Filing Fees for Notices of Certain Investments in the United States by Foreign Persons and Certain Transactions by Foreign Persons Involving Real Estate in the United States, 13586-13595 [2020-04641]

Agencies

• DEPARTMENT OF THE TREASURY
• Office of Investment Security

[Federal Register Volume 85, Number 46 (Monday, March 9, 2020)]
[Proposed Rules]
[Pages 13586-13595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04641]


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DEPARTMENT OF THE TREASURY

Office of Investment Security

31 CFR Parts 800 and 802

RIN 1505-AC65


Filing Fees for Notices of Certain Investments in the United 
States by Foreign Persons and Certain Transactions by Foreign Persons 
Involving Real Estate in the United States

AGENCY: Office of Investment Security, Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish a fee for parties filing a 
voluntary notice of certain transactions for review by the Committee on 
Foreign Investment in the United States (CFIUS). In establishing a fee 
for such notices, this proposed rule would implement section 1723 of 
the Foreign Investment Risk Review Modernization Act of 2018, which 
amends section 721 of the Defense Production Act of 1950 to allow CFIUS 
to collect fees.

DATES: Written comments must be received by April 8, 2020.

ADDRESSES: Written comments on this proposed rule may be submitted 
through one of two methods:
     Electronic Submission: Comments may be submitted 
electronically through the Federal government eRulemaking portal at 
https://www.regulations.gov. Electronic submission of comments allows 
the commenter maximum time to prepare and submit a comment, ensures 
timely receipt, and enables the Department of the Treasury (Treasury 
Department) to make the comments available to the public. Please note 
that comments submitted through https://www.regulations.gov will be 
public, and can be viewed by members of the public.
     Mail: Send to U.S. Department of the Treasury, Attention: 
Laura Black, Director of Investment Security Policy and International 
Relations, 1500 Pennsylvania Avenue NW, Washington, DC 20220.
    Please submit comments only and include your name and company name 
(if any), and cite ``Filing Fees for Notices of Certain Investments in 
the United States by Foreign Persons and Certain Transactions By 
Foreign Persons Involving Real Estate in the United States'' in all 
correspondence. In general, the Treasury Department will post all 
comments to https://www.regulations.gov without change, including any 
business or personal information provided, such as names, addresses, 
email addresses, or telephone numbers. All comments received, including 
attachments and other supporting material, will be part of the public 
record and subject to public disclosure. You should only submit 
information that you wish to make publicly available.

FOR FURTHER INFORMATION CONTACT: For questions about this proposed 
rule, contact: Laura Black, Director of Investment Security Policy and 
International Relations; Meena R. Sharma, Deputy Director of Investment 
Security Policy and International Relations; David Shogren, Senior 
Policy Advisor; or James Harris, Senior Policy Advisor, at U.S. 
Department of the Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 
20220; telephone: (202) 622-3425; email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background and Overview

    On August 13, 2018, the Foreign Investment Risk Review 
Modernization Act of 2018 (FIRRMA), Subtitle A of Title XVII of Public 
Law 115-232, 132 Stat. 2173, was enacted. FIRRMA amends section 721 
(section 721) of the Defense Production Act of 1950 (DPA), which 
delineates the authorities and jurisdiction of the Committee on Foreign 
Investment in the United States (CFIUS or the Committee). Executive 
Order 13456, 73 FR 4677 (Jan. 23, 2008), directs the Secretary of the 
Treasury to issue regulations implementing section 721. This proposed 
rule is being issued pursuant to that authority.
    FIRRMA maintains the Committee's jurisdiction over any transaction 
which could result in foreign control of any U.S. business, and it 
broadens the authorities of the President and CFIUS under section 721 
to review and to take action to address any national security concerns 
arising from certain non-controlling investments and real estate 
transactions. FIRRMA refers to the transactions over which CFIUS has 
jurisdiction as ``covered transactions.'' This statutory reference is 
implemented in the final rule for 31 CFR part 800 at 85 FR 3112 (Part 
800 rule) as the definition of ``covered transaction'' and in the final 
rule for 31 CFR part 802 at 85 FR 3158 (Part 802 rule) as the 
definition of ``covered real estate transaction.'' FIRRMA also 
modernizes CFIUS's processes to better enable timely and effective 
reviews of transactions falling under its jurisdiction, including by 
introducing the concept of a declaration--an abbreviated notification 
to which the Committee must respond within a 30-day assessment period--
as an alternative to a voluntary notice, which has been the traditional 
means of filing a transaction with CFIUS.
    FIRRMA further provides that ``the Committee may assess and collect 
a fee in an amount determined by the Committee in regulations . . . 
with respect to each covered transaction for which a written notice is 
submitted to the Committee.'' FIRRMA, section 1723. FIRRMA directs that 
the fee be 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.
    On January 17, 2020, the Treasury Department published two rules 
implementing FIRRMA. The Part 800 rule continues CFIUS's jurisdiction 
over transactions that could result in control of a U.S. business. It 
also implements the provisions of FIRRMA relating to CFIUS's new 
jurisdiction to review certain non-controlling investments in a U.S. 
business that afford a foreign person specified access to information 
in the possession of, rights in, or involvement in the substantive 
decisionmaking of U.S. businesses with certain activities relating to 
critical technologies, critical infrastructure, or sensitive personal 
data. In addition, the Part 800 rule makes certain changes to CFIUS's 
existing process and procedures, including allowing parties to submit 
any transaction to CFIUS through a declaration. The Part 802 rule 
implements the provisions of FIRRMA relating to CFIUS's new 
jurisdiction to review the purchase or lease by, or concession to, a 
foreign person of certain real estate in the United States. Those two 
rules did not include any provisions regarding filing fees.
    This proposed rule would establish a filing fee for ``covered 
transactions'' under the Part 800 rule and ``covered real estate 
transactions'' under the Part 802 rule that are filed with the 
Committee as voluntary written notices. The proposed fee structure and 
amounts are the same for the Part 800 rule and the Part 802 rule. In 
accordance with FIRRMA, there is no fee for any declaration submitted 
to the Committee,

