Public Comment on Regulations on Outbound Investments in Quantum

(August 25, 2023) On August 9, 2023, President Biden signed an Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern. It declared a national emergency to address United States investments in countries of concern in sectors including semiconductors and microelectronics, quantum information technologies, and artificial intelligence capabilities. The Secretary of the Treasury—in consultation with the Secretary of Commerce and other agency heads, as appropriate—will issue regulations that require certain transactions be reported or prohibited.

As a part of the process of developing the regulations, the Department of the Treasury has issued an advanced notice of proposed rulemaking (ANPRM), seeking public comment on topics related to the implementation of the Executive Order, including quantum information technologies. The public comments are due Thursday, September 28, 2023. The Treasury Department is currently not considering a separate notification requirement for quantum information technologies.

Below is a quantum-focused excerpt from the ANPRM:

Section III.H. Covered National Security Technology or Product: Quantum Information Technologies

The Order states that the regulations will define “covered national security technologies and products” to include sensitive technologies and products in the quantum information technologies category.

The U.S. Government is concerned with the development and production of quantum information technologies and products that enable capabilities that could compromise encryption and other cybersecurity controls and jeopardize military communications, among other things. To address these concerns, the Treasury Department is considering a prohibition that would focus on specific and advanced quantum information technologies and products, or with respect to end uses. In the case of quantum sensors, the end-use provisions seek to distinguish from use cases in civilian fields such as medicine and geology, and in the case of quantum networking systems, they seek to avoid capturing quantum systems with no relevance to secure communications or systems related to classical encryption. The Treasury Department is currently not considering a separate notification requirement for quantum information technologies.

The Treasury Department is considering a prohibition on U.S. persons undertaking a transaction with a covered foreign person engaged in activities involving:

  • Quantum Computers and Components: The production of a quantum computer, dilution refrigerator, or two-stage pulse tube cryocooler.
    • “Quantum computer” is defined as a computer that performs computations that harness the collective properties of quantum states, such as superposition, interference, or entanglement.
  • Quantum Sensors: The development of a quantum sensing platform designed to be exclusively used for military end uses, government intelligence, or mass-surveillance end uses.
  • Quantum Networking and Quantum Communication Systems: The development of a quantum network or quantum communication system designed to be exclusively used for secure communications, such as quantum key distribution.

The ANPRM seeks comment on this topic including:

  1. Where possible, please provide empirical data about trends in U.S. investment into country of concern entities engaged in quantum information technologies as described in section III.H. Please identify any technologies notable for the high volume or frequency of outbound investment activity or for the low volume or frequency of outbound investment activity. Based on this data, are there U.S. outbound investment trends in quantum information technologies in countries of concern that would not be captured by the definitions in section III.H? If so, what are they?
  2. Please identify any areas within this category where investments by U.S. persons in countries of concern may provide a strategic benefit to the United States, such that continuing such investment would benefit, and not impair, U.S. national security. Please also identify any key factors that affect the size of these benefits (e.g., do these benefits differ in size depending on the application of the technology or product at issue?). Please be specific and where possible, provide supporting material, including empirical data, findings, and analysis in reports or studies by established organizations or research institutions, and indicate material that is business confidential per the instructions at the beginning of this ANPRM.
  3. With respect to the definition of “Quantum Computers and Components,” would any further specificity be beneficial and, if so, what, and why? Are there existing definitions from other U.S. Government regulations or programs that are not reflected in section III.H and should be considered? Please provide specificity.
  4. In defining “Quantum Sensors,” the policy objective is to avoid covering quantum sensors designed for commercial uses such as medical and geological applications. As such, the definition under consideration references certain end uses that have national security implications. What are the costs and benefits or unintended consequences with this approach? What alternative frameworks or definitions, if any, should the Treasury Department consider, and why?
  5. With respect to “Quantum Sensors” and “Quantum Networking and Quantum Communication Systems,” what could be the impact of the language “designed to be exclusively used”? How would the alternative formulation “designed to be primarily used” change the scope? Is there another approach that should be considered?
  6. Additionally, with respect to “Quantum Networking and Quantum Communications Systems,” the definition is intended to cover quantum cryptography. Are there other clarifications or enhancements that should be made to this definition? What might inadvertently be captured that was not intended as noted in section III.H?
  7. Are there other areas of quantum information technologies that should be considered as an addition or alternative to the definitions in section III.H?

Executive Order:

Advanced Notice of Proposed Rulemaking: