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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations restrictive means that the Secretary, in the Secretarys discretion, determines to be necessary to attenuate or alleviate the undue or unacceptable risk posed by the ICTS Transaction.
7.109cNotification of Final Determination Commenters also provided a number of suggestions on how to further ensure the Secretary is held accountable for his or her actions under the authority of this rule. Recommendations include limiting the Secretarys ability to assign a designee with final decision-making authority and deleting the emergency action provision set forth in section 7.100f of the proposed rule. These suggestions are intended to ensure that Congress can hold the executive branch accountable for enforcement actions.
In response to these comments, the final rule enhances transparency by requiring final written determinations to be published in the Federal Register, where they are readily accessible to both the Congress and the public. Moreover, the rule now clarifies that the publication shall omit any confidential business information.

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7.200 Penalties Commenters requested the final rule clarify the type and scope of penalties for noncompliance with the Secretarys prohibition or mitigation of a transaction. We agree with commenters that the type and scope of the penalties for noncompliance were unclear, and the section has been revised accordingly. The rule now clarifies that any person who commits a violation of any final determination, direction, or mitigation agreement may be liable to the United States for civil or criminal penalties under IEEPA.
Other Comments The Department received other comments with which the Department disagrees. The Department responds to those comments below.
First, one commenter requested that the Department expand the meaning of the term electronic means within the definition of ICTS. While the Department cannot modify the definition of ICTS contained in the Executive Order, the Department clarifies that electronic means includes electromagnetic, magnetic, and photonic means. This change is not intended to widen the scope of the rule, but merely to clarify the means by which ICTS must function in order for the rule to apply.
Second, some commenters requested that the Department provide technical assistance for parties forced to alter
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ICTS infrastructure. However, the Department is unable to offer technical assistance at this time. Accordingly, the Department declines to implement any provision for technical assistance in the rule, and the parties to the transaction will bear the responsibility and cost of complying with any prohibition or mitigation measure.
Third, one commenter argued that the rule imposes an unfunded mandate on the private sector, within the meaning of the Unfunded Mandates Reform Act of 1995, Public Law 1044 UMRA, contrary to the determination made by the Department in the proposed rule.
The commenter further argued that UMRA requires that before the rule becomes final, the Department must include in the rule a written statement assessing the costs and benefits of the rule, and estimates of future compliance costs, as required by UMRA. The Department continues to believe that the rule does not constitute a Federal private sector mandate as defined by UMRA, in that the rule does not impose an enforceable duty upon the private sector. See 2 U.S.C. 6587. Rather, the rule sets out the processes and procedures that the Secretary of Commerce will use to identify, assess, and address certain transactions, including classes of transactions.
However, as the commenter notes, when a rule does constitute a Federal private sector mandate, UMRA requires the agency prepare a written statement containing information about the costs and benefits of the mandate, including, where feasible, future compliance costs, 2 U.S.C. 1532, as well as that the agency identify and consider regulatory alternatives and select the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule, 2 U.S.C. 1535. Thus, even in the event that the rule were considered to constitute a federal private sector mandate, the Department has met these requirements in full through the preparation of the accompanying Regulatory Impact Analysis.
Changes From the Proposed Rule Upon consideration of the public comments received, the Department makes several changes, as discussed in detail above, from the proposed rule in order to increase clarity and certainty for the public. First, the rule provides detail on the procedures the Secretary will follow when reviewing ICTS
Transactions, including identifying the criteria and information the Secretary will consider. For example, the rule provides clarity as to when the Secretary will consult with the appropriate agency heads as part of the
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review and determination process.
Second, the rule details the requirements for responding to initial determinations. Third, the rule clarifies that parties may respond to an initial determination or seek to negotiate a mitigation agreement with the Secretary.
Fourth, the rule now provides that unless the Secretary determines in writing that additional time is necessary, the Secretary shall issue a final determination within 180 days of accepting a referral and commencing the initial review of an ICTS Transaction, eliminating the uncertainty of an openended review process. Fifth, the rule ensures transparency by specifically requiring the Secretary to publish the results of final determinations, absent any confidential business information, in the Federal Register. Sixth, the rule now specifies that an ICTS Transactions between parties outside of a sector designated as critical infrastructure must involve a clearly specified technology or service in order to be considered a covered ICTS
Transactions.
Additionally, in response to commenters seeking clarity regarding the scope of the rule, including numerous requests for the identification of foreign adversaries, the Department defines certain terms. The added definitions help to clarify the scope of the rule by providing guidance on which entities may be subject to the rule, what constitutes an ICTS
Transaction, and whether an ICTS
Transaction involves a foreign adversary. This additional clarity will assist entities with making appropriate decisions regarding ICTS Transactions that may present risks to the national security, therefore helping to protect the United States ICTS supply chain.
Classification A. Executive Order 12866 Regulatory Policies and Procedures Pursuant to the procedures established to implement Executive Order 12866, the Office of Management and Budget has determined that this rule is economically significant.
B. Executive Order 13771 Reducing Regulation and Controlling Regulatory Costs This rule is not subject to the requirements of Executive Order 13771
because the benefit-cost analysis demonstrates that the regulation is anticipated to improve national security as its primary direct benefit.
ICTS has become integral to the daily operations and functionality of U.S.
critical infrastructure, as well as much,
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