[[Page 13587]]

or for any unilateral review of a transaction based on an agency notice 
filed by any member of the Committee. However, the filing fee does 
apply to notices filed by parties to a covered transaction or a covered 
real estate transaction after the Committee has completed its 
assessment of a declaration and taken action under Sec.  800.407 or 
Sec.  802.405 (i.e., in cases where the Committee requests that the 
parties file a written notice and in cases where the Committee informs 
parties that it is not able to conclude action and that the parties may 
file a written notice). The filing fee also applies where parties 
choose to notify CFIUS of a transaction subject to Sec.  800.401 
through a notice instead of a declaration.
    The Treasury Department has proposed a fee structure that it 
believes will not discourage filings and will allow parties to continue 
the practice of determining whether to file a voluntary written notice 
based on an evaluation of the facts and circumstances of the 
transaction. The proposed fees for notices are based on the value of 
the notified transaction, with the smallest transactions (i.e., those 
with a value of less than $500,000) not being assessed a filing fee. 
For transactions with values equal to or exceeding $500,000, the filing 
fee is based on a tiered approach, as follows:
     Where the value of the transaction is equal to or greater 
than $500,000 but less than $5,000,000, a filing fee of $750 is 
assessed;
     Where the value of the transaction is equal to or greater 
than $5,000,000 but less than $50,000,000, a filing fee of $7,500 is 
assessed;
     Where the value of the transaction is equal to or greater 
than $50,000,000 but less than $250,000,000, a filing fee of $75,000 is 
assessed;
     Where the value of the transaction is equal to or greater 
than $250,000,000 but less than $750,000,000, a filing fee of $150,000 
is assessed; and
     Where the value of the transaction is equal to or greater 
than $750,000,000, a filing fee of $300,000 is assessed.
    The applicable fee must be paid to the Treasury Department prior to 
the Staff Chairperson accepting a notice for review, except in certain 
limited circumstances where the Staff Chairperson waives the filing 
fee. Payment instructions will be available on the Treasury Department 
website prior to the effective date of the final rule implementing the 
filing fees.
    The proposed rule describes how a transaction's value is 
determined, the manner of payment, circumstances in which the Treasury 
Department may issue a refund, when an additional fee may be required 
in the event of the withdrawal and refiling of a notice, and the 
consequences of fee underpayment.

II. Methodology for Establishing the Fee Structure

A. Consideration of Various Factors

    In establishing a filing fee, FIRRMA requires the Committee to take 
into account the effect of the fee on small business concerns, the 
expenses of the Committee associated with conducting activities under 
section 721, the effect of the fee on foreign investment, and any other 
matters the Committee considers appropriate.
    The Treasury Department and CFIUS member agencies considered the 
effect of a fee on small businesses, and a more detailed discussion of 
the potential impact of the proposed fee structure on small businesses 
is included in the Regulatory Flexibility Act discussion, below. The 
proposed fee structure accounts for and attempts to minimize the impact 
on small business concerns by not assessing a fee on transactions that 
are valued at less than $500,000. Additionally, the fee for 
transactions valued between $500,000 and $5,000,000 is set at only 
$750. Should the filing fee pose a concern to a small business, the 
declaration process, for which there is no filing fee, is available for 
any transaction. Furthermore, there is the possibility, which is not 
intended to be used frequently, for the Staff Chairperson to waive the 
filing fee in whole or in part if extraordinary circumstances relating 
to national security warrant.
    The Treasury Department also considered the expenses of the 
Committee associated with carrying out section 721. As noted above, the 
Committee's jurisdiction has expanded through the enactment of FIRRMA. 
The Treasury Department and CFIUS member agencies are increasing 
personnel and making infrastructure and other resource expenditures to 
implement section 721. In light of this, the Treasury Department 
determined that the proposed fee amounts were appropriate and has 
estimated that the fees would allow the Committee to recoup a portion 
of the costs associated with, but would not exceed the cost of, 
administering section 721. The Treasury Department will monitor the 
amount of fees generated and administration costs and will adjust fees 
as needed, including through new rule making, as appropriate.
    The Treasury Department considered alternatives to the proposed fee 
structure in seeking to assess the impact on foreign investment. In 
particular, the Treasury Department considered setting a fixed or 
variable rate to be applied to all notices, as well as a uniform fixed 
fee amount for all notices--before determining that the proposal in 
this rule was the most appropriate based on various factors including 
proportionality, administration, clarity, and impact on parties' 
decision whether to file a notice. The proposed fees represent only a 
small amount (0.15 percent or less) of the overall value of the 
transactions for which a fee will be assessed, and the Treasury 
Department does not believe the proposed fees will discourage foreign 
investment in the United States or the filing of written notices with 
the Committee. However, the Treasury Department is interested in 
learning from the public about the impact that filing fees may have on 
a party's decision to engage in a transaction and whether to seek safe 
harbor through the submission of a voluntary notice.

B. Tiered Fixed-Fee Proposal

    The proposed rule sets forth a tiered, fixed-fee schedule based on 
transaction value. This structure allows the Treasury Department to set 
the fees consistent with the requirements in FIRRMA and is informed by 
the nature and value of transactions that have typically been filed as 
notices.
    The tiers set a generally consistent fee rate relative to the value 
of the transaction. Because parties must pay fees prior to the Staff 
Chairperson accepting a notice for review, the fee tiers are structured 
in a manner that allows the required fee for a transaction that has not 
yet closed to be determined with relative certainty. This structure was 
intended to achieve the Treasury Department's goals of clarity and 
administrative efficiency.
    The Treasury Department expects that the filing fee will represent 
a relatively small proportion of the total transaction costs associated 
with any given transaction. In each case, the fee amount set in the 
proposed rule is no more than 0.15 percent of the overall transaction 
value. If, however, the filing fee is burdensome in the context of a 
particular transaction, parties can consider filing a declaration 
instead of a notice, which does not require payment of a fee.
    The Treasury Department is interested in comments from the public 
on the impact of the proposed tiered fixed-fee structure and whether 
additional tiers or additional features should be considered.

[[Page 13588]]

C. Calculating Transaction Value

    The proposed rule describes with particularity how to determine the 
value of a transaction for purposes of determining the applicable fee. 
This determination is relevant only for calculating the applicable 
filing fee and is not determinative of the Committee's assessment as to 
what constitutes the ``covered transaction'' or ``covered real estate 
transaction'' subject to its review. The Treasury Department 
anticipates that, in most instances, determining the value of the 
transaction will be straightforward, based on the amount of money the 
foreign person is paying in the transaction.
    Generally, for transactions subject to the Part 800 rule and for 
purchases of real estate subject to the Part 802 rule, the value of a 
transaction will be the total value of all consideration that has been 
or will be paid in the context of the transaction by or on behalf of 
the foreign person who is a party to the transaction, including cash, 
assets, shares or other ownership interests, debt forgiveness, 
services, or other in-kind consideration. Where a covered transaction 
is a part of a transaction that includes one or more non-U.S. 
businesses, the total value of the transaction will generally be 
assessed based on the global value of the transaction encompassing both 
U.S. and non-U.S. businesses. There is an exception for transactions 
under the Part 800 rule where the value of the transaction is equal to 
or greater than $5,000,000, but the value of the interests or rights 
acquired in the U.S. business is less than $5,000,000. In such cases, 
the fee will be $750. This exception was intended to minimize any 
potential disincentives the fee may pose to parties filing a notice 
with CFIUS, where the target company has a limited presence in the 
United States. The Treasury Department is interested in comments on 
whether a similar approach should be taken for transactions under the 
Part 802 rule, where the value of the covered real estate is relatively 
small in the context of the overall transaction.
    The proposed rule also specifies how the transaction value for 
leases and concessions under the Part 802 rule will be determined. 
Specifically, leases and concessions would be valued according to the 
sum of the consideration, including lease inducements, fixed payments, 
certain variable lease payments, and other types of identifiable 
consideration applicable to real estate transactions. Within the 
general categories of real estate transactions, certain variations in 
terms of valuation, payment structures, and other consideration will 
impact the fee calculation. The Treasury Department welcomes comments 
on the approach taken in the proposed rule and whether and how the rule 
could be further tailored to address industry practices.
    The Treasury Department recognizes that, for some transactions, 
consideration may be paid in securities or other non-cash assets, or 
even in services or other in-kind consideration, and the proposed rule 
addresses these scenarios. For transactions where the consideration is 
a security that is traded on a national securities exchange, the value 
of the transaction is calculated based on the closing price on the 
national securities exchange on which the securities are primarily 
listed on the trading day immediately prior to the date the parties 
file a notice with the Committee. If the security was not traded on 
that day, the last published closing price would be used. Where the 
consideration includes other non-cash assets, interests, or services or 
other in-kind consideration, the value of the consideration would be 
the fair market value as of the date the parties file the notice. Where 
the transaction is a lending transaction, the value of the 
consideration is the cash value of the loan or similar financing 
arrangement. Additionally, where the transaction arises from the 
conversion of a contingent equity interest previously acquired by a 
foreign person, the value of the transaction would include the 
consideration that was paid by or on behalf of the foreign person to 
initially acquire the contingent equity interest in addition to any 
other consideration.
    In the rare circumstance in which the consideration for a 
transaction has not been determined, the value of the transaction would 
be based on the fair market value of the assets or real estate being 
acquired in the transaction as of the date the parties file the notice, 
or the fair market value of the U.S. business being merged or 
contributed. The proposed rule includes a definition of fair market 
value, which tracks the basic definition described in the Financial 
Accounting Standards Board Statement No. 157.
    In order to assist the parties and the Committee in determining the 
appropriate fee amount associated with a transaction, the proposed rule 
also makes modest revisions to the content requirements for joint 
voluntary notices under the Part 800 rule and the Part 802 rule. 
Specifically, the proposed rule adds a requirement that, along with a 
good faith estimate of the net value of the interest acquired in the 
U.S. business by the foreign person, the parties provide the Committee 
with the value of the transaction and an explanation of the methodology 
used to determine such valuation and the applicable fee.
    Additionally, as discussed above, the proposed fee rule for Part 
800 provides that where a covered transaction is part of a transaction 
valued at or greater than $5,000,000 that includes one or more non-U.S. 
businesses, but the value of the interests or rights acquired in the 
U.S. business is less than $5,000,000, the fee will be $750, regardless 
of the value of the overall transaction. If the value of the U.S. 
business equals or exceeds $5,000,000, then the fee will be determined 
based on the total value of the overall transaction.

D. Other Matters--Timing and Refunds

    The proposed rule requires that parties pay any applicable fee at 
the time they file a notice with the Committee. The Staff Chairperson 
may decide not to accept a notice, and the Committee may not begin 
reviewing a notice, until the Treasury Department has received the 
applicable fee. Where the Staff Chairperson accepts a notice but later 
determines that the fee was underpaid, prior to rejecting the notice 
the Staff Chairperson will inform the parties in writing of the 
insufficiency of payment and provide the parties three business days to 
pay the remainder of the filing fee. In addition, no waiver will be 
implied, even where the Staff Chairperson does not reject a voluntary 
notice for failure to pay the full amount of the filing fee.
    Furthermore, while the Treasury Department will not, as a general 
matter, provide refunds of filing fees, if it determines that a 
notified transaction is not a covered transaction or a covered real 
estate transaction, as relevant, it will refund the filing fee to the 
party that made the payment.
    The proposed rule permits parties to petition the Staff Chairperson 
to seek a partial refund of fees, if the parties can demonstrate that a 
party or the parties to a transaction paid a filing fee in an amount 
greater than required at the time of filing. The Treasury Department 
anticipates that such partial refunds will be made infrequently due to 
the tiered fee structure. Additionally, the Staff Chairperson may waive 
the fee, in whole or in part, if the Staff Chairperson determines that 
extraordinary circumstances relating to national security warrant such 
a waiver.
    Finally, the proposed rule does not require parties to pay an 
additional fee where the Committee allows the parties to withdraw and 
re-file a notice, unless the Staff Chairperson determines that a 
material change to the transaction has occurred, or a material 
inaccuracy or

[[Page 13589]]

omission was made by the parties in information provided to the 
Committee, that requires the Committee to consider new information, in 
which case the Staff Chairperson will inform the parties in writing.

