Last week, the U.S. Department of the Treasury (Treasury) issued an interim rule for the Committee on Foreign Investment in the United States (CFIUS) establishing a fee for parties filing a written notice of a transaction. The interim rule implements the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). The interim rule is effective May 1, 2020; written comments on the interim rule must be received by June 1, 2020.
On March 9, 2020, Treasury published a notice of proposed rulemaking, see prior client alert here. As noted, the proposed rule establishes filing standards for "covered transactions" (under Part 800) and "covered real estate transactions" (under Part 802) that are filed with CFIUS. The proposed rule created a new subpart K on filing fees and made a limited number of revisions to other, related sections of those regulations. Public comments on the proposed rule were due by April 3, 2020.
Acknowledging that COVID-19 may have impacted the ability to submit comments for the proposed rule, Treasury published the existing rule as an interim rule and requested written comments through June 1, 2020. The fee schedule in the interim rule is unchanged from the proposed rule, which is as follows:
Tier |
Filing Fee |
|
Value of the transaction is less than $500,000 |
$0 |
|
Value of the transaction is equal to or greater than $500,000 but less than $5 million |
$750 |
|
Value of the transaction is equal to or greater than $5 million but less than $50 million |
$7,500 |
|
Value of the transaction is equal to or greater than $50 million but less than $250 million |
$75,000 |
|
Value of the transaction is equal to or greater than $250 million but less than $750 million |
$150,000 |
|
Value of the transaction is equal to or greater than $750 million |
$300,000 |
The fee is based on the value of the transaction, taking various factors into account. It also provides that such fees may not exceed an amount equal to the lesser of one percent of the value of the transaction, or $300,000, adjusted annually for inflation. Given the growing volume of work and resources devoted to CFIUS, Treasury determined that implementing the filing fees is appropriate. Treasury does not expect the filing fees to impact levels of foreign investment in the United States or decisions to file transactions with CFIUS.
Some specific items for consideration:
- What Is Covered. The fees apply with respect to covered transactions and covered real estate transactions for which a formal written notice is filed with CFIUS. But no fee is required for the submission of voluntary short-form declarations, mandatory notifications, and unilaterally initiated reviews by CFIUS. Filing fees will apply, however, for notices filed in response to a review of a declaration that results in a request by CFIUS that the parties file a formal notice.
- How Paid. The fees must be paid via electronic payment, in U.S. dollars, as instructed on the Treasury Department's website.
- Impact on Draft Notices. Parties that filed a draft written notice prior to May 1, 2020, but file a formal written notice on or after May 1, 2020, will be required to pay the appropriate filing fee.
- No Additional Fees Anticipated. The parties to a transaction will not be required to pay an additional fee for refiling or withdrawing a notice, unless the Staff Chairperson determines there has been a material change, inaccuracy, or omission.
- Joint Venture Transactions. Treasury proposed an alternative approach for valuing joint venture transactions on the basis of the foreign person's proportional ownership interest in the joint venture. Interested parties may wish to consider filing comments.
Please let us know if you have any questions regarding CFIUS or wish to submit comments related to the interim rule.