[Federal Register Volume 72, Number 196 (Thursday, October 11, 2007)]
[Proposed Rules]
[Pages 57900-57901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-20042]


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DEPARTMENT OF THE TREASURY

Office of International Investment

31 CFR Part 800


Regulations Pertaining to Mergers, Acquisitions and Takeovers

AGENCY: Department of the Treasury.

ACTION: Notice of inquiry; Notice of public meeting.

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SUMMARY: On July 26, 2007, President Bush signed into law the Foreign 
Investment and National Security Act of 2007 (``FINSA''), which amends 
section 721 of the Defense Production Act of 1950. Section 721 creates 
a process by which the President and his delegee, the Committee on 
Foreign Investment in the United States (``CFIUS''), conduct national 
security reviews of foreign acquisitions of control of U.S. businesses. 
As chair of CFIUS, Treasury has begun preparatory work on regulations 
that implement these new legislative provisions. Treasury is interested 
in private sector views on issues relating to the existing national 
security review process, as well as issues raised by FINSA, and is 
inviting both written and oral comments.

DATES: Written comments are due on or before December 7, 2007. The 
public meeting will be held from two to four o'clock (2-4 p.m.) on 
October 23, 2007.

ADDRESSES: Written comments may be submitted electronically to 
[email protected]. Electronic filings that exceed 5 megabytes (MB) 
must be divided into smaller transmissions of no more than 5MB each. 
All comments will be posted to CFIUS's Web site at http://www.ustreas.gov/offices/international-affairs/exon-florio/.

FOR FURTHER INFORMATION CONTACT: For questions about this Notice of 
Inquiry or the Notice of Public Meeting, contact: Nova Daly, Deputy 
Assistant Secretary, U.S. Department of the Treasury, 1500 Pennsylvania 
Avenue, NW., Washington, DC 20220; telephone: (202) 622-2752; or e-
mail: [email protected].

SUPPLEMENTARY INFORMATION:
    Background: On May 10, 2007, President Bush issued an Open 
Economies statement reaffirming the United States' longstanding policy 
of welcoming international investment. He noted that, while continuing 
``to take every necessary step to protect national security, my 
Administration recognizes that our prosperity and security are founded 
on our country's openness.'' In that context, on July 26, 2007, 
President Bush signed into law the Foreign Investment and National 
Security Act of 2007 (``FINSA'') (Pub. L. 110-49), which amends section 
721 of the Defense Production Act of 1950 (50 U.S.C. 2170 et seq.) 
(``section 721''), to codify the structure, role, process, and 
responsibilities of CFIUS. The principal provisions of the new 
legislation are described below.
    CFIUS Membership: FINSA establishes CFIUS in statute and specifies 
its membership to include the Secretaries of the Departments of the 
Treasury, State, Defense, Commerce, Energy, and Homeland Security, and 
the Attorney General. Additionally, the Secretary of Labor and the 
Director of National Intelligence are ex officio, non-voting members of 
CFIUS, with the latter serving as an independent advisor to CFIUS on 
intelligence matters. In addition to certain officials in the Executive 
Office of the President, the President may also appoint the head of any 
other executive department, agency, or office whom he deems appropriate 
to serve as a CFIUS member. Current executive orders specify twelve 
CFIUS members, including certain officials in the Executive Office of 
the President.
    FINSA specifies that the Secretary of the Treasury shall serve as 
Chairperson of CFIUS and, as appropriate, shall designate a CFIUS 
member or members to be the ``lead'' agency or agencies for each 
covered transaction reviewed by CFIUS and for the monitoring of 
completed transactions.
    Review and Investigation Process: FINSA requires that, upon receipt 
by Treasury of written notification of a ``covered transaction'' (i.e., 
a merger, acquisition, or takeover by or with any foreign person that 
could result in foreign control of any person engaged in interstate 
commerce in the United States), the President, acting through CFIUS, 
shall review the transaction within 30 days to determine its effects on 
national security, based on any relevant factors, including several new 
factors FINSA added to an illustrative list contained in section 721. 
The term ``national security'' is clarified to include those issues 
relating to ``homeland security,'' including its application to 
``critical infrastructure,'' which is also defined in the new 
legislation.
    If, during its review, CFIUS determines that (1) the transaction 
threatens to impair U.S. national security and the threat has not yet 
been mitigated, (2) the lead agency recommends an investigation and 
CFIUS concurs, (3) the transaction would result in foreign government 
control, or (4) the transaction would result in the control of any U.S. 
critical infrastructure that could impair U.S. national security and 
the threat has not yet been mitigated, then CFIUS must conduct and 
complete within 45 days an investigation of the transaction. The latter 
two grounds for an investigation do not mandate an investigation if the 
Secretary or Deputy Secretary of the Treasury and the equivalent lead 
agency counterparts jointly determine that the transaction will not 
impair U.S. national security.
    FINSA also authorizes the President or CFIUS, if approved at the 
Under Secretary level or above, to review unilaterally any covered 
transaction that is proposed or pending after August 23, 1988, and that 
has not previously been reviewed, or a previously reviewed transaction 
if false or inaccurate information was submitted to CFIUS during the 
review or investigation of the transaction or a mitigation agreement 
resulting from the review or investigation was intentionally and 
materially breached.
    Risk Mitigation and Tracking of Withdrawn Cases: FINSA provides 
that CFIUS or a lead agency designated by the Secretary of the Treasury 
may, on behalf of CFIUS, enter into, modify, monitor, and enforce 
agreements with any party to a covered transaction to mitigate national 
security risk posed by the transaction. Any mitigation agreement must 
be based on transaction-specific, risk-based analysis. FINSA also 
requires that CFIUS establish a method of tracking transactions 
withdrawn from the review or investigation process, as well as a 
process for establishing interim protections to address any national 
security concerns raised by withdrawn transactions that have not yet 
been refiled.
    Actions by the President: FINSA authorizes the President to suspend 
or prohibit any covered transaction when (1) there is credible evidence 
that the foreign interest might take action that threatens to impair 
national security, and (2) provisions of law other than section 721 and 
the International Emergency Economic Powers Act do not provide adequate 
and appropriate authority to protect national security in the matter 
before the President. The President must decide whether to take such 
action within 15 days of the

[[Page 57901]]

completion of an investigation, based on all relevant factors, 
including, as appropriate, an illustrative list of factors contained in 
section 721, which has been expanded by FINSA.
    Regulations: FINSA requires the President to direct the issuance of 
implementing regulations. These regulations shall impose civil 
penalties for violations of section 721, including those relating to 
mitigation agreements. Proposed regulations will be published in the 
Federal Register and be subject to notice and comment before final 
regulations are published. Treasury must also publish in the Federal 
Register guidance on the types of transactions that CFIUS has reviewed 
and that have presented national security considerations. Treasury 
plans to do so separately from the regulations that will be published 
under section 721.
    Request for Comment: The purpose of issuing this notice of inquiry 
and convening a public meeting is to obtain a wide array of views of 
businesses active in international mergers and acquisitions on several 
broad topics, in order to inform regulatory development. Topics of 
particular interest to Treasury include, but are not limited to:
    (i) Procedural issues relating to the review process, including 
pre-filing, filing of voluntary notice, unilateral initiation of review 
by CFIUS, withdrawal of notice, refiling of notice, and notice to 
filers of the results of a review or investigation;
    (ii) Definitional issues, including the definitions of ``control,'' 
``foreign person,'' ``person engaged in interstate commerce in the 
United States,'' ``critical infrastructure,'' and ``critical 
technologies'';
    (iii) Mitigation agreements, including determinations of the need 
for risk mitigation, scope of provisions, compliance monitoring, 
modification, and enforcement, including civil penalties and other 
remedies for breach;
    (iv) Confidentiality issues;
    (v) Collection of information from filers, including personal 
identifier information and information to aid CFIUS in determining 
jurisdiction and whether the transaction raises national security 
considerations; and
    (vi) Emerging trends in international investment and their 
relevance to the CFIUS process, including legal structures for 
effecting acquisitions of U.S. businesses.
    Treasury would also be interested in hearing views on other topics 
of interest to the private sector that relate to the CFIUS review 
process or FINSA.
    Public Meeting: Treasury announces a public meeting to be held from 
two to four o'clock (2-4 p.m.) on October 23, 2007, in Room 4121 of the 
Treasury Building, at 1500 Pennsylvania Avenue, NW., Washington, DC 
20220, to discuss issues associated with this legislation. The meeting 
will be open to the public on a first-come, first-served basis. Space 
is limited. Due to security requirements and to facilitate entry to the 
meeting site, anyone wishing to attend must contact Mr. Michael Kimack 
at [email protected] or (202) 622-0414 no later than October 
16, 2007, in order to provide the necessary clearance information: Full 
name, business affiliation, date of birth, and Social Security number. 
For foreign nationals: Full name, business affiliation, date of birth, 
passport number, and the country where the passport was issued. When 
arriving for the meeting, attendees must present photo or passport 
identification and/or a U.S. Government building pass, if applicable, 
and should arrive at least one-half hour prior to the start time of the 
meeting. The public meeting is physically accessible to people with 
disabilities. Individuals requiring special services, such as sign 
language interpretation, are asked to indicate this to Mr. Kimack.

    Dated: October 4, 2007.
Gay Hartwell Sills,
Staff Chair, Committee on Foreign Investment in the United States 
(CFIUS).
 [FR Doc. E7-20042 Filed 10-10-07; 8:45 am]
BILLING CODE 4811-42-P