III. Rulemaking Requirements

Executive Order 12866

    These regulations are not subject to the general requirements of 
Executive Order 12866, which covers review of regulations by the Office 
of Information and Regulatory Affairs in the Office of Management and 
Budget (OMB), because they relate to a foreign affairs function of the 
United States, pursuant to section 3(d)(2) of that order. In addition, 
these regulations are not subject to review under section 6(b) of 
Executive Order 12866 pursuant to section 7(c) of the April 11, 2018 
Memorandum of Agreement between the Treasury Department and OMB, which 
states that CFIUS regulations are not subject to OMB's standard 
centralized review process under Executive Order 12866.

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the OMB for review in accordance with 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control 
number 1505-0121.
    Comments on the collection of information should be sent to the 
Office of Management and Budget, Attn: Desk Officer for the Department 
of the Treasury, Office of Information and Regulatory Affairs, 
Washington, DC 20503, or via email to [email protected], with 
copies to Laura Black, Director of Investment Security Policy and 
International Relations, U.S. Department of the Treasury, 1500 
Pennsylvania Avenue NW, Washington, DC 20220. Comments on the 
collection of information should be received by May 8, 2020.
    In accordance with 5 CFR 1320.8(d)(1), the Treasury Department is 
soliciting comments from members of the public concerning this 
collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond; including through the use of appropriate automated 
collection techniques or other forms of information technology.
    The information collection in this proposed rule is in Sec.  
800.502(c)(1)(viii) and Sec.  802.502(b)(1)(ix). Specifically, the 
proposed rule would add a requirement that, along with the existing 
requirement for a good faith approximation of value of the interest 
acquired in the U.S. business or covered real estate by the foreign 
person, the parties provide the Committee with the value of the 
transaction and an explanation of the methodology used to determine 
such valuation and the applicable fee. This proposal has been submitted 
to OMB as a revision to the collection of information approved under 
1505-0121 without a change in the total burden hours. The notice 
requirement was previously approved under the Paperwork Reduction Act 
with a per respondent burden of 130 hours. This burden should account 
for the modest increase in reporting under proposed Sec.  
800.502(c)(1)(viii) and Sec.  802.502(b)(1)(ix); however, comments are 
invited from members of the public who believe the burden hours should 
be revised.
    An agency may not conduct or sponsor and an individual is not 
required to respond to a collection of information unless it displays a 
valid OMB control number.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) 
generally requires an agency to prepare an initial regulatory 
flexibility analysis unless the agency certifies that the rule will 
not, once implemented, have a significant economic impact on a 
substantial number of small entities. The RFA applies whenever an 
agency is required to publish a general notice of proposed rulemaking 
under section 553(b) of the Administrative Procedures Act (5 U.S.C. 
553) (APA), or any other law. As set forth below, because regulations 
issued pursuant to the DPA, such as these regulations, are not subject 
to the APA or another law requiring the publication of a general notice 
of proposed rulemaking, the RFA does not apply.
    The proposed rule implements section 721 of the DPA. Section 709(a) 
of the DPA provides that the regulations issued under it are not 
subject to the rulemaking requirements of the APA. Section 709(b)(1) 
instead provides that any regulation issued under the DPA be published 
in the Federal Register and opportunity for public comment be provided 
for not less than 30 days. Section 709(b)(3) of the DPA also provides 
that all comments received during the public comment period be 
considered and the publication of the final regulation contain written 
responses to such comments. Consistent with the plain text of the DPA, 
legislative history confirms that Congress intended that regulations 
under the DPA be exempt from the notice and comment provisions of the 
APA and instead provided that the agency include a statement that 
interested parties were consulted in the formulation of the final 
regulation. See H.R. Conf. Rep. No. 102-1028, at 42 (1992) and H.R. 
Rep. No. 102-208 pt. 1, at 28 (1991). The limited public participation 
procedures described in the DPA do not require a general notice of 
proposed rulemaking as set forth in the RFA. Further, the mechanisms 
for publication and public participation are sufficiