§ 800.401 or § 800.402 shall submit 

electronically the information set out in 

§ 800.404, including the certifications 

required thereunder, to the Staff 

Chairperson in accordance with the 

submission instructions on the 

Committee’s section of the Department 

of the Treasury website. 

(b) No communications other than 

those described in paragraph (a) of this 

section shall constitute the submission 

of a declaration for purposes of section 

721. 

(c) Information and other 

documentary material submitted to the 

Committee under this section shall be 

considered to have been filed with the 

President or the President’s designee for 

purposes of section 721(c) and 

§ 800.802. 

(d) Persons filing a declaration shall, 

during the time that the matter is 

pending before the Committee, 

promptly advise the Staff Chairperson of 

any material changes in plans, facts, or 

circumstances regarding the transaction, 

and any material change in information 

provided or required to be provided to 

the Committee under § 800.404. Unless 

the Committee rejects the declaration on 

the basis of such material changes in 

accordance with § 800.406(a)(2)(i), such 

changes shall become part of the 

declaration filed by such persons under 

this section, and the certification 

required under § 800.405(d) shall apply 

to such changes. 

(e) Parties to a transaction that have 

filed with the Committee a written 

notice regarding a transaction under 

§ 800.501 or § 802.501 or a declaration 

under § 802.401 may not submit to the 

Committee a declaration regarding the 

same transaction or a substantially 

similar transaction without the written 

approval of the Staff Chairperson. 

§ 800.404 Contents of declarations. 

(a) The party or parties submitting a 

declaration of a transaction under 

§ 800.403 shall provide the information 

set out in this section, which must be 

accurate and complete with respect to 

all parties and to the transaction. (See 

also paragraphs (d) and (e) of this 

section.) 

(b) If fewer than all parties to a 

transaction submit a declaration, the 

Committee may, at its discretion, 

request that the parties to the 

transaction file a written notice of the 

transaction under § 800.501, if the Staff 

Chairperson determines that the 

information provided by the submitting 

party or parties in the declaration is 

insufficient for the Committee to assess 

the transaction. 

(c) Subject to paragraph (e) of this 

section, a declaration submitted under 

§ 800.403 shall describe or provide, as 

applicable: 

(1) The name of the foreign person(s) 

and U.S. business(es) that are parties to, 

or, in applicable cases, the subject of, 

the transaction, as well as the name, 

telephone number, and email address of 

the primary point of contact for each 

party. 

(2) The following information 

regarding the transaction in question: 

(i) A brief description of the rationale 

for and nature of the transaction, 

including its structure (e.g., share 

purchase, merger, asset purchase); 

(ii) The percentage of voting interest 

acquired and the resulting aggregate 

voting interest held by the foreign 

person and its affiliates; 

(iii) The percentage of economic 

interest acquired and the resulting 

aggregate economic interest held by the 

foreign person and its affiliates; 

(iv) Whether the U.S. business has 

multiple classes of ownership, and if so, 

the pre- and post-transaction share 


lotter on DSKBCFDHB2PROD with RULES2
3142 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

ownership of the foreign person(s) in 

the U.S. business broken out by class; 

(v) The total transaction value in U.S. 

dollars; 

(vi) The status of the transaction, 

including the actual or expected 

completion date of the transaction; 

(vii) All sources of financing for the 

transaction; and 

(viii) A copy of the definitive 

documentation of the transaction, or if 

none exists, the document establishing 

the material terms of the transaction. 

(3) The following: 

(i) A statement as to whether a party 

to the transaction is stipulating that the 

transaction is a covered transaction and 

a description of the basis for the 

stipulation; and 

(ii) A statement as to whether a party 

to the transaction is stipulating that the 

transaction is a foreign governmentcontrolled transaction and a description 

of the basis for the stipulation. 

(4) A statement as to whether the 

foreign person will acquire any of the 

following with respect to the U.S. 

business: 

(i) Access to any material nonpublic 

technical information in the possession 

of the U.S. business, and if so, a brief 

explanation of the access and type of 

information; 

(ii) Membership, observer rights, or 

nomination rights as set forth in 

§ 800.211(b)(2), and if so, a statement as 

to the composition of the board or other 

body both before and after the 

completion date of the transaction; 

(iii) Any involvement, other than 

through voting of shares, in substantive 

decisionmaking of the U.S. business 

regarding covered investment critical 

infrastructure, critical technologies, or 

sensitive personal data as set forth in 

§ 800.211(b)(3), and if any, a statement 

as to the involvement in such 

substantive decisionmaking; or 

(iv) Any rights that could result in the 

foreign person acquiring control of the 

U.S. business and, if any, a brief 

explanation of these rights. 

(5) The following information 

regarding the U.S. business: 

(i) Website address; 

(ii) Principal place of business; 

(iii) Place of incorporation or 

organization; and 

(iv) A list of the addresses or 

geographic coordinates (to at least the 

fourth decimal) of all locations of the 

U.S. business, including the U.S. 

business’ headquarters, facilities, and 

operating locations. 

(6) With respect to the U.S. business 

that is the subject of the transaction and 

any entity of which that U.S. business 

is a parent, a brief summary of their 

respective business activities, as, for 

example, set forth in annual reports, and 

the product or service categories of 

each, including the applicable six-digit 

North American Industry Classification 

System (NAICS) Codes, Commercial and 

Government Entity Code (CAGE Code) 

assigned by the Department of Defense, 

and any applicable Dun and Bradstreet 

identification (DUNS) numbers assigned 

to the U.S. business, and an explanation 

of how the entity is engaged in interstate 

commerce in the United States, where 

applicable. 

(7) A statement as to whether the U.S. 

business produces, designs, tests, 

manufactures, fabricates, or develops 

one or more critical technologies. 

(8) A statement as to whether the U.S. 

business performs any of the functions 

with respect to covered investment 

critical infrastructure as set forth in 

column 2 of appendix A to this part. 

(9) A statement as to whether the U.S. 

business directly or indirectly maintains 

or collects sensitive personal data of 

U.S. citizens, directly or indirectly has 

collected or maintained sensitive 

personal data in the 12 months prior to 

any of the applicable events specified in 

§ 800.241(a)(1)(i)(B), or has a 

demonstrated business objective to 

collect such data in the future. 

(10) A statement as to whether the 

U.S. business has any contracts 

(including any subcontracts, if known) 

that are currently in effect or were in 

effect within the past three years with 

any U.S. Government agency or 

component, or in the past 10 years if the 

contract included access to personally 

identifiable information of U.S. 

Government personnel. If so, provide an 

annex listing such contracts, including 

the name of the U.S. Government 

agency or component, the delivery order 

number or contract number, the primary 

contractor (if the U.S. business is a 

subcontractor), the start date, and the 

estimated completion date. 

(11) A statement as to whether the 

U.S. business has any contracts 

(including any subcontracts, if known) 

that are currently in effect or were in 

effect within the past five years 

involving information, technology, or 

data that is classified under Executive 

Order 12958, as amended. 

(12) A statement as to whether the 

U.S. business has received any grant or 

other funding from the Department of 

Defense or the Department of Energy, or 

participated in or collaborated on any 

defense or energy program or product 

involving one or more critical 

technologies, covered investment 

critical infrastructure, or other critical 

infrastructure within the past five years. 

(13) A statement as to whether the 

U.S. business participated in a Defense 

Production Act Title III Program (50 

U.S.C. 4501 et seq.) within the past 

seven years. 

(14) A statement as to whether the 

U.S. business has received or placed 

priority rated contracts or orders under 

the Defense Priorities and Allocations 

System (DPAS) regulation (15 CFR part 

700), and the level(s) of priority of such 

contracts or orders (‘‘DX’’ or ‘‘DO’’) 

within the past three years. 

(15) The name of the ultimate parent 

of the foreign person. 

(16) The address of the foreign person 

and its ultimate parent. 

(17) Complete organizational charts, 

both pre- and post-transaction, 

including information that identifies the 

name, principal place of business, and 

place of incorporation or other legal 

organization (for entities); nationality 

(for individuals); and ownership 

percentage (expressed in terms of both 

voting and economic interest, if 

different) for each of the following: 

(i) The immediate parent, the ultimate 

parent, and each intermediate parent, if 

any, of each foreign person that is a 

party to the transaction; 

(ii) Where the ultimate parent is a 

private company, the ultimate owner(s) 

of such parent; 

(iii) Where the ultimate parent is a 

public company, any shareholder with 

an interest of greater than five percent 

in such parent; and 

(iv) The U.S. business that is the 

subject of the transaction, both before 

and after completion of the transaction. 

(18) Information regarding all foreign 

government ownership in the foreign 

person’s ownership structure, including 

nationality and percentage of 

ownership, as well as any rights that a 

foreign government holds, directly or 

indirectly, with respect to the foreign 

person. 

(19) With respect to the foreign person 

that is party to the transaction and any 

of its parents, as applicable, a brief 

summary of their respective business 

activities, as, for example, set forth in 

annual reports. 

(20) A statement as to whether any 

party to the transaction has been party 

to another transaction previously 

notified or submitted to the Committee, 

and the case number assigned by the 

Committee regarding such 

transaction(s). 

(21) A statement (including relevant 

jurisdiction and criminal case law 

number or legal citation) as to whether 

the U.S. business, the foreign person, 

any parent of the foreign person, or any 

person of which the foreign person is a 

parent has been convicted in the last 10 

years of a crime in any jurisdiction. 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3143 

(22) If applicable, a description 

(which may group similar items into 

general product categories) of any 

critical technology that the U.S. 

business produces, designs, tests, 

manufactures, fabricates, or develops, 

and a list of any relevant Export Control 

Classification Numbers (ECCNs) under 

the EAR and the USML categories under 

the ITAR, and, if applicable, identify 

whether there are specially designed 

and prepared nuclear equipment, parts 

and components, materials, software, 

and technology covered by 10 CFR part 

810; nuclear facilities, equipment, and 

materials covered by 10 CFR part 110; 

or select agents and toxins covered by 

7 CFR part 331, 9 CFR part 121, or 42 

CFR part 73. 

(23) If applicable, a statement as to 

which functions set forth in column 2 

of appendix A to this part that the U.S. 

business performs with respect to 

covered investment critical 

infrastructure, including a description 

of such functions and the applicable 

covered investment critical 

infrastructure. 

(24) If applicable: 

(i) The category or categories of data, 

as specified at § 800.241, that the U.S. 

business directly or indirectly maintains 

or collects; 

(ii) For each applicable category of 

data specified in § 800.241, individually 

and in the aggregate, the approximate 

number of total unique persons from 

whom: 

(A) The data is currently maintained, 

and 

(B) The data has been maintained or 

collected at any point during the 12 

months prior to any of the applicable 

events specified in § 800.241(a)(1)(i)(B); 

(iii) Whether the U.S. business has a 

demonstrated business objective to 

maintain or collect data described in 

§ 800.241(a)(1)(ii) of greater than one 

million individuals and such data is an 

integrated part of the U.S. business’s 

primary products or services. 

(iv) Whether the U.S. business targets 

or tailors products or services to any 

U.S. executive branch agency or military 

department with intelligence, national 

security, or homeland security 

responsibilities, or to personnel or 

contractors thereof. 

(d) Each party submitting a 

declaration shall provide a certification 

of the information contained in the 

declaration consistent with § 800.204. A 

sample certification may be found on 

the Committee’s section of the 

Department of the Treasury website. 

(e) A party that offers a stipulation 

under paragraph (c)(3) of this section 

acknowledges that the Committee and 

the President are entitled to rely on such 

stipulation in determining whether the 

transaction is a covered investment, a 

covered control transaction, or a foreign 

government-controlled transaction for 

the purposes of section 721 and all 

authorities thereunder, and waives the 

right to challenge any such 

determination. Neither the Committee 

nor the President is bound by any such 

stipulation, nor does any such 

stipulation limit the ability of the 

Committee or the President to act on 

any authority provided under section 

721 with respect to any covered 

transaction. 

§ 800.405 Beginning of 30-day assessment 

period. 

(a) Upon receipt of a declaration 

submitted under § 800.403, the Staff 

Chairperson shall promptly inspect the 

declaration and shall promptly notify in 

writing all parties to a transaction that 

have submitted a declaration that: 

(1) The Staff Chairperson has 

accepted the declaration and circulated 

the declaration to the Committee, and 

the date on which the assessment 

described in paragraph (b) of this 

section begins; or 

(2) The Staff Chairperson has 

determined not to accept the declaration 

and circulate the declaration to the 

Committee because the declaration is 

incomplete, and an explanation of the 

material respects in which the 

declaration is incomplete. 

(b) A 30-day period for assessment of 

a covered transaction that is the subject 

of a declaration shall commence on the 

date on which the declaration is 

received by the Committee from the 

Staff Chairperson. Such period shall end 

no later than the thirtieth day after it has 

commenced, or if the thirtieth day is not 

a business day, no later than the next 

business day after the thirtieth day. 

(c) During the 30-day assessment 

period, the Staff Chairperson may invite 

the parties to a covered transaction to 

attend a meeting with the Committee 

staff to discuss and clarify issues 

pertaining to the transaction. 

(d) If the Committee notifies the 

parties to a transaction that have 

submitted a declaration under § 800.403 

that the Committee intends to conclude 

all action under section 721 with 

respect to that transaction, each party 

that has submitted additional 

information subsequent to the original 

declaration shall file a certification as 

described in § 800.204. A sample 

certification may be found on the 

Committee’s section of the Department 

of the Treasury website. 

(e) If a party fails to provide the 

certification required under paragraph 

(d) of this section, the Committee may, 

at its discretion, take any of the actions 

under § 800.407. 

§ 800.406 Rejection, disposition, or 

withdrawal of declarations. 

(a) The Committee, acting through the 

Staff Chairperson, may: 

(1) Reject any declaration that does 

not comply with § 800.404 and so 

inform the parties promptly in writing; 

(2) Reject any declaration at any time, 

and so inform the parties promptly in 

writing, if, after the declaration has been 

submitted and before the Committee has 

taken one of the actions specified in 

§ 800.407: 

(i) There is a material change in the 

covered transaction as to which a 

declaration has been submitted; or 

(ii) Information comes to light that 

contradicts material information 

provided in the declaration by the party 

(or parties); or 

(3) Reject any declaration at any time 

after the declaration has been submitted, 

and so inform the parties promptly in 

writing, if the party (or parties) that 

submitted the declaration does not 

provide follow-up information 

requested by the Staff Chairperson 

within two business days of the request, 

or within a longer time frame if the 

party (or parties) so request in writing 

and the Staff Chairperson grants that 

request in writing. 

(b) The Staff Chairperson shall notify 

the party (or parties) that submitted a 

declaration when the Committee has 

found that the transaction that is the 

subject of a declaration is not a covered 

transaction. 

(c) Parties to a transaction that have 

submitted a declaration under § 800.403 

may request in writing, at any time prior 

to the Committee taking action under 

§ 800.407, that such declaration be 

withdrawn. Such request shall be 

directed to the Staff Chairperson and 

shall state the reasons why the request 

is being made and state whether the 

transaction that is the subject of the 

declaration is being fully and 

permanently abandoned. An official of 

the Department of the Treasury will 

promptly advise the parties to the 

transaction in writing of the 

Committee’s decision. 

(d) The Committee may not request or 

recommend that a declaration be 

withdrawn and refiled, except to permit 

parties to a covered transaction to 

correct material errors or omissions, or 

describe material changes to the 

transaction, in the declaration submitted 

with respect to that covered transaction. 

(e) A party (or parties) may not submit 

more than one declaration for the same 

or a substantially similar transaction 


lotter on DSKBCFDHB2PROD with RULES2
3144 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

without approval from the Staff 

Chairperson. 

Note 1 to § 800.406: See § 800.403(e) 

regarding the prohibition on submitting a 

declaration regarding the same transaction or 

a substantially similar transaction for which 

a written notice has been filed without the 

approval of the Staff Chairperson. 

§ 800.407 Committee actions. 

(a) Upon receiving a declaration 

submitted under § 800.403 with respect 

to a covered transaction, the Committee 

may, at the discretion of the Committee: 

(1) If the Committee has reason to 

believe that the transaction may raise 

national security considerations, request 

that the parties to the transaction file a 

written notice under subpart E; 

(2) Inform the parties to the 

transaction that the Committee is not 

able to conclude action under section 

721 with respect to the transaction on 

the basis of the declaration and that the 

parties may file a written notice under 

subpart E to seek written notification 

from the Committee that the Committee 

has concluded all action under section 

721 with respect to the transaction; 

(3) Initiate a unilateral review of the 

transaction under § 800.501(c); or 

(4) Notify the parties in writing that 

the Committee has concluded all action 

under section 721 with respect to the 

transaction. 

(b) The Committee shall take action 

under paragraph (a) of this section 

within the time period set forth in 

§ 800.405(b). 

Subpart E—Notices 

§ 800.501 Procedures for notices. 

(a) Except as otherwise prohibited 

under paragraph (j) of this section, a 

party or parties to a proposed or 

completed transaction may file a 

voluntary notice of the transaction with 

the Committee. Voluntary notice to the 

Committee is filed by sending an 

electronic copy of the notice that 

includes, in English, the information set 

out in § 800.502, including the 

certification required under paragraph 

(l) of that section. For electronic 

submission instructions, see the 

Committee’s section of the Department 

of the Treasury website. 

(b) If the Committee determines that 

a transaction for which no voluntary 

notice has been filed under this part, 

and with respect to which the 

Committee has not informed the parties 

in writing that the Committee has 

concluded all action under section 721, 

may be a covered transaction and may 

raise national security considerations, 

the Staff Chairperson, acting on the 

recommendation of the Committee, may 

request the parties to the transaction to 

provide to the Committee the 

information necessary to determine 

whether the transaction is a covered 

transaction, and if the Committee 

determines that the transaction is a 

covered transaction, to file a notice of 

such covered transaction under 

paragraph (a) of this section. 

(c) With respect to any transaction: 

(1) Any member of the Committee, or 

his or her designee at or above the 

Under Secretary or equivalent level, 

may, subject to paragraph (c)(2) of this 

section, file an agency notice to the 

Committee through the Staff 

Chairperson regarding a transaction if: 

(i) That member has reason to believe 

that the transaction is a covered 

transaction and may raise national 

security considerations and: 

(A) The Committee has not informed 

the parties to such transaction in writing 

that the Committee has concluded all 

action under section 721 with respect to 

such transaction; and 

(B) The President has not announced 

a decision not to exercise the President’s 

authority under section 721(d) with 

respect to such transaction; or 

(ii) The transaction is a covered 

transaction and: 

(A) The Committee has informed the 

parties to such transaction in writing 

that the Committee has concluded all 

action under section 721 with respect to 

such transaction or determined that 

such transaction is not a covered 

transaction, or the President has 

announced a decision not to exercise 

the President’s authority under section 

721(d) with respect to such transaction; 

and 

(B) Either: 

(1) A party to such transaction 

submitted false or misleading material 

information to the Committee in 

connection with the Committee’s 

consideration of such transaction or 

omitted material information, including 

material documents, from information 

submitted to the Committee; or 

(2) A party to or the entity resulting 

from consummation of such transaction 

materially breaches (or, if the review or 

investigation of such transaction was 

initiated under section 721 before 

August 13, 2018, intentionally 

materially breaches) a mitigation 

agreement or condition described in 

section 721(l)(3)(A), such breach is 

certified to the Committee by the lead 

department or agency monitoring and 

enforcing such agreement or condition 

as a material breach (or, if the review or 

investigation of such transaction was 

initiated under section 721 before 

August 13, 2018, an intentional material 

breach), and the Committee determines 

that there are no other adequate and 

appropriate remedies or enforcement 

tools available to address such breach. 

(2)(i) That is an investment where a 

foreign person is not an excepted 

investor due to the application of 

§ 800.219(d), any member of the 

Committee, or his or her designee at or 

above the Under Secretary or equivalent 

level, may file an agency notice to the 

Committee through the Staff 

Chairperson regarding such investment 

if: 

(A) That member has reason to believe 

that the transaction is a covered 

transaction and may raise national 

security considerations; 

(B) The Committee has not informed 

the parties to such transaction in writing 

that the Committee has concluded all 

action under section 721 with respect to 

such transaction; and 

(C) The President has not announced 

a decision not to exercise the President’s 

authority under section 721(d) with 

respect to such transaction. 

(ii) No notice filed under this 

paragraph (c)(2) shall be made with 

respect to a transaction more than one 

year after the completion date of the 

transaction, unless the Chairperson of 

the Committee determines, in 

consultation with other members of the 

Committee, that because the foreign 

person no longer meets all the criteria 

set forth in § 800.219(a)(1) or (2), (a)(3)(i) 

through (iii), or (c)(1)(i) through (iii), the 

transaction may threaten to impair the 

national security of the United States, 

and in no event shall an agency notice 

under this paragraph be made with 

respect to such a transaction more than 

three years after the completion date of 

the transaction. 

(d) Notices filed under paragraph (c) 

of this section are deemed accepted 

upon their receipt by the Staff 

Chairperson. No agency notice under 

paragraph (c)(1) of this section shall be 

made with respect to a transaction more 

than three years after the completion 

date of the transaction, unless the 

Chairperson of the Committee, in 

consultation with other members of the 

Committee, files such an agency notice. 

(e) No communications other than 

those described in paragraphs (a) and (c) 

of this section shall constitute the filing 

or submitting of a notice for purposes of 

section 721. 

(f) Upon receipt of the electronic copy 

of a notice filed under paragraph (a) of 

this section, including the certification 

required by § 800.502(l), the Staff 

Chairperson shall promptly inspect 

such notice for completeness. 

(g) Parties to a transaction are 

encouraged to consult with the 

Committee in advance of filing a notice 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3145 

and, in appropriate cases, to file with 

the Committee a draft notice or other 

appropriate documents to aid the 

Committee’s understanding of the 

transaction and to provide an 

opportunity for the Committee to 

request additional information to be 

included in the notice. Any such prenotice consultation should take place, or 

any draft notice should be provided, at 

least five business days before the filing 

of a voluntary notice. All information 

and documentary material made 

available to the Committee under this 

paragraph shall be considered to have 

been filed with the President or the 

President’s designee for purposes of 

section 721(c) and § 800.802. 

(h) Information and other 

documentary material provided by the 

parties to the Committee after the filing 

of a voluntary notice under this section 

shall be part of the notice, and shall be 

subject to the final certification required 

under § 800.502(m). 

(i) For any voluntarily submitted draft 

or formal written notice that includes a 

stipulation under section § 800.502(o) 

that a transaction is a covered 

transaction, the Committee shall 

provide comments on the draft or formal 

written notice or accept the formal 

written notice of a covered transaction 

not later than the date that is 10 

business days after the date of 

submission of the draft or formal written 

notice. 

(j) No party to a transaction may file 

a notice under paragraph (a) of this 

section if the transaction has been the 

subject of a declaration submitted under 

subpart D and the Committee has not 

yet taken action with respect to the 

transaction under § 800.407. 

§ 800.502 Contents of voluntary notices. 

(a) If the parties to a transaction file 

a voluntary notice, they shall provide in 

detail the information set out in this 

section, which must be accurate and 

complete with respect to all parties and 

to the transaction. (See also paragraph 

(l) of this section and § 800.204 

regarding certification requirements.) 

(b) If fewer than all parties to a 

transaction file a voluntary notice, for 

example in the case of a hostile 

takeover, each notifying party shall 

provide the information set out in this 

section with respect to itself and, to the 

extent known or reasonably available to 

it, with respect to each non-notifying 

party. 

(c) A voluntary notice filed under 

§ 800.501 shall describe or provide, as 

applicable: 

(1) The following information 

regarding the transaction in question: 

(i) A summary setting forth the 

essentials of the transaction, including a 

statement of the purpose of the 

transaction, and its scope, both within 

and outside of the United States; 

(ii) The nature of the transaction, for 

example, whether the acquisition is by 

merger, consolidation, the purchase of 

voting interest, or otherwise; 

(iii) The name, United States address 

(if any), website address (if any), 

nationality (for individuals) or place of 

incorporation or other legal organization 

(for entities), and address of the 

principal place of business of each 

foreign person that is a party to the 

transaction; 

(iv) The name, address, website 

address (if any), principal place of 

business, and place of incorporation or 

other legal organization of the U.S. 

business that is the subject of the 

transaction; 

(v) The name, address, and nationality 

(for individuals) or place of 

incorporation or other legal organization 

(for entities) of: 

(A) The immediate parent, the 

ultimate parent, and each intermediate 

parent, if any, of the foreign person that 

is a party to the transaction; 

(B) Where the ultimate parent is a 

private company, the ultimate owner(s) 

of such parent; and 

(C) Where the ultimate parent is a 

public company, any shareholder with 

an interest of greater than five percent 

in such parent; 

(vi) The name, address, website 

address (if any), and nationality (for 

individuals) or place of incorporation or 

other legal organization (for entities) of 

each person that will control the U.S. 

business being acquired; 

(vii) The actual or expected 

completion date of the transaction; 

(viii) A good faith approximation of 

the net value of the interest acquired in 

the U.S. business in U.S. dollars, as of 

the date of the notice; 

(ix) The name of any and all financial 

institutions involved in the transaction, 

including as advisors, underwriters, or 

sources of financing for the transaction; 

(x) A copy of any partnership 

agreements, integration agreements, or 

other side agreements relating to the 

transaction; 

(xi) A statement as to whether the 

foreign person will acquire any of the 

following in the U.S. business: 

(A) Access to any material nonpublic 

technical information in the possession 

of the U.S. business, and if so, a brief 

explanation of the type of access and 

type of information; 

(B) Membership, observer rights, or 

nomination rights as set forth in 

§ 800.211(b)(2), and if so, a description 

of such rights and a statement as to the 

composition of the board or other body 

both before and after the completion 

date of the transaction, as well as a copy 

of the document(s) setting forth the 

post-acquisition governance provisions 

(e.g., quorum requirements, special 

rights) for the board of directors or other 

body; 

(C) Any involvement, other than 

through voting of shares, in substantive 

decisionmaking of the U.S. business 

regarding covered investment critical 

infrastructure, critical technologies, or 

sensitive personal data as set forth in 

§ 800.211(b)(3), and if so, a brief 

explanation of the nature and extent of 

involvement; 

(2) With respect to a transaction 

structured as an acquisition of assets of 

a U.S. business, a detailed description of 

the assets of the U.S. business being 

acquired, including the approximate 

value of those assets in U.S. dollars; 

(3) With respect to the U.S. business 

that is the subject of the transaction and 

any entity of which that U.S. business 

is a parent (unless that entity is 

excluded from the scope of the 

transaction): 

(i) Their respective business activities, 

as, for example, set forth in annual 

reports, and the product or service 

categories of each, including an estimate 

of U.S. market share for such product or 

service categories and the methodology 

used to determine market share, a list of 

direct competitors for those primary 

product or service categories, and their 

NAICS Code, if any, and an explanation 

of how the entity is engaged in interstate 

commerce in the United States, where 

applicable; 

(ii) The street address (and mailing 

address, if different) within the United 

States and website address (if any) of 

each facility that is manufacturing 

classified or unclassified products or 

producing services described in 

paragraph (c)(3)(v) of this section, and 

their respective CAGE Codes and DUNS 

number; 

(iii) Each contract (identified by 

agency and number) that is currently in 

effect or was in effect within the past 

five years with any agency of the U.S. 

Government involving any information, 

technology, or data that is classified 

under Executive Order 12958, as 

amended, its estimated final completion 

date, and the name, office, and 

telephone number of the contracting 

official; 

(iv) Any other contract (identified by 

agency and number) that is currently in 

effect or was in effect within the past 

three years with any U.S. Government 

agency or component with national 

defense, homeland security, or other 


lotter on DSKBCFDHB2PROD with RULES2
3146 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

national security responsibilities, 

including law enforcement 

responsibility as it relates to defense, 

homeland security, or national security, 

its estimated final completion date, and 

the name, office, and telephone number 

of the contracting official; 

(v) Any products or services 

(including research and development): 

(A) That it supplies, directly or 

indirectly, to any agency of the U.S. 

Government, including as a prime 

contractor or first tier subcontractor, a 

supplier to any such prime contractor or 

subcontractor, or, if known by the 

parties filing the notice, a subcontractor 

at any tier; and 

(B) If known by the parties filing the 

notice, for which it is a single qualified 

source (i.e., other acceptable suppliers 

are readily available to be so qualified) 

or a sole source (i.e., no other supplier 

has needed technology, equipment, and 

manufacturing process capabilities) for 

any such agencies and whether there are 

other suppliers in the market that are 

available to be so qualified; 

(vi) Any products or services 

(including research and development) 

that: 

(A) It supplies to third parties and it 

knows are rebranded by the purchaser 

or incorporated into the products of 

another entity, and the names or brands 

under which such rebranded products 

or services are sold; and 

(B) In the case of services, it provides 

on behalf of, or under the name of, 

another entity, and the name of any 

such entities; 

(vii) For the prior three years— 

(A) A list of priority rated contracts or 

orders under DPAS) regulation that the 

U.S. business that is the subject of the 

transaction has received and the level of 

priority of such contracts or orders 

(‘‘DX’’ or ‘‘DO’’); and 

(B) A list of such priority rated 

contracts or orders that the U.S. 

business has placed with other entities 

and the level of priority of such 

contracts or orders, and the acquiring 

party’s plan to ensure that any new 

entity formed at the completion of the 

notified transaction (or the U.S. 

business, if no new entity is formed) 

complies with the DPAS regulations; 

(viii) A description and copy of the 

cyber security plan, if any, that will be 

used to protect against cyber attacks on 

the operation, design, and development 

of the U.S. business’s services, 

networks, systems, data storage 

(including the collection or 

maintenance of sensitive personal data), 

and facilities; 

(ix) A description of whether the U.S. 

business performs any of the functions 

with respect to covered investment 

critical infrastructure, if any, as set forth 

in column 2 of appendix A to this part. 

This statement shall include a 

description of such functions, including 

the applicable covered investment 

critical infrastructure; 

(x)(A) A description of whether the 

U.S. business produces, designs, tests, 

manufactures, fabricates, or develops 

one or more: 

(1) Items that are subject to the EAR 

and, if so, a description (which may 

group similar items into general product 

categories) of the items and a list of the 

relevant commodity classifications set 

forth on the CCL (i.e., ECCNs or EAR99 

designation); 

(2) Defense articles and defense 

services, and related technical data 

covered by the USML in the ITAR, and, 

if so, the category of the USML; articles 

and services for which commodity 

jurisdiction requests (22 CFR 120.4) are 

pending; and articles and services 

(including those under development) 

that may be designated or determined in 

the future to be defense articles or 

defense services under 22 CFR 120.3; 

(3) Specially designed and prepared 

nuclear equipment, parts and 

components, materials, software, and 

technology covered by 10 CFR part 810; 

(4) Nuclear facilities, equipment, and 

material covered by 10 CFR part 110; 

(5) Select Agents and Toxins (7 CFR 

part 331, 9 CFR part 121, and 42 CFR 

part 73); or 

(6) Emerging and foundational 

technologies controlled under section 

1758 of the Export Control Reform Act 

of 2018 (codified at 50 U.S.C. 4817); 

(B) A description of whether the U.S. 

business otherwise trades in any item 

described in paragraphs (c)(3)(x)(A)(1) 

through (6) of this section, to the extent 

not addressed in the voluntary notice in 

response to paragraph (c)(3)(x)(A) of this 

section; and 

(C) For any item described in 

paragraphs (c)(3)(x)(A)(1) through (6) of 

this section for which there is no 

completed Commodity Classification 

Automated Tracking System or 

Commodity Jurisdiction determination, 

the voluntary notice shall include a 

brief statement as to how the parties 

evaluated the item (e.g., selfclassification by individuals with 

technical knowledge at the U.S. 

business, classification information 

provided by the manufacturer, 

classification provided by outside 

counsel or third party consultant, etc.); 

(xi) A description of whether the U.S. 

business directly or indirectly maintains 

or collects sensitive personal data of 

U.S. citizens, directly or indirectly has 

collected or maintained sensitive 

personal data in the 12 months prior to 

any of the applicable events specified in 

§ 800.241(a)(1)(i)(B), or has a 

demonstrated business objective to 

maintain or collect such data in the 

future including: 

(A) The category or categories of data 

specified in § 800.241 that the U.S. 

business directly or indirectly maintains 

or collects or intends to maintain or 

collect; 

(B) For each applicable category of 

data specified in § 800.241, individually 

and in the aggregate, the approximate 

number of total unique persons from 

whom: 

(1) The data is currently maintained; 

and 

(2) The data has been maintained or 

collected at any point during the 12 

months prior to any of the applicable 

events specified in § 800.241(a)(1)(i)(B); 

(C) Whether the U.S. business has a 

demonstrated business objective to 

maintain or collect data described in 

§ 800.241(a)(1)(ii) of greater than one 

million individuals and such data is an 

integrated part of the U.S. business’s 

primary products or services, and if so, 

please provide a brief explanation; 

(D) A description of how the U.S. 

business targets or tailors its products or 

services to any U.S. executive branch 

agency or military department with 

intelligence, national security, or 

homeland security responsibilities, or 

personnel or contractors thereof; 

(E) The commercial rationale of the 

U.S. business for maintaining or 

collecting such sensitive personal data 

and a description of how the U.S. 

business uses and protects such 

sensitive personal data, including a 

description of how decisions regarding 

the use of sensitive personal data are 

made, and by whom; 

(F) A description of the U.S. 

business’s policies and practices 

regarding the sale, license, or transfer of, 

or grant of access to, sensitive personal 

data to third parties, including a copy of 

any notice provided to customers 

regarding the use and transfer of 

sensitive personal data; 

(G) A description of the U.S. 

business’s policies and practices 

regarding retention of sensitive personal 

data; and 

(H) Any plans by the foreign party to 

the transaction to alter any of the 

foregoing; 

(4) Whether the U.S. business that is 

the subject of the transaction: 

(i) Possesses any licenses, permits, or 

other authorizations other than those 

under the regulatory authorities listed in 

this paragraph (c)(4) that have been 

granted by an agency of the U.S. 

Government (if applicable, 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3147 

identification of the relevant licenses 

shall be provided); or 

(ii) Has technology that has military 

applications (if so, an identification of 

such technology and a description of 

such military applications shall be 

included); 

(5) With respect to the foreign person 

engaged in the transaction and its 

parents: 

(i) The business or businesses of the 

foreign person and its ultimate parent, 

as such businesses are described, for 

example, in annual reports, and the 

CAGE codes, NAICS codes, and DUNS 

numbers, if any, for such businesses; 

(ii) The plans of the foreign person for 

the U.S. business with respect to: 

(A) Reducing, eliminating, or selling 

research and development facilities; 

(B) Changing product quality; 

(C) Shutting down or moving outside 

of the United States facilities that are 

within the United States; 

(D) Consolidating or selling product 

lines or technology; 

(E) Modifying or terminating contracts 

referred to in paragraphs (c)(3)(iii) and 

(iv) of this section; or 

(F) Eliminating domestic supply by 

selling products solely to non-domestic 

markets; 

(iii) Whether the foreign person is 

controlled by or acting on behalf of a 

foreign government, including as an 

agent or representative, or in some 

similar capacity, and if so, the identity 

of the foreign government; 

(iv) Whether a foreign government or 

a person controlled by or acting on 

behalf of a foreign government: 

(A) Has or controls ownership 

interests, including contingent equity 

interest, of the acquiring foreign person 

or any parent of the acquiring foreign 

person, and if so, the nature and amount 

of any such interests, and with regard to 

contingent equity interest, the terms and 

timing of conversion; 

(B) Has the right or power to appoint 

any of the principal officers or the 

members of the board of directors 

(including other persons who perform 

the duties usually associated with such 

titles) of the foreign person that is a 

party to the transaction or any parent of 

that foreign person; 

(C) Holds any other contingent 

interest (for example, such as might 

arise from a lending transaction) in the 

foreign acquiring party and, if so, the 

rights that are covered by this 

contingent interest, and the manner in 

which they would be enforced; or 

(D) Has any other affirmative or 

negative rights or powers that could be 

relevant to the Committee’s 

determination of whether the notified 

transaction is a foreign governmentcontrolled transaction, and if there are 

any such rights or powers, their source 

(for example, a ‘‘golden share,’’ 

shareholders agreement, contract, 

statute, or regulation) and the 

mechanics of their operation; 

(v) Any formal or informal 

arrangements among foreign persons 

that hold an ownership interest in any 

foreign person that is a party to the 

transaction or between such foreign 

person and other foreign persons to act 

in concert on particular matters 

affecting the U.S. business that is the 

subject of the transaction, and provide 

a copy of any documents that establish 

those rights or describe those 

arrangements; 

(vi) For each member of the board of 

directors or equivalent governing body 

(including external directors and other 

persons who perform the duties usually 

associated with such titles) and officers 

(including president, senior vice 

president, executive vice president, and 

other persons who perform duties 

normally associated with such titles) of 

the acquiring foreign person engaged in 

the transaction and its immediate, 

intermediate, and ultimate parents, and 

for any individual having an ownership 

interest of five percent or more in the 

acquiring foreign person engaged in the 

transaction and in the foreign person’s 

ultimate parent, the following 

information: 

(A) A curriculum vitae or similar 

professional synopsis, provided as part 

of the main notice, and 

(B) The following ‘‘personal identifier 

information,’’ which, for privacy 

reasons, and to ensure limited 

distribution, shall be set forth in a 

separate document, not in the main 

notice: 

(1) Full name (last, first, middle 

name); 

(2) All other names and aliases used; 

(3) Business address; 

(4) Country and city of residence; 

(5) Date of birth, in the format MM/ 

DD/YYYY; 

(6) Place of birth; 

(7) U.S. Social Security number 

(where applicable); 

(8) National identity number, 

including nationality, date and place of 

issuance, and expiration date (where 

applicable); 

(9) U.S. or foreign passport number (if 

more than one, all must be fully 

disclosed), nationality, date and place of 

issuance, and expiration date and, if a 

U.S. visa holder, the visa type and 

number, date and place of issuance, and 

expiration date; and 

(10) Dates and nature of foreign 

government and foreign military service 

(where applicable), other than military 

service at a rank below the top two noncommissioned ranks of the relevant 

foreign country; and 

(vii) The following ‘‘business 

identifier information’’ for the 

immediate, intermediate, and ultimate 

parents of the foreign person engaged in 

the transaction, including their main 

offices and branches: 

(A) Business name, including all 

names under which the business is 

known to be or has been doing business; 

(B) Business address; 

(C) Business phone number, website 

address, and email address; and 

(D) Employer identification number or 

other domestic tax or corporate 

identification number. 

(d)(1) The voluntary notice shall list 

any filings with, or reports to, agencies 

of the U.S. Government that have been 

or will be made with respect to the 

transaction prior to its completion, 

indicating the agencies concerned, the 

nature of the filing or report, the date on 

which it was filed or the estimated date 

by which it will be filed, and a relevant 

contact point and/or telephone number 

within the agency, if known. 

(2) Example: Corporation A, a foreign 

person, intends to acquire Corporation 

X, which is wholly owned and 

controlled by a U.S. national and which 

has a Facility Security Clearance under 

the Department of Defense Industrial 

Security Program. See Department of 

Defense, ‘‘Industrial Security 

Regulation,’’ DOD 5220.22–R, and 

‘‘Industrial Security Manual for 

Safeguarding Classified Information,’’ 

DOD 5220.22–M. Corporation X 

accordingly files a revised Form DD SF– 

328, and enters into discussions with 

the Defense Security Service about 

effectively insulating its facilities from 

the foreign person. Corporation X may 

also have made filings with the U.S. 

Securities and Exchange Commission, 

the Department of Commerce, the 

Department of State, or other federal 

departments and agencies. This 

paragraph (d) requires that certain 

specific information about these filings 

be reported to the Committee in a 

voluntary notice. 

(e) In the case of the establishment of 

a joint venture in which one or more of 

the parties is contributing a U.S. 

business, information for the voluntary 

notice shall be prepared on the 

assumption that the foreign person that 

is party to the joint venture has made an 

acquisition of the existing U.S. business 

that the other party to the joint venture 

is contributing or transferring to the 

joint venture. The voluntary notice shall 

describe the name and address of the 

joint venture and the entities that 


lotter on DSKBCFDHB2PROD with RULES2
3148 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

established, or are establishing, the joint 

venture. 

(f) In the case of the acquisition of 

some but not all of the assets of an 

entity, paragraph (c) of this section 

requires submission of the specified 

information only with respect to the 

assets of the entity that have been or are 

proposed to be acquired. 

(g) Persons filing a voluntary notice 

shall, with respect to the foreign person 

that is a party to the transaction, its 

immediate parent, the U.S. business that 

is the subject of the transaction, and 

each entity of which the foreign person 

is a parent, append to the voluntary 

notice the most recent annual report of 

each such entity, in English. Separate 

reports are not required for any entity 

whose financial results are included 

within the consolidated financial results 

stated in the annual report of any parent 

of any such entity, unless the 

transaction involves the acquisition of a 

U.S. business whose parent is not being 

acquired, in which case the notice shall 

include the most recent audited 

financial statement of the U.S. business 

that is the subject of the transaction. If 

a U.S. business does not prepare an 

annual report and its financial results 

are not included within the 

consolidated financial results stated in 

the annual report of a parent, the filing 

shall include, if available, the entity’s 

most recent audited financial statement 

(or, if an audited financial statement is 

not available, the unaudited financial 

statement). 

(h) Persons filing a voluntary notice 

shall, during the time that the matter is 

pending before the Committee or the 

President, promptly advise the Staff 

Chairperson of any material changes in 

plans, facts and circumstances 

addressed in the notice, and information 

provided or required to be provided to 

the Committee under this section, and 

shall file amendments to the notice to 

reflect such material changes. Such 

amendments shall become part of the 

notice filed by such persons under 

§ 800.501, and the certifications 

required under paragraphs (l) and (m) of 

this section shall apply to such 

amendments. 

(i) Persons filing a voluntary notice 

shall include a copy of the most recent 

asset or stock purchase agreement or 

other document establishing the agreed 

terms of the transaction. 

(j) Persons filing a voluntary notice 

shall include: 

(1) Complete organizational charts, 

both pre- and post-transaction, 

including information that identifies the 

name, principal place of business, and 

place of incorporation or other legal 

organization (for entities); nationality 

(for individuals); and ownership 

percentage (expressed in terms of both 

voting and economic interest, if 

different) for each of the following: 

(i) The immediate parent, the ultimate 

parent, and each intermediate parent, if 

any, of each foreign person that is a 

party to the transaction; 

(ii) Where the ultimate parent is a 

private company, the ultimate owner(s) 

of such parent; 

(iii) Where the ultimate parent is a 

public company, any shareholder with 

an interest of greater than five percent 

in such parent; and 

(iv) The U.S. business that is the 

subject of the transaction, both before 

and after completion of the transaction; 

and 

(2) The opinion of the person 

regarding whether: 

(i) It is a foreign person; 

(ii) It is controlled by a foreign 

government; 

(iii) A foreign government holds a 

substantial interest in the foreign person 

that is party to the transaction; and 

(iv) The transaction has resulted or 

could result in a covered control 

transaction or a covered investment, and 

the reasons for its view, focusing in 

particular on any powers (for example, 

by virtue of a shareholders agreement, 

contract, statute, or regulation) that the 

foreign person will have with regard to 

the U.S. business, and how those 

powers can or will be exercised, or any 

other access, rights, or involvement the 

foreign person will have in a U.S. 

business with respect to critical 

technologies, covered investment 

critical infrastructure, or sensitive 

personal data. 

(k) Persons filing a voluntary notice 

shall include information as to whether: 

(1) Any party to the transaction is, or 

has been, a party to a mitigation 

agreement entered into or condition 

imposed under section 721, and if so, 

shall specify the date and purpose of 

such agreement or condition and the 

U.S. Government signatories; and 

(2) Any party to the transaction 

(including such party’s parents, 

subsidiaries, or entities under common 

control with the party) has been a party 

to a transaction previously notified to 

the Committee. 

(l) Each party filing a voluntary notice 

shall provide a certification of the notice 

consistent with § 800.204. A sample 

certification may be found on the 

Committee’s section of the Department 

of the Treasury website. 

(m) At the conclusion of a review or 

investigation, each party that has filed 

additional information subsequent to 

the original notice shall file a final 

certification. (See § 800.204.) A sample 

certification may be found at the 

Committee’s section of the Department 

of the Treasury website. 

(n) Parties filing a voluntary notice 

shall include with the notice a list 

identifying each document provided as 

part of the notice, including all 

documents provided as attachments or 

exhibits to the narrative response. 

(o) A party filing a voluntary notice 

may stipulate that the transaction is a 

covered transaction and, if the party 

stipulates that the transaction is a 

covered transaction, that the transaction 

is a foreign government-controlled 

transaction. A stipulation offered by any 

party under this section must be 

accompanied by a detailed description 

of the basis for the stipulation. The 

required description of the basis shall 

include, but is not limited to, discussion 

of all relevant information responsive to 

paragraphs (c)(6)(iii) through (v) of this 

section. A party that offers such a 

stipulation acknowledges that the 

Committee and the President are 

entitled to rely on such stipulation in 

determining whether the transaction is 

a covered transaction, a foreign 

government-controlled transaction, and/ 

or subject to mandatory declaration or 

notice for the purposes of section 721 

and all authorities thereunder, and 

waives the right to challenge any such 

determination. Neither the Committee 

nor the President is bound by any such 

stipulation, nor does any such 

stipulation limit the ability of the 

Committee or the President to act on 

any authority provided under section 

721 with respect to any covered 

transaction. 

§ 800.503 Beginning of 45-day review 

period. 

(a) The Staff Chairperson shall accept 

a voluntary notice the next business day 

after the Staff Chairperson has: 

(1) Determined that the notice 

complies with § 800.502; and 

(2) Disseminated the notice to all 

members of the Committee. 

(b) A 45-day period for review of a 

transaction shall commence on the date 

on which the voluntary notice has been 

accepted, agency notice has been 

received by the Staff Chairperson, or the 

Chairperson of the Committee has 

requested a notice under § 800.501(b). 

Such review shall end no later than the 

forty-fifth day after it has commenced, 

or if the forty-fifth day is not a business 

day, no later than the next business day 

after the forty-fifth day. 

(c) The Staff Chairperson shall 

promptly advise in writing all parties to 

a transaction that have filed a voluntary 

notice of: 

(1) The acceptance of the notice; 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3149 

(2) The date on which the review 

begins; and 

(3) The designation of any lead agency 

or agencies. 

(d) Within two business days after 

receipt of an agency notice by the Staff 

Chairperson, the Staff Chairperson shall 

send written advice of such notice to the 

parties to the transaction that is subject 

to the notice. Such written advice shall 

identify the date on which the review 

began. 

(e) The Staff Chairperson shall 

promptly circulate to all Committee 

members any draft pre-filing notice, any 

agency notice, any complete notice, and 

any subsequent information filed by the 

parties. 

§ 800.504 Deferral, rejection, or disposition 

of certain voluntary notices. 

(a) The Committee, acting through the 

Staff Chairperson, may: 

(1) Reject any voluntary notice that 

does not comply with § 800.501 or 

§ 800.502 and so inform the parties 

promptly in writing; 

(2) Reject any voluntary notice at any 

time, and so inform the parties promptly 

in writing, if, after the notice has been 

submitted and before action by the 

Committee or the President has been 

concluded: 

(i) There is a material change in the 

transaction as to which notification has 

been made; or 

(ii) Information comes to light that 

contradicts material information 

provided in the notice by the parties; 

(3) Reject any voluntary notice at any 

time after the notice has been accepted, 

and so inform the parties promptly in 

writing, if the party or parties that have 

submitted the voluntary notice do not 

provide follow-up information 

requested by the Staff Chairperson 

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; or 

(4) Reject any voluntary notice before 

the conclusion of a review or 

investigation, and so inform the parties 

promptly in writing, if one of the parties 

submitting the voluntary notice has not 

submitted the final certification 

required by § 800.502(m). 

(b) Notwithstanding the authority of 

the Staff Chairperson under paragraph 

(a) of this section to reject an incomplete 

notice, the Staff Chairperson may defer 

acceptance of the notice, and the 

beginning of the review period specified 

by § 800.503, to obtain any information 

required under this section that has not 

been submitted by the notifying party or 

parties or other parties to the 

transaction. Where necessary to obtain 

such information, the Staff Chairperson 

may inform any non-notifying party or 

parties that notice has been filed with 

respect to a transaction involving the 

party, and request that certain 

information required under this section, 

as specified by the Staff Chairperson, be 

provided to the Committee within seven 

days after receipt of the Staff 

Chairperson’s request. 

(c) The Staff Chairperson shall notify 

the parties when the Committee has 

found that the transaction that is the 

subject of a voluntary notice is not a 

covered transaction. 

(d) Examples: 

(1) Example 1. The Staff Chairperson 

receives a joint notice from Corporation A, a 

foreign person, and Corporation X, a 

company that is owned and controlled by 

U.S. nationals, with respect to Corporation 

A’s intent to purchase all of the shares of 

Corporation X. The joint notice does not 

contain any information described under 

§ 800.502 concerning classified materials and 

products or services supplied to the U.S. 

military services. The Staff Chairperson may 

reject the notice or defer the start of the 

review period until the parties have supplied 

the omitted information. 

(2) Example 2. Same facts as the first 

sentence of Example 1 of this section, except 

that the joint notice indicates that 

Corporation A does not intend to purchase 

Corporation X’s Division Y, which is engaged 

in classified work for a U.S. Government 

agency. Corporations A and X notify the 

Committee on the 40th day of the 45-day 

notice period that Division Y will also be 

acquired by Corporation A. This fact 

constitutes a material change with respect to 

the transaction as originally notified, and the 

Staff Chairperson may reject the notice. 

(3) Example 3. The Staff Chairperson 

receives a joint notice by Corporation A, a 

foreign person, and Corporation X, a U.S. 

business, indicating that Corporation A 

intends to purchase five percent of the voting 

securities of Corporation X. Under the 

particular facts and circumstances presented, 

the Committee concludes that Corporation 

A’s purchase of this interest in Corporation 

X could not result in a covered investment 

in or foreign control of Corporation X. The 

Staff Chairperson shall advise the parties in 

writing that the transaction as presented is 

not subject to section 721. 

(4) Example 4. The Staff Chairperson 

receives a voluntary notice involving the 

acquisition by Company A, a foreign person, 

of the entire interest in Company X, a U.S. 

business. The notice mentions the 

involvement of a second foreign person in 

the transaction, Company B, but states that 

Company B is merely a passive investor in 

the transaction. During the course of the 

review, the parties provide information that 

clarifies that Company B has the right to 

appoint two members of Company X’s board 

of directors. This information contradicts the 

material assertion in the notice that Company 

B is a passive investor. The Committee may 

reject this notice without concluding review 

under section 721. 

§ 800.505 Determination of whether to 

undertake an investigation. 

(a) After a review of a notified 

transaction under § 800.503, the 

Committee shall undertake an 

investigation of any transaction that it 

has determined to be a covered 

transaction if: 

(1) A member of the Committee (other 

than a member designated as ex officio 

under section 721(k)) advises the Staff 

Chairperson that the member believes 

that the transaction threatens to impair 

the national security of the United 

States and that the threat has not been 

mitigated; or 

(2) The lead agency recommends, and 

the Committee concurs, that an 

investigation be undertaken. 

(b) The Committee shall also 

undertake, after a review of a covered 

transaction under § 800.503, an 

investigation to determine the effects on 

national security of any covered 

transaction that: 

(1) Is a foreign government-controlled 

transaction; or 

(2) Would result in control by a 

foreign person of critical infrastructure 

of or within the United States, if the 

Committee determines that the 

transaction could impair national 

security and such impairment has not 

been mitigated. 

(c) The Committee shall undertake an 

investigation as described in paragraph 

(b) of this section unless the 

Chairperson of the Committee (or the 

Deputy Secretary of the Treasury) and 

the head of any lead agency (or his or 

her delegee at the deputy level or 

equivalent) designated by the 

Chairperson determine on the basis of 

the review that the covered transaction 

will not impair the national security of 

the United States. 

§ 800.506 Determination not to undertake 

an investigation. 

If the Committee determines, during 

the review period described in 

§ 800.503, not to undertake an 

investigation of a notified covered 

transaction, action under section 721 

shall be concluded. An official at the 

Department of the Treasury shall 

promptly inform the parties to a covered 

transaction in writing of a determination 

of the Committee not to undertake an 

investigation and to conclude action 

under section 721. 

§ 800.507 Commencement of 

investigation. 

(a) If it is determined that an 

investigation should be undertaken, 

such investigation shall commence no 

later than the end of the review period 

described in § 800.503. 


lotter on DSKBCFDHB2PROD with RULES2
3150 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

(b) An official of the Department of 

the Treasury shall promptly inform the 

parties to a covered transaction in 

writing of the commencement of an 

investigation. 

§ 800.508 Completion or termination of 

investigation and report to the President. 

(a) Subject to paragraph (e) of this 

section, the Committee shall complete 

an investigation no later than the fortyfifth day after the date the investigation 

commences, or, if the forty-fifth day is 

not a business day, no later than the 

next business day after the forty-fifth 

day. 

(b) Upon completion or termination of 

any investigation, the Committee shall 

send a report to the President requesting 

the President’s decision if: 

(1) The Committee recommends that 

the President suspend or prohibit the 

transaction; 

(2) The Committee is unable to reach 

a decision on whether to recommend 

that the President suspend or prohibit 

the transaction; or 

(3) The Committee requests that the 

President make a determination with 

regard to the transaction. 

(c) In circumstances when the 

Committee sends a report to the 

President requesting the President’s 

decision with respect to a covered 

transaction, such report shall include 

information relevant to sections 

721(d)(4)(A) and (B), and shall present 

the Committee’s recommendation. If the 

Committee is unable to reach a decision 

to present a single recommendation to 

the President, the Chairperson of the 

Committee shall submit a report of the 

Committee to the President setting forth 

the differing views and presenting the 

issues for decision. 

(d) Upon completion or termination of 

an investigation, if the Committee 

determines to conclude all deliberative 

action under section 721 with regard to 

a notified covered transaction without 

sending a report to the President, action 

under section 721 shall be concluded. 

An official at the Department of the 

Treasury shall promptly advise the 

parties to such a transaction in writing 

of a determination to conclude action. 

(e) In extraordinary circumstances, 

the Chairperson may, upon a written 

request signed by the head of a lead 

agency, extend an investigation for one 

15-day period. A request to extend an 

investigation must describe, with 

particularity, the extraordinary 

circumstances that warrant the 

Chairperson extending the investigation. 

The authority of the head of a lead 

agency to request the extension of an 

investigation may not be delegated to 

any person other than the deputy head 

(or equivalent thereof) of the lead 

agency. If the Chairperson extends an 

investigation under this paragraph with 

respect to a covered transaction, the 

Committee shall promptly notify the 

parties to the transaction of the 

extension. 

(f) For purposes of paragraph (e) of 

this section, the term extraordinary 

circumstances means circumstances for 

which extending an investigation is 

necessary and the appropriate course of 

action, in the Chairperson’s discretion, 

due to a force majeure event or to 

protect the national security of the 

United States. 

§ 800.509 Withdrawal of notices. 

(a) A party (or parties) to a transaction 

that has filed notice under § 800.501(a) 

may request in writing, at any time prior 

to conclusion of all action under section 

721, that such notice be withdrawn. 

Such request shall be directed to the 

Staff Chairperson and shall state the 

reasons why the request is being made. 

Such requests will ordinarily be 

granted, unless otherwise determined by 

the Committee. An official of the 

Department of the Treasury will 

promptly advise the parties to the 

transaction in writing of the 

Committee’s decision. 

(b) Any request to withdraw an 

agency notice by the agency that filed it 

shall be in writing and shall be effective 

only upon approval by the Committee. 

An official of the Department of the 

Treasury shall advise the parties to the 

transaction in writing of the 

Committee’s decision to approve the 

withdrawal request within two business 

days of the Committee’s decision. 

(c) In any case where a request to 

withdraw a notice is granted under 

paragraph (a) of this section: 

(1) The Staff Chairperson, in 

consultation with the Committee, shall 

establish, as appropriate: 

(i) A process for tracking actions that 

may be taken by any party to the 

covered transaction before a notice is 

refiled under § 800.501; and 

(ii) Interim protections to address 

specific national security concerns with 

the covered transaction identified 

during the review or investigation of the 

covered transaction. 

(2) The Staff Chairperson shall specify 

a time frame, as appropriate, for the 

parties to resubmit a notice and shall 

advise the parties of that time frame in 

writing. 

(d) A notice of a transaction that is 

submitted under paragraph (c)(2) of this 

section shall be deemed a new notice for 

purposes of the regulations in this part, 

including § 800.701. 

Subpart F—Committee Procedures 

§ 800.601 General. 

(a) In any assessment, review, or 

investigation of a covered transaction, 

the Committee should consider the 

factors specified in section 721(f) and, 

as appropriate, require the parties to 

provide to the Committee the 

information necessary to consider such 

factors. The Committee’s assessment, 

review, or investigation (if necessary) 

shall examine, as appropriate, whether: 

(1) The transaction is a covered 

transaction; 

(2) There is credible evidence to 

support a belief that any foreign person 

party to a covered transaction might 

take action that threatens to impair the 

national security of the United States; 

and 

(3) Provisions of law, other than 

section 721 and the International 

Emergency Economic Powers Act, 

provide adequate and appropriate 

authority to protect the national security 

of the United States. 

(b) During an assessment, review, or 

investigation, the Staff Chairperson may 

invite the parties to a notified 

transaction to attend a meeting with the 

Committee staff to discuss and clarify 

issues pertaining to the transaction. 

During an investigation, a party to the 

transaction under investigation may 

request a meeting with the Committee 

staff; such a request ordinarily will be 

granted. 

(c) The Staff Chairperson shall be the 

point of contact for receiving material 

filed with the Committee, including 

notices and declarations. 

(d) Where more than one lead agency 

is designated, communications on 

material matters between a party to the 

transaction and a lead agency shall 

include all lead agencies designated 

with regard to those matters. 

(e) The parties’ description of a 

transaction in a declaration or notice 

does not limit the ability of the 

Committee to, as appropriate, assess, 

review, or investigate, or exercise any 

other authorities available under section 

721 with respect to any covered 

transaction that the Committee 

identifies as having been notified to the 

Committee based upon the facts set 

forth in the declaration or notice, any 

additional information provided to the 

Committee subsequent to the original 

declaration or notice, or any other 

information available to the Committee. 

§ 800.602 Role of the Secretary of Labor. 

In response to a request from the 

Chairperson of the Committee, the 

Secretary of Labor shall identify for the 

Committee any risk mitigation 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3151 

provisions proposed to or by the 

Committee that would violate U.S. 

employment laws or require a party to 

violate U.S. employment laws. The 

Secretary of Labor shall serve no policy 

role on the Committee. 

§ 800.603 Materiality. 

The Committee generally will not 

consider as material minor inaccuracies, 

omissions, or changes relating to 

financial or commercial factors not 

having a bearing on national security. 

§ 800.604 Tolling of deadlines during lapse 

in appropriations. 

Any deadline or time limitation under 

subpart D or E imposed on the 

Committee shall be tolled during a lapse 

in appropriations. 

Subpart G—Finality of Action 

§ 800.701 Finality of actions under section 

721. 

(a) All authority available to the 

President or the Committee under 

section 721(d), including divestment 

authority, shall remain available at the 

discretion of the President with respect 

to: 

(1) Covered control transactions 

proposed or pending on or after August 

23, 1988; 

(2) Transactions that, between 

November 10, 2018, and February 12, 

2020, fell within the scope of part 801 

of this title; and 

(3) Covered investments proposed or 

pending after February 13, 2020. 

(b) Subject to § 800.501(c)(1)(ii), such 

authority shall not be exercised if: 

(1) Subject to § 800.219(d), the 

Committee, through its Staff 

Chairperson, has advised a party (or the 

parties) in writing that a particular 

transaction with respect to which a 

voluntary notice or a declaration has 

been filed is not a covered transaction; 

(2) The parties to the transaction have 

been advised in writing under 

§ 800.407(a)(4), § 800.506, or 

§ 800.508(d) that the Committee has 

concluded all action under section 721 

with respect to the covered transaction; 

or 

(3) The President has previously 

announced, under section 721(d), his or 

her decision not to exercise his or her 

authority under section 721 with respect 

to the covered transaction. 

(c) Divestment or other relief under 

section 721 shall not be available with 

respect to transactions that were 

completed prior to August 23, 1988. 

Subpart H—Provision and Handling of 

Information 

§ 800.801 Obligation of parties to provide 

information. 

(a) Parties to a transaction that is 

notified or declared under subparts D or 

E, or a transaction for which no notice 

or declaration has been submitted and 

for which the Staff Chairperson has 

requested information to assess whether 

the transaction is a covered transaction, 

shall provide information to the Staff 

Chairperson that will enable the 

Committee to conduct a full assessment, 

review, and/or investigation of the 

transaction. Parties to a transaction that 

have filed information with the 

Committee shall promptly advise the 

Staff Chairperson of any material 

changes to such information. If deemed 

necessary by the Committee, 

information may be obtained from 

parties to a transaction or other persons 

through subpoena or otherwise, under 

the Defense Production Act 

Reauthorization of 2003, as amended 

(50 U.S.C. 4555(a)). 

(b) Documentary materials or 

information required or requested to be 

filed with the Committee under this part 

shall be submitted in English. 

Supplementary materials, such as 

annual reports, written in a foreign 

language shall be submitted in certified 

English translation. 

(c) Any information filed with the 

Committee in connection with any 

action for which a report is required 

under section 721(l)(6)(B) with respect 

to the implementation of a mitigation 

agreement or condition described in 

section 721(l)(3)(A) shall be 

accompanied by a certification that 

complies with the requirements of 

section 721(n) and § 800.204. A sample 

certification may be found at the 

Committee’s section of the Department 

of the Treasury website. 

§ 800.802 Confidentiality. 

(a) Except as provided in paragraph 

(b) of this section, any information or 

documentary material submitted or filed 

with the Committee under this part, 

including information or documentary 

material filed under § 800.501(g), shall 

be exempt from disclosure under the 

Freedom of Information Act, as 

amended (5 U.S.C. 552 et seq.), and no 

such information or documentary 

material may be made public. 

(b) Paragraph (a) of this section shall 

not prohibit disclosure of the following: 

(1) Information relevant to any 

administrative or judicial action or 

proceeding; 

(2) Information to Congress or to any 

duly authorized committee or 

subcommittee of Congress; 

(3) Information important to the 

national security analysis or actions of 

the Committee to any domestic 

governmental entity, or to any foreign 

governmental entity of a United States 

ally or partner, under the exclusive 

direction and authorization of the 

Chairperson, only to the extent 

necessary for national security 

purposes, and subject to appropriate 

confidentiality and classification 

requirements; or 

(4) Information that the parties have 

consented to be disclosed to third 

parties. 

(c) This section shall continue to 

apply with respect to information and 

documentary material submitted or filed 

with the Committee in any case where: 

(1) Action has concluded under 

section 721 concerning a notified 

transaction; 

(2) A request to withdraw a notice or 

a declaration is granted under § 800.509 

or § 800.406(c), respectively, or where a 

notice or a declaration has been rejected 

under § 800.504(a) or § 800.406(a), 

respectively; 

(3) The Committee determines that a 

notified or declared transaction is not a 

covered transaction; or 

(4) Such information or documentary 

material was filed under subpart D and 

the parties do not subsequently file a 

notice under subpart E. 

(d) Nothing in paragraph (a) of this 

section shall be interpreted to prohibit 

the public disclosure by a party of 

documentary material or information 

that it has submitted or filed with the 

Committee. Any such documentary 

material or information so disclosed 

may subsequently be reflected in the 

public statements of the Chairperson, 

who is authorized to communicate with 

the public and the Congress on behalf of 

the Committee, or of the Chairperson’s 

designee. 

(e) The provisions of the Defense 

Production Act Reauthorization of 2003, 

as amended (50 U.S.C. 4555(d)) relating 

to fines and imprisonment shall apply 

with respect to the disclosure of 

information or documentary material 

filed with the Committee under these 

regulations. 

Subpart I—Penalties and Damages 

§ 800.901 Penalties and damages. 

(a) Any person who submits a 

declaration or notice with a material 

misstatement or omission or makes a 

false certification under § 800.404, 

§ 800.405, or § 800.502 may be liable to 

the United States for a civil penalty not 


lotter on DSKBCFDHB2PROD with RULES2
3152 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

to exceed $250,000 per violation. The 

amount of the penalty imposed for a 

violation shall be based on the nature of 

the violation. 

(b) Any person who fails to comply 

with the requirements of § 800.401 may 

be liable to the United States for a civil 

penalty not to exceed $250,000 or the 

value of the transaction, whichever is 

greater. The amount of the penalty 

imposed for a violation shall be based 

on the nature of the violation. 

(c) Any person who, after December 

22, 2008, violates, intentionally or 

through gross negligence, a material 

provision of a mitigation agreement 

entered into before October 11, 2018, 

with, a material condition imposed 

before October 11, 2018, by, or an order 

issued before October 11, 2018, by, the 

United States under section 721(l) may 

be liable to the United States for a civil 

penalty not to exceed $250,000 per 

violation or the value of the transaction, 

whichever is greater. Any person who 

violates a material provision of a 

mitigation agreement entered into on or 

after October 11, 2018, with, a material 

condition imposed on or after October 

11, 2018, by, or an order issued on or 

after October 11, 2018, by, the United 

States under section 721(l) may be liable 

to the United States for a civil penalty 

not to exceed $250,000 per violation or 

the value of the transaction, whichever 

is greater. For clarification, under the 

previous two sentences, whichever 

penalty amount is greater may be 

imposed per violation, and the amount 

of the penalty imposed for a violation 

shall be based on the nature of the 

violation. 

(d) A mitigation agreement entered 

into or amended under section 721(l) 

after December 22, 2008, may include a 

provision providing for liquidated or 

actual damages for breaches of the 

agreement. The mitigation agreement 

shall specify the amount of any 

liquidated damages that are a reasonable 

assessment of the harm to the national 

security that could result from a breach 

of the agreement. Any mitigation 

agreement containing a liquidated 

damages provision shall include a 

provision specifying that the Committee 

may consider the severity of the breach 

in deciding whether to seek a lesser 

amount than that stipulated in the 

agreement. 

(e) A determination to impose 

penalties under paragraphs (a) through 

(c) of this section must be made by the 

Committee. Notice of the penalty, 

including a written explanation of the 

conduct to be penalized and the amount 

of the penalty, shall be sent to the 

subject person electronically and by 

U.S. mail or courier service. Notice shall 

be deemed to have been effected by the 

earlier of the date of electronic 

transmission and the date of receipt of 

U.S. mail or courier service. For the 

purposes of this section, the term 

subject person means the person or 

persons who may be liable to the United 

States for a civil penalty. 

(f) Upon receiving notice of a penalty 

to be imposed under paragraphs (a) 

through (c) of this section, the subject 

person may, within 15 business days of 

receipt of such notice, submit a petition 

for reconsideration to the Staff 

Chairperson, including a defense, 

justification, or explanation for the 

conduct to be penalized. The Committee 

will review the petition and issue any 

final penalty determination within 15 

business days of receipt of the petition. 

The Staff Chairperson and the subject 

person may extend either such period 

through written agreement. The 

Committee and the subject person may 

reach an agreement on an appropriate 

remedy at any time before the 

Committee issues any final penalty 

determination. 

(g) The penalties and damages 

authorized in paragraphs (a) through (d) 

of this section may be recovered in a 

civil action brought by the United States 

in federal district court. 

(h) Section 2 of the False Statements 

Accountability Act of 1996, as amended 

(18 U.S.C. 1001), shall apply to all 

information provided to the Committee 

under section 721, including by any 

party to a covered transaction. 

(i) The penalties and damages 

available under this section are without 

prejudice to other penalties, civil or 

criminal, available under law. 

(j) The imposition of a civil monetary 

penalty or damages under these 

regulations creates a debt due to the 

U.S. Government. The Department of 

the Treasury may take action to collect 

the penalty or damages assessed if not 

paid within the time prescribed by the 

Committee and notified to the 

applicable party or parties. In addition 

or instead, the matter may be referred to 

the Department of Justice for 

appropriate action to recover the 

penalty or damages. 

§ 800.902 Effect of lack of compliance. 

If, at any time after a mitigation 

agreement or condition is entered into 

or imposed under section 721(l), the 

Committee or a lead agency in 

coordination with the Staff Chairperson, 

as the case may be, determines that a 

party or parties to the agreement or 

condition are not in compliance with 

the terms of the agreement or condition, 

the Committee or a lead agency in 

coordination with the Staff Chairperson 

may, in addition to the authority of the 

Committee to impose penalties under 

section 721(h) and to unilaterally 

initiate a review of any covered 

transaction under section 

721(b)(1)(D)(iii): 

(a) Negotiate a plan of action for the 

party or parties to remediate the lack of 

compliance, with failure to abide by the 

plan or otherwise remediate the lack of 

compliance serving as the basis for the 

Committee to find a material breach of 

the agreement or condition; 

(b) Require that the party or parties 

submit a written notice or declaration 

under clause (i) of section 721(b)(1)(C) 

with respect to a covered transaction 

initiated after the date of the 

determination of noncompliance and 

before the date that is five years after the 

date of the determination to the 

Committee to initiate a review of the 

transaction under section 721(b); or 

(c) Seek injunctive relief. 

Subpart J—Foreign National Security 

Investment Review Regimes 

§ 800.1001 Determinations. 

(a) The Committee may determine at 

any time that a foreign state has 

established and is effectively utilizing a 

robust process to analyze foreign 

investments for national security risks 

and to facilitate coordination with the 

United States on matters relating to 

investment security. 

(b) The Committee may rescind a 

determination under paragraph (a) of 

this section if the Committee determines 

that such a rescission is appropriate. 

(c) The Chairperson of the Committee 

shall publish a notice of any 

determination or rescission of a 

determination under paragraph (a) or (b) 

of this section, respectively, in the 

Federal Register. 

§ 800.1002 Effect of determinations. 

(a) A determination under 

§ 800.1001(a) shall take effect 

immediately upon publication of a 

notice of such determination under 

§ 800.1001(c) and remain in effect 

unless rescinded under § 800.1001(b). 

(b) A rescission of a determination 

under § 800.1001(b) shall take effect on 

the date specified in the notice 

published under § 800.1001(c). 

(c) A determination under 

§ 800.1001(a) does not apply to any 

transaction for which a declaration or 

notice has been accepted by the Staff 

Chairperson under § 800.405(a)(1) or 

§ 800.503(a), respectively. 

(d) A rescission of a determination 

under § 800.1001(b) does not apply to 

any transaction for which: 

(1) The completion date is prior to the 

date upon which the rescission of a 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3153 

determination under paragraph (b) of 

this section becomes effective; or 

(2) The following has occurred before 

publication of the rescission of 

determination under § 800.1001(c): 

(i) The parties to the transaction have 

executed a binding written agreement, 

or other binding document, establishing 

the material terms of the transaction that 

is ultimately consummated; 

(ii) A party has made a public offer to 

shareholders to buy shares of a U.S. 

business; or 

(iii) A shareholder has solicited 

proxies in connection with an election 

of the board of directors of a U.S. 

business or has requested the 

conversion of convertible voting 

securities. 

Appendix A to Part 800—Covered 

Investment Critical Infrastructure and 

Functions Related to Covered 

Investment Critical Infrastructure 

Column 1—Covered investment critical infrastructure Column 2—Functions related to covered investment critical 

infrastructure 

(i) Any: (i) Own or operate any: 

(a) Internet protocol network that has access to every other internet 

protocol network solely via settlement-free peering; or 

(a) Internet protocol network that has access to every other internet 

protocol network solely via settlement-free peering; or 

(b) telecommunications service or information service, each as defined 

in section 3(a)(2) of the Communications Act of 1934, as amended 

(47 U.S.C. 153), or fiber optic cable, in each case that directly serves 

any military installation identified in § 802.227. 

(b) telecommunications service or information service, each as defined 

in section 3(a)(2) of the Communications Act of 1934, as amended 

(47 U.S.C. 153), or fiber optic cable, in each case that directly 

serves any military installation identified in § 802.227. 

(ii) Any internet exchange point that supports public peering. (ii) Own or operate any internet exchange point that supports public 

peering. 

(iii) Any submarine cable system requiring a license under section 1 of 

the Cable Landing License Act of 1921 (47 U.S.C. 34), which includes any associated submarine cable, submarine cable landing facilities, and any facility that performs network management, monitoring, maintenance, or other operational functions for such submarine cable system. 

(iii) Own or operate any submarine cable system requiring a license 

under section 1 of the Cable Landing License Act of 1921 (47 U.S.C. 

34), which includes any associated submarine cable, submarine 

cable landing facilities, and any facility that performs network management, monitoring, maintenance, or other operational functions for 

such submarine cable system. 

(iv) Any submarine cable, landing facility, or facility that performs network management, monitoring, maintenance, or other operational 

function that is part of a submarine cable system described above in 

item (iii) of column 1 of this appendix A. 

(iv) Supply or service any submarine cable, landing facility, or facility 

that performs network management, monitoring, maintenance, or 

other operational function that is part of a submarine cable system 

described above in item (iii) of column 1 of this appendix A. 

(v) Any data center that is collocated at a submarine cable landing 

point, landing station, or termination station. 

(v) Own or operate any data center that is collocated at a submarine 

cable landing point, landing station, or termination station. 

(vi) Any satellite or satellite system providing services directly to the 

Department of Defense or any component thereof. 

(vi) Own or operate any satellite or satellite system providing services 

directly to the Department of Defense or any component thereof. 

(vii) Any industrial resource other than commercially available off-theshelf items, as defined in section 4203(a) of the National Defense 

Authorization Act for Fiscal Year 1996, as amended (41 U.S.C. 104), 

that is manufactured or operated for a Major Defense Acquisition 

Program, as defined in section 7(b)(2)(A) of the Defense Technical 

Corrections Act of 1987, as amended (10 U.S.C. 2430), or a Major 

System, as defined in 10 U.S.C. 2302d, as amended, and: 

(vii) As applicable, manufacture any industrial resource other than commercially available off-the-shelf items, as defined in section 4203(a) 

of the National Defense Authorization Act for Fiscal Year 1996, as 

amended (41 U.S.C. 104), or operate any industrial resource that is 

a facility, in each case, for a Major Defense Acquisition Program, as 

defined in section 7(b)(2)(A) of the Defense Technical Corrections 

Act of 1987, as amended (10 U.S.C. 2430), or a Major System, as 

defined in 10 U.S.C. 2302d, as amended, and: 

(a) The U.S. business is a ‘‘single source,’’ ‘‘sole source,’’ or ‘‘strategic 

multisource,’’ to the extent the U.S. business has been notified of 

such status; or 

(a) The U.S. business is a ‘‘single source,’’ ‘‘sole source,’’ or ‘‘strategic 

multisource,’’ to the extent the U.S. business has been notified of 

such status; or 

(b) the industrial resource: (b) the industrial resource: 

(1) Requires 12 months or more to manufacture; or (1) Requires 12 months or more to manufacture; or 

(2) is a ‘‘long lead’’ item, to the extent the U.S. business has been notified that such industrial resource is a ‘‘long lead’’ item. (2) is a ‘‘long lead’’ item, to the extent the U.S. business has been notified that such industrial resource is a ‘‘long lead’’ item. 

(viii) Any industrial resource, other than commercially available off-theshelf items, as defined in section 4203(a) of the National Defense 

Authorization Act for Fiscal Year 1996, as amended (41 U.S.C. 104), 

that is manufactured under a ‘‘DX’’ priority rated contract or order 

under the Defense Priorities and Allocations System regulation (15 

CFR part 700, as amended) in the preceding 24 months. 

(viii) Manufacture any industrial resource, other than commercially 

available off-the-shelf items, as defined in section 4203(a) of the National Defense Authorization Act for Fiscal Year 1996, as amended 

(41 U.S.C. 104), under a ‘‘DX’’ priority rated contract or order under 

the Defense Priorities and Allocations System regulation (15 CFR 

part 700, as amended) within 24 months of the transaction in question. 

(ix) Any facility in the United States that manufactures: (ix) Manufacture any of the following in the United States: 

(a) Specialty metal, as defined in section 842(a)(1)(i) of the John Warner National Defense Authorization Act for Fiscal Year 2007, as 

amended (10 U.S.C. 2533b); 

(a) Specialty metal, as defined in section 842(a)(1)(i) of the John Warner National Defense Authorization Act for Fiscal Year 2007, as 

amended (10 U.S.C. 2533b); 

(b) covered material, as defined in 10 U.S.C. 2533c, as amended; (b) covered material, as defined in 10 U.S.C. 2533c, as amended; 

(c) chemical weapons antidote contained in automatic injectors, as described in 10 U.S.C. 2534, as amended; or (c) chemical weapons antidote contained in automatic injectors, as described in 10 U.S.C. 2534, as amended; or 

(d) carbon, alloy, and armor steel plate that is in Federal Supply Class 

9515 or is described by specifications of the American Society for 

Testing Materials or the American Iron and Steel Institute. 

(d) carbon, alloy, and armor steel plate that is in Federal Supply Class 

9515 or is described by specifications of the American Society for 

Testing Materials or the American Iron and Steel Institute. 

(x) Any industrial resource other than commercially available off-theshelf items, as defined in 41 U.S.C. 104, as amended, that has been 

funded, in whole or in part, by any of the following sources in the last 

60 months: 

(x) As applicable, manufacture any industrial resource other than commercially available off-the-shelf items, as defined in 41 U.S.C. 104, 

as amended, or operate any industrial resource that is a facility, in 

each case, that has been funded, in whole or in part, by any of the 

following sources within 60 months of the transaction in question: 

(a) Defense Production Act of 1950 Title III program, as amended (50 

U.S.C 4501 et seq.); 

(a) Defense Production Act of 1950 Title III program, as amended (50 

U.S.C. 4501 et seq.); 


lotter on DSKBCFDHB2PROD with RULES2
3154 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

Column 1—Covered investment critical infrastructure Column 2—Functions related to covered investment critical 

infrastructure 

(b) Industrial Base Fund under section 896(b)(1) of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011, as amended 

(10 U.S.C. 2508); 

(b) Industrial Base Fund under section 896(b)(1) of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011, as amended 

(10 U.S.C. 2508); 

(c) Rapid Innovation Fund under section 1073 of Ike Skelton National 

Defense Authorization Act for Fiscal Year 2011, as amended (10 

U.S.C. 2359a); 

(c) Rapid Innovation Fund under section 1073 of Ike Skelton National 

Defense Authorization Act for Fiscal Year 2011, as amended (10 

U.S.C. 2359a); 

(d) Manufacturing Technology Program under 10 U.S.C. 2521, as 

amended; 

(d) Manufacturing Technology Program under 10 U.S.C. 2521, as 

amended; 

(e) Defense Logistics Agency Warstopper Program, as described in 

DLA Instruction 1212, Industrial Capabilities Program—Manage the 

WarStopper Program; or 

(e) Defense Logistics Agency Warstopper Program, as described in 

DLA Instruction 1212, Industrial Capabilities Program—Manage the 

WarStopper Program; or 

(f) Defense Logistics Agency Surge and Sustainment contract, as described in Subpart 17.93 of the Defense Logistics Acquisition Directive. (f) Defense Logistics Agency Surge and Sustainment contract, as described in Subpart 17.93 of the Defense Logistics Acquisition Directive. 

(xi) Any system, including facilities, for the generation, transmission, 

distribution, or storage of electric energy comprising the bulk-power 

system, as defined in section 215(a)(1) of the Federal Power Act, as 

amended (16 U.S.C. 824o(a)(1)). 

(xi) Own or operate any system, including facilities, for the generation, 

transmission, distribution, or storage of electric energy comprising 

the bulk-power system, as defined in section 215(a)(1) of the Federal 

Power Act, as amended (16 U.S.C. 824o(a)(1)). 

(xii) Any electric storage resource, as defined in 18 CFR 35.28(b)(9), 

as amended, that is physically connected to the bulk-power system. 

(xii) Own or operate any electric storage resource, as defined in 18 

CFR 35.28(b)(9), as amended, that is physically connected to the 

bulk-power system. 

(xiii) Any facility that provides electric power generation, transmission, 

distribution, or storage directly to or located on any military installation identified in § 802.227. 

(xiii) Own or operate any facility that provides electric power generation, transmission, distribution, or storage directly to or located on 

any military installation identified in § 802.227. 

