[Federal Register Volume 89, Number 182 (Thursday, September 19, 2024)]
[Proposed Rules]
[Pages 76783-76785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-21278]



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DEPARTMENT OF THE TREASURY

31 CFR Part 1


Privacy Act Exemptions

AGENCY: Departmental Offices, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: In accordance with the Privacy Act of 1974, as amended 
(Privacy Act), the Department of the Treasury (Treasury), Departmental 
Offices gives notice of a proposed exemption for a new system of 
records entitled ``Department of the Treasury, Departmental Offices 
.413--Outbound Investment Security Program Notification System'' from 
certain provisions of the Privacy Act. The Outbound Investment Security 
Program Notification System is being established for information 
collected in connection with the implementation of the Executive order 
of August 9, 2023. The exemption is intended to comply with the legal 
prohibitions against the disclosure of certain kinds of information and 
to protect certain information maintained in this system of records.

DATES: Written comments must be received by October 21, 2024.

ADDRESSES: Comments may be submitted by any of the following methods:
    <bullet> Federal E-rulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. Electronic submission 
of comments allows the commenter maximum time to prepare and submit a 
comment and ensures timely receipt.
    <bullet> Mail: U.S. Department of the Treasury, Attention: Meena R. 
Sharma, Director, Office of Investment Security Policy and 
International Relations, 1500 Pennsylvania Avenue NW, Washington, DC 
20220.
    Treasury encourages comments to be submitted via https://www.regulations.gov. All comments submitted, including attachments and 
other supporting material, will be made public, including any 
personally identifiable or confidential business information that is 
included in a comment. Therefore, commenters should submit only 
information that they wish to make publicly available. Commenters who 
wish to remain anonymous should not include identifying information in 
their comments.

FOR FURTHER INFORMATION CONTACT: For general questions and questions 
regarding privacy issues, please contact: Ryan Law, Deputy Assistant 
Secretary for Privacy, Transparency, and Records, Department of the 
Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220; telephone: 
(202) 622-5710.

SUPPLEMENTARY INFORMATION:

Background

    On August 9, 2023, the President issued Executive Order 14105, 88 
FR 54867 (the Outbound Order), which declares a national emergency to 
address the threat to the United States posed by countries of concern, 
which seek to develop and exploit sensitive technologies or products 
critical for military, intelligence, surveillance, or cyber-enabled 
capabilities. Among other things, the Outbound Order directs the 
Secretary of the Treasury to issue regulations that require U.S. 
persons to provide notification of information to the Department of the 
Treasury (Treasury) regarding certain transactions involving a person 
of a country of concern that is engaged in certain activities involving 
covered national security technologies and products that may contribute 
to the threat to the national security of the United States as 
identified under the Order. The Outbound Order also directs the 
Secretary of the Treasury to issue regulations that prohibit certain 
transactions by a U.S. person involving a person of a country of 
concern that is engaged in certain activities involving covered 
national security technologies and products that pose a particularly 
acute national security threat to the United States. The Outbound Order 
authorizes the Secretary of the Treasury to exempt from applicable 
prohibitions or notification requirements any transaction or 
transactions determined to be in the national interest of the United 
States. On August 9, 2023, Treasury issued an advance notice of 
proposed rulemaking, 88 FR 54961 (published August 14, 2023), to 
explain initial considerations and seek public comment on 
implementation of the Order.
    On June 21, 2024, Treasury issued a notice of proposed rulemaking 
(NPRM) to seek public comment on the proposed rule, 89 FR 55846 
(published July 5, 2024). Treasury intends to require U.S. persons to 
provide notification of certain transactions under its implementing 
regulations. This information would include relevant details on the 
U.S. person(s) involved in the transaction as well as information on 
the transaction and the foreign person(s) involved. These notifications 
would increase the U.S. Government's visibility into transactions by 
U.S. persons or their controlled foreign entities and involving 
technologies and products relevant to the threat to the national 
security of the United States due to the policies and actions of 
countries of concern. These notifications would also be helpful in 
highlighting aggregate sector trends and related capital flows as well 
as informing future policy development. Treasury also intends to 
require any U.S. person seeking a national interest exemption for a 
particular transaction to submit information to Treasury regarding the 
scope of that transaction including, as applicable, the information 
that would be required for a notification under the implementing 
regulations. These transactions are the subject of this document.
    In a systems of records notice published elsewhere in this issue of 
the Federal Register, Treasury's Departmental Offices is proposing to 
establish a system of records for information collected in connection 
with the implementation of the Order.

Privacy Act

    Treasury, Departmental Offices is hereby giving notice of a 
proposed rule to exempt the Outbound Investment Security Program 
Notification System from certain provisions of the Privacy Act pursuant 
to 5 U.S.C. 552a(k)(1) and (k)(2) and the authority vested in the 
Secretary of the Treasury by 31 CFR 1.23(c).
    Under 5 U.S.C. 552a(k)(1), the head of a Federal agency may 
promulgate rules to exempt a system of records from certain provisions 
of 5 U.S.C. 552a if the system of records is subject to the exemption 
contained in section 552(b)(1) of this title. (Freedom of Information 
Act, exemption (b)(1) protects from disclosure information that has 
been deemed classified ``under criteria established by an Executive 
order to be kept secret in the interest of national defense or foreign 
policy'' and is ``in fact properly classified pursuant to such 
Executive order.'')
    Under 5 U.S.C. 552a(k)(2), the head of a Federal agency may 
promulgate rules to exempt a system of records from certain provisions 
of 5 U.S.C. 552a if the system of records contains investigatory 
materials compiled for law enforcement purposes that are not within the 
scope of subsection (j)(2) of the Privacy Act (which applies to 
agencies and components thereof that perform as their principal 
function any activity pertaining to the enforcement of criminal laws).
    To the extent that this system of records contains classified 
information protected by 5 U.S.C. 552a(k)(1) or investigatory materials 
compiled for law

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enforcement purposes protected by 5 U.S.C. 552a(k)(2), Treasury 
proposes to exempt the following system of records from various 
provisions of the Privacy Act:

DO .413--Outbound Investment Security Program Notification System

    Under 5 U.S.C. 552a(k)(1) and (k)(2), Treasury proposes that 
certain records in the above-referenced system of records be exempt 
from 5 U.S.C. 552a(c)(3), (d)(1) through (4), (e)(1), (e)(4)(G) through 
(I), and (f) of the Privacy Act. See 31 CFR 1.36.
    The following are the reasons why the classified records and 
investigatory materials contained in the above-referenced system of 
records may be exempted from various provisions of the Privacy Act 
pursuant to 5 U.S.C. 552a(k)(1) and (2).
    1. 5 U.S.C. 552a(c)(3) requires an agency to make any accounting of 
disclosures of records required by 5 U.S.C. 552a(c)(1) available to the 
individual named in the record upon his or her request. Exemption from 
this requirement is appropriate because release of the accounting of 
disclosures of the records in this system could alert individuals 
whether they have been identified as the subject of an analysis related 
to the national security interests of the United States, to the 
existence of the analysis, and reveal the interest on the part of 
Treasury as well as the recipient agency. Disclosure of the accounting 
would present a serious impediment to efforts to protect national 
security interests by giving individuals an opportunity to learn 
whether they have been identified as subjects of a national security-
related analysis. As further described in the following paragraph, 
access to such knowledge would impair Treasury's ability to carry out 
its mission, since individuals could:
    i. Take steps to avoid analysis;
    ii. Inform associates that a national security analysis is in 
progress;
    iii. Learn the nature of the national security analysis;
    iv. Learn the scope of the national security analysis;
    v. Begin, continue, or resume conduct that may pose a threat to 
national security upon inferring they may not be part of a national 
security analysis because their records were not disclosed; or
    vi. Destroy information relevant to the national security analysis.
    2. 5 U.S.C. 552a(d)(1) through (4) grant individuals access to 
records containing information about them and permit them to request 
amendment of a record pertaining to them and require the agency either 
to amend the record or note the disputed portion of the record and, if 
the agency refuses to amend the record, to provide a copy of the 
individual's statement of disagreement with the agency's refusal, to 
persons or other agencies to whom the record is thereafter disclosed. 
Exemption from this requirement is appropriate because access to a 
portion of the records contained in this system of records could inform 
individuals whether they have been identified as the subject of an 
analysis related to the national security interests of the United 
States, to the existence of the analysis and reveal the interest on the 
part of Treasury or another agency. Access to the records would present 
a serious impediment to efforts to protect national security interests 
by permitting the individual who is the subject of a record to learn 
whether they have been identified as a subject of a national security-
related analysis. Access to such knowledge would impair Treasury's 
ability to carry out its mission, since individuals could take steps to 
impede the analysis and avoid detection, including the steps described 
in paragraphs 1.i. through vi. of this section. Amendment of the 
records would interfere with ongoing analysis and impose an impossible 
administrative burden. The information contained in the system may also 
include classified information, the release of which would pose a 
threat to the national security of the United States. In addition, 
permitting access and amendment to such information could disclose 
sensitive security information that could be detrimental to Treasury.
    3. 5 U.S.C. 552a(e)(1) requires an agency to maintain in its 
records only such information about an individual as is relevant and 
necessary to accomplish a purpose of the agency required to be 
accomplished by statute or Executive order. Exemption from this 
requirement is appropriate because what information is relevant and 
necessary may not always be apparent at the time of collection. In the 
interests of national security, it is appropriate to include a broad 
range of information that may aid in identifying and assessing the 
nature and scope of national security threats to the United States. 
Additionally, the accuracy of information obtained or introduced 
occasionally may be unclear, or the information may not be strictly 
relevant or necessary to a specific analysis. In the interests of 
national security, it is appropriate to retain all information that may 
aid in establishing patterns of suspicious activity.
    4. 5 U.S.C. 552a(e)(4)(G) throuh (I) and 5 U.S.C. 552a(f) require 
an agency to publish the agency procedures whereby individuals can be 
notified if the system of records pertains to them, how they can gain 
access to any record pertaining to them in the system of records and 
contest its content, and the categories of sources of records in the 
system. Exemption from these requirements is appropriate because, as 
noted above, this system is exempt from the access and amendment 
provisions of subsection (d).
    Any records from another Treasury system of records or another 
Executive Branch agency's system of records for which an exemption is 
claimed under 5 U.S.C. 552a(j) or (k) that may also be included in this 
system of records retains the same exempt status as such records have 
in the system for which such exemption is claimed.

Regulatory Analysis

    This proposed rule is not a ``significant regulatory action'' under 
Executive Order 12866. Pursuant to the requirements of the Regulatory 
Flexibility Act (RFA), 5 U.S.C. 601 et seq., it is hereby certified 
that this proposed rule will not have a significant economic impact on 
a substantial number of small entities. This proposed rule, issued 
pursuant to 5 U.S.C. 552a(k), is to exempt certain information 
maintained by Treasury in the above-referenced systems of records from 
certain provisions of the Privacy Act. Small entities, as defined in 
the RFA, are not provided rights under the Privacy Act and are outside 
the scope of this regulation.
    The related information collections have been submitted to the 
Office of Management and Budget on July 8, 2024 under control number: 
202407-1505-002.

List of Subjects in 31 CFR Part 1

    Courts, Freedom of information, Government employees, Privacy.

    For the reasons stated in the preamble, Treasury proposes to amend 
31 CFR part 1 as follows:

PART 1--DISCLOSURE OF RECORDS

0
1. The authority citation for part 1 continues to read as follows:

    Authority:  5 U.S.C. 301, 552, 552a, 553; 31 U.S.C. 301, 321; 31 
U.S.C. 3717.

0
2. Amend Sec.  1.36 by adding, in alphanumeric order, an entry for ``DO 
.413--Outbound Investment Security Program Notification System'' in 
table 8 to paragraph (e)(1)(ii) and table 11 to paragraph (g)(1)(ii) to 
read as follows:

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Sec.  1.36  Systems exempt in whole or in part from provisions of the 
Privacy Act and this part.

* * * * *
    (e) * * *
    (1) * * *
    (ii) * * *

                     Table 8 to Paragraph (e)(1)(ii)
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                  No.                             Name of system
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                              * * * * * * *
DO .413................................  Outbound Investment Security
                                          Program Notification System.
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* * * * *
    (g) * * *
    (1) * * *
    (ii) * * *

                    Table 11 to Paragraph (g)(1)(ii)
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                  No.                             Name of system
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                              * * * * * * *
DO .413................................  Outbound Investment Security
                                          Program Notification System.
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* * * * *

    Dated: September 12, 2024.
Ryan Law,
Deputy Assistant Secretary for Privacy, Transparency, and Records.
[FR Doc. 2024-21278 Filed 9-18-24; 8:45 am]
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