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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations
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7.103

Initial review of ICTS Transactions.

a Upon receipt of any information identified in 7.100a, upon written request of an appropriate agency head, or at the Secretarys discretion, the Secretary may consider any referral for review of a transaction referral.
b In considering a referral pursuant to paragraph a, the Secretary shall assess whether the referral falls within the scope of 7.3a of this part and involves ICTS designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary, and determine whether to:
1 Accept the referral and commence an initial review of the transaction;
2 Request additional information, as identified in 7.100a, from the referring entity regarding the referral; or 3 Reject the referral.
c Upon accepting a referral pursuant to paragraph b of this section, the Secretary shall conduct an initial review of the ICTS Transaction and assess whether the ICTS Transaction poses an undue or unacceptable risk, which may be determined by evaluating the following criteria:
1 The nature and characteristics of the information and communications technology or services at issue in the ICTS Transaction, including technical capabilities, applications, and market share considerations;
2 The nature and degree of the ownership, control, direction, or jurisdiction exercised by the foreign adversary over the design, development, manufacture, or supply at issue in the ICTS Transaction;
3 The statements and actions of the foreign adversary at issue in the ICTS
Transaction;
4 The statements and actions of the persons involved in the design, development, manufacture, or supply at issue in the ICTS Transaction;
5 The statements and actions of the parties to the ICTS Transaction;
6 Whether the ICTS Transaction poses a discrete or persistent threat;
7 The nature of the vulnerability implicated by the ICTS Transaction;
8 Whether there is an ability to otherwise mitigate the risks posed by the ICTS Transaction;
9 The severity of the harm posed by the ICTS Transaction on at least one of the following:
i Health, safety, and security;
ii Critical infrastructure;
iii Sensitive data;
iv The economy;
v Foreign policy;
vi The natural environment; and vii National Essential Functions as defined by Federal Continuity Directive2 FCD2; and
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10 The likelihood that the ICTS
Transaction will in fact cause threatened harm.
d If the Secretary finds that an ICTS
Transaction does not meet the criteria of paragraph b of this section:
1 The transaction shall no longer be under review; and 2 Future review of the transaction shall not be precluded, where additional information becomes available to the Secretary.
7.104

First interagency consultation.

Upon finding that an ICTS
Transaction likely meets the criteria set forth in 7.103c during the initial review under 7.103, the Secretary shall notify the appropriate agency heads and, in consultation with them, shall determine whether the ICTS
Transaction meets the criteria set forth in 7.103c.
7.105

Initial determination.

a If, after the consultation required by 7.104, the Secretary determines that the ICTS Transaction does not meet the criteria set forth in 7.103c:
1 The transaction shall no longer be under review; and 2 Future review of the transaction shall not be precluded, where additional information becomes available to the Secretary.
b If, after the consultation required by 7.104, the Secretary determines that the ICTS Transaction meets the criteria set forth in 7.103c, the Secretary shall:
1 Make an initial written determination, which shall be dated and signed by the Secretary, that:
i Explains why the ICTS Transaction meets the criteria set forth in 7.103c;
and ii Sets forth whether the Secretary has initially determined to prohibit the ICTS Transaction or to propose mitigation measures, by which the ICTS
Transaction may be permitted; and 2 Notify the parties to the ICTS
Transaction either through publication in the Federal Register or by serving a copy of the initial determination on the parties via registered U.S. mail, facsimile, and electronic transmission, or third-party commercial carrier, to an addressees last known address or by personal delivery.
c Notwithstanding the fact that the initial determination to prohibit or propose mitigation measures on an ICTS
Transaction may, in whole or in part, rely upon classified national security information, or sensitive but unclassified information, the initial determination will contain no classified national security information, nor
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reference thereto, and, at the Secretarys discretion, may not contain sensitive but unclassified information.
7.106

Recordkeeping requirement.

Upon notification that an ICTS
Transaction is under review or that an initial determination concerning an ICTS Transaction has been made, a notified person must immediately take steps to retain any and all records relating to such transaction.
7.107 Procedures governing response and mitigation.

Within 30 days of service of the Secretarys notification pursuant to 7.105, a party to an ICTS Transaction may respond to the Secretarys initial determination or assert that the circumstances resulting in the initial determination no longer apply, and thus seek to have the initial determination rescinded or mitigated pursuant to the following administrative procedures:
a A party may submit arguments or evidence that the party believes establishes that insufficient basis exists for the initial determination, including any prohibition of the ICTS Transaction;
b A party may propose remedial steps on the partys part, such as corporate reorganization, disgorgement of control of the foreign adversary, engagement of a compliance monitor, or similar steps, which the party believes would negate the basis for the initial determination;
c Any submission must be made in writing;
d A party responding to the Secretarys initial determination may request a meeting with the Department, and the Department may, at its discretion, agree or decline to conduct such meetings prior to making a final determination pursuant to 7.109;
e This rule creates no right in any person to obtain access to information in the possession of the U.S.
Government that was considered in making the initial determination to prohibit the ICTS Transaction, to include classified national security information or sensitive but unclassified information; and f f If the Department receives no response from the parties within 30
days after service of the initial determination to the parties, the Secretary may determine to issue a final determination without the need to engage in the consultation process provided in section 7.108 of this rule.
7.108

Second interagency consultation.

a Upon receipt of any submission by a party to an ICTS Transaction under 7.107, the Secretary shall consider
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