(xiv) Any industrial control system utilized by: (xiv) Manufacture or service any industrial control system utilized by: 

(a) System comprising the bulk-power system as described above in 

item (xi) of column 1 of this appendix A; or 

(a) System comprising the bulk-power system as described above in 

item (xi) of column 1 of this appendix A; or 

(b) a facility directly serving any military installation as described above 

in item (xiii) of column 1 of this appendix A. 

(b) a facility directly serving any military installation as described above 

in item (xiii) of column 1 of this appendix A. 

(xv) Any: (xv) Own or operate: 

(a) Any individual refinery with the capacity to produce 300,000 or 

more barrels per day (or equivalent) of refined oil or gas products; or 

(a) Any individual refinery with the capacity to produce 300,000 or 

more barrels per day (or equivalent) of refined oil or gas products; or 

(b) collection of one or more refineries owned or operated by a single 

U.S. business with the capacity to produce, in the aggregate, 

500,000 or more barrels per day (or equivalent) of refined oil or gas 

products. 

(b) one or more refineries with the capacity to produce, in the aggregate, 500,000 or more barrels per day (or equivalent) of refined oil or 

gas products. 

(xvi) Any crude oil storage facility with the capacity to hold 30 million 

barrels or more of crude oil. 

(xvi) Own or operate any crude oil storage facility with the capacity to 

hold 30 million barrels or more of crude oil. 

(xvii) Any: (xvii) Own or operate any: 

(a) Liquefied natural gas (LNG) import or export terminal requiring: (a) Liquefied natural gas (LNG) import or export terminal requiring: 

(1) Approval under section 3(e) of the Natural Gas Act, as amended 

(15 U.S.C. 717b(e)), or 

(1) Approval under section 3(e) of the Natural Gas Act, as amended 

(15 U.S.C. 717b(e)), or 

(2) a license under section 4 of the Deepwater Port Act of 1974, as 

amended (33 U.S.C. 1503); or 

(2) a license under section 4 of the Deepwater Port Act of 1974, as 

amended (33 U.S.C. 1503); or 

(b) natural gas underground storage facility or LNG peak-shaving facility requiring a certificate of public convenience and necessity under 

section 7 of the Natural Gas Act, as amended (15 U.S.C. 717f). 

(b) natural gas underground storage facility or LNG peak-shaving facility requiring a certificate of public convenience and necessity under 

section 7 of the Natural Gas Act, as amended (15 U.S.C. 717f). 

(xviii) Any financial market utility that the Financial Stability Oversight 

Council has designated as systemically important under section 804 

of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 

as amended (12 U.S.C. 5463). 

(xviii) Own or operate any financial market utility that the Financial Stability Oversight Council has designated as systemically important 

under section 804 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended (12 U.S.C. 5463). 

(xix) Any exchange registered under section 6 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78f), that facilitates 

trading in any national market system security, as defined in 17 CFR 

§ 242.600, as amended, and which exchange during at least four of 

the preceding six calendar months had: 

(xix) Own or operate any exchange registered under section 6 of the 

Securities Exchange Act of 1934, as amended (15 U.S.C. 78f), that 

facilitates trading in any national market system security, as defined 

in 17 CFR § 242.600, as amended, and which exchange during at 

least four of the preceding six calendar months had: 

(a) With respect to all national market system securities that are not 

options, 10 percent or more of the average daily dollar volume reported by applicable transaction reporting plans; or 

(a) With respect to all national market system securities that are not 

options, 10 percent or more of the average daily dollar volume reported by applicable transaction reporting plans; or 

(b) with respect to all listed options, 15 percent or more of the average 

daily dollar volume reported by applicable national market system 

plans for reporting transactions in listed options. 

(b) with respect to all listed options, 15 percent or more of the average 

daily dollar volume reported by applicable national market system 

plans for reporting transactions in listed options. 

(xx) Any technology service provider in the Significant Service Provider 

Program of the Federal Financial Institutions Examination Council 

that provides core processing services. 

(xx) Own or operate any technology service provider in the Significant 

Service Provider Program of the Federal Financial Institutions Examination Council that provides core processing services. 

(xxi) Any rail line and associated connector line designated as part of 

the Department of Defense’s Strategic Rail Corridor Network. 

(xxi) Own or operate any rail line and associated connector line designated as part of the Department of Defense’s Strategic Rail Corridor Network. 

(xxii) Any interstate oil pipeline that: (xxii) Own or operate any interstate oil pipeline that: 

(a) Has the capacity to transport: (a) Has the capacity to transport: 

(1) 500,000 barrels per day or more of crude oil, or (1) 500,000 barrels per day or more of crude oil, or 

(2) 90 million gallons per day or more of refined petroleum product; or (2) 90 million gallons per day or more of refined petroleum product; or 


lotter on DSKBCFDHB2PROD with RULES2
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 3155 

Column 1—Covered investment critical infrastructure Column 2—Functions related to covered investment critical 

infrastructure 

(b) directly serves the strategic petroleum reserve, as defined in section 152 of the Energy Policy and Conservation Act, as amended (42 

U.S.C. 6232). 

(b) directly serves the strategic petroleum reserve, as defined in section 152 of the Energy Policy and Conservation Act, as amended (42 

U.S.C. 6232). 

(xxiii) Any interstate natural gas pipeline with an outside diameter of 20 

or more inches. 

(xxiii) Own or operate any interstate natural gas pipeline with an outside diameter of 20 or more inches. 

(xxiv) Any industrial control system utilized by: (xxiv) Manufacture or service any industrial control system utilized by: 

(a) An interstate oil pipeline as described above in item (xxii) of column 

1 of this appendix A; or 

(a) An interstate oil pipeline as described above in item (xxii) of column 

1 of this appendix A; or 

(b) an interstate natural gas pipeline as described above in item (xxiii) 

of column 1 of this appendix A. 

(b) an interstate natural gas pipeline as described above in item (xxiii) 

of column 1 of this appendix A. 

(xxv) Any airport identified in § 802.210(a)(1) through (3). (xxv) Own or operate any airport identified in § 802.210(a)(1) through 

(3). 

(xxvi) Any: (xxvi) Own or operate any: 

(a) Maritime port identified in § 802.210(a)(4) or (5); or (a) Maritime port identified in § 802.210(a)(4) or (5); or 

(b) any individual terminal at such maritime ports. (b) any individual terminal at such maritime ports. 

(xxvii) Any public water system, as defined in section 1401(4) of the 

Safe Drinking Water Act, as amended (42 U.S.C. 300f(4)(A)), or 

treatment works, as defined in section 212(2)(A) of the Clean Water 

Act, as amended (33 U.S.C. 1292(2)), which: 

(xxvii) Own or operate any public water system, as defined in section 

1401(4) of the Safe Drinking Water Act, as amended (42 U.S.C. 

300f(4)(A)), or treatment works, as defined in section 212(2)(A) of 

the Clean Water Act, as amended (33 U.S.C. 1292(2)), which: 

(a) Regularly serves 10,000 individuals or more, or (a) Regularly serves 10,000 individuals or more, or 

(b) directly serves any military installation identified in § 802.227. (b) directly serves any military installation identified in § 802.227. 

(xxviii) Any industrial control system utilized by a public water system 

or treatment works as described above in item (xxvii) of column 1 of 

this appendix A. 

(xxviii) Manufacture or service any industrial control system utilized by 

a public water system or treatment works as described above in item 

(xxvii) of column 1 of this appendix A. 

Appendix B to Part 800—Industries 

Industry NAICS Code 

Aircraft Manufacturing ................................................................................................................................... NAICS Code: 336411. 

Aircraft Engine and Engine Parts Manufacturing ......................................................................................... NAICS Code: 336412. 

Alumina Refining and Primary Aluminum Production .................................................................................. NAICS Code: 331313. 

Ball and Roller Bearing Manufacturing ......................................................................................................... NAICS Code: 332991. 

Computer Storage Device Manufacturing .................................................................................................... NAICS Code: 334112. 

Electronic Computer Manufacturing ............................................................................................................. NAICS Code: 334111. 

Guided Missile and Space Vehicle Manufacturing ....................................................................................... NAICS Code: 336414. 

Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing .................. NAICS Code: 336415. 

Military Armored Vehicle, Tank, and Tank Component Manufacturing ....................................................... NAICS Code: 336992. 

Nuclear Electric Power Generation .............................................................................................................. NAICS Code: 221113. 

Optical Instrument and Lens Manufacturing ................................................................................................. NAICS Code: 333314. 

Other Basic Inorganic Chemical Manufacturing ........................................................................................... NAICS Code: 325180. 

Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing ........................... NAICS Code: 336419. 

Petrochemical Manufacturing ....................................................................................................................... NAICS Code: 325110. 

Petrochemical Manufacturing Powder Metallurgy Part Manufacturing ........................................................ NAICS Code: 332117. 

Power, Distribution, and Specialty Transformer Manufacturing ................................................................... NAICS Code: 335311. 

Primary Battery Manufacturing ..................................................................................................................... NAICS Code: 335912. 

Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing ................. NAICS Code: 334220. 

Research and Development in Nanotechnology .......................................................................................... NAICS Code: 541713. 

Research and Development in Biotechnology (except Nanobiotechnology) ............................................... NAICS Code: 541714. 

Secondary Smelting and Alloying of Aluminum ........................................................................................... NAICS Code: 331314. 

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.NAICS Code: 334511. 

Semiconductor and Related Device Manufacturing ..................................................................................... NAICS Code: 334413. 

Semiconductor Machinery Manufacturing .................................................................................................... NAICS Code: 333242. 

Storage Battery Manufacturing ..................................................................................................................... NAICS Code: 335911. 

Telephone Apparatus Manufacturing ............................................................................................................ NAICS Code: 334210. 

Turbine and Turbine Generator Set Units Manufacturing ............................................................................ NAICS Code: 333611. 

PART 801—PILOT PROGRAM TO 

REVIEW CERTAIN TRANSACTIONS 

INVOLVING FOREIGN PERSONS AND 

CRITICAL TECHNOLOGIES 

■ 2. The authority citation for part 801 

continues to read as follows: 

Authority: 50 U.S.C. 4565; Pub. L. 115– 

232 

■ 3. Revise section 801.103 to read as 

follows: 

§ 801.103 Applicability rule. 

The regulations in this part apply to 

any pilot program covered transaction 

for which the following occurred on or 

after November 10, 2018, and prior to 

February 13, 2020: 

(a) The completion date, unless any of 

the following occurred before October 

11, 2018: 

(1) The parties to the transaction 

executed a binding written agreement or 

other document establishing the 

material terms of the transaction; 

(2) A party made a public offer to 

shareholders to buy shares of the pilot 


lotter on DSKBCFDHB2PROD with RULES2
3156 Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Rules and Regulations 

program U.S. business that is the subject 

of the transaction; or 

(3) A shareholder solicited proxies in 

connection with an election of the board 

of directors of the pilot program U.S. 

business that is the subject of the 

transaction; 

(b) The parties to the transaction 

executed a binding written agreement or 

other document establishing the 

material terms of the transaction; 

(c) A party made a public offer to 

shareholders to buy shares of the pilot 

program U.S. business that is the subject 

of the transaction; or 

(d) A shareholder solicited proxies in 

connection with an election of the board 

of directors of the pilot program U.S. 

business that is the subject of the 

transaction or has requested the 

conversion of convertible voting 

securities thereof. 

§ 801.302 [Amended]f 

■ 4. Amend § 801.302 in paragraph (c) 

by removing ‘‘(b)(2)(i) through 

(b)(2)(iii)’’ after ‘‘criteria set forth in 

paragraphs’’ and adding in its place ‘‘(b) 

through (d)’’. 

Dated: January 6, 2020. 

Thomas Feddo, 

Assistant Secretary for Investment Security. 

[FR Doc. 2020–00188 Filed 1–13–20; 4:15 pm] 

BILLING CODE –P 


lotter on DSKBCFDHB2PROD with RULES2