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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations
In response to these comments, the Department has added provisions to enhance and clarify when and how parties to an ICTS Transaction that is the subject of an initial determination may engage with the Secretary about the initial determination. The rule establishes a clear process for responding to an initial determination concerning an ICTS Transaction and provides further guidance on how any identified risks may be mitigated so that an identified ICTS Transaction may proceed. Similar to the proposed rule, within 30 days of being notified of an initial determination, pursuant to section 7.105 of the rule, parties to that transaction may respond to the initial determination or assert that the circumstances leading to the initial determination no longer apply. A party may submit arguments or evidence in support of their response and may also propose remedial steps that the party believes would negate the basis for the Secretarys initial determination. The rule also allows parties to an ICTS
Transaction that is subject to an initial determination to request a meeting with the Department, which may be granted at the Secretarys discretion.
Additionally, the rule clarifies that if the parties to an ICTS Transaction do not submit a response to the Secretarys initial determination within 30 days following service of the initial determination, that initial determination will become final.
Other commenters recommended the adoption of an appeals process for parties notified of a final determination.
The Department has adopted a process for reconsidering an initial determination by the Secretary.
However, an administrative appeals process would hinder the Secretarys ability to move swiftly to prevent an undue or unacceptable risk.
Some commenters also requested that the Department establish a maximum life span for imposed mitigations, arguing that such a rule would reduce the inhibiting effects that mitigations would have on ICTS innovation. The Department disagrees with commenters, finding that such a clause would prevent the Department from evaluating the mitigations put in place on ICTS
Transactions. Failing to reevaluate would effectively limit mitigation requirements and potentially reopen national security vulnerabilities.
7.108 Second Interagency Consultation The proposed rule set out the review process that must be followed before the Secretary issues a final determination that constitutes a final agency action.

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The process involved response periods, as well as possible extensions, given to any party affected by a preliminary determination. Commenters addressed communications regarding initial and final determinations within the context of this process. Some commenters suggested that the Secretary should collaborate with private industry when making determinations, similar to the process within the Department of Homeland Securitys Supply Chain Risk Management Task Force. Similar comments were received advocating for the establishment of a mechanism for industry to seek guidance on specific work programs or participants involved.
The Department has declined to add specific provisions relating to collaborating with industry on ICTS
Transaction determinations. However, in consideration of these comments there is now a provision explaining what factors and sources the Secretary will take into consideration during the second consultation. Specifically, the Secretary will take into account the views of the appropriate agency heads, through the interagency consultation processes. In providing their views, the appropriate agency heads may consider the perspective of relevant publicprivate working groups and advisory committees with which they convene or engage. For instance, DHSs views could incorporate input from the Supply Chain Risk Management Task Force.
The Department also points out that it maintains a number of advisory committees that provide regular opportunities for industry and the regulated community to provide feedback to the Department on issues impacting their operations. Under the Secure and Trusted Communications Networks Act of 2020, the National Telecommunications and Information Administration is also charged with establishing a program to share supply chain risk information with telecommunication providers and manufacturers.
Commenters also requested that the Department explain whether and how the Secretarys determinations may be appealed or reviewed by another authority. This rule adds a provision that, should any appropriate agency head oppose the Secretarys proposed final determination, the Secretary shall notify the President of the Secretarys proposed final determination and such opposition. After receiving direction from the President regarding the Secretarys proposed final determination and any appropriate agency heads opposition thereto, the Secretary shall issue a final determination pursuant to 7.109.

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Additionally, the Department will implement, within 120 days of publishing this rule, procedures for how parties to a proposed, pending, or ongoing ICTS Transaction may seek a license, pursuant to Section 2b of the Executive Order, in a manner consistent with the national security of the United States.
As noted above, after reviewing an ICTS Transaction that the Secretary believes may pose an undue or unacceptable risk, the Secretary will engage in a first interagency consultation with the appropriate agency heads to discuss the ICTS
Transaction and the Secretarys concerns. Following that consultation, the Secretary will make an initial determination and, if that decision includes a determination to prohibit an ICTS Transaction, will notify the parties to the transaction of the Secretarys initial determination. After the parties are afforded an opportunity to respond to the initial determination and propose mitigation measures, the Secretary will engage in a second interagency consultation with the appropriate agency heads, to discuss the transaction, the initial determination, and any response. This process will help ensure that all information regarding ICTS
Transactions and the views of the appropriate agency head are considered when the Secretary makes a final determination.
7.109 Final Determination As noted above, the Department appreciates the comments requesting additional clarity on the process by which the Secretary will make decisions about ICTS Transactions. The rule now provides a specific step for issuing final determinations on ICTS Transactions.
The outcome of a final determination remains unchanged from the proposed rule and will provide that an ICTS
Transaction is either: 1 Prohibited; 2
not prohibited; or 3 permitted pursuant to the adoption of agreed-upon mitigation measures. Moreover, the rule clarifies that the written final determinations will include directions on the timing and manner of cessation of a prohibited ICTS Transaction, as applicable, along with the penalties, as authorized by IEEPA, for violations of applicable mitigation terms or other direction or prohibition issued under this rule. The final determination will provide a specific description of the prohibited ICTS Transaction and shall be limited in force to the circumstances described therein. Moreover, if the Secretary determines that an ICTS
Transaction is prohibited, the final determination shall direct the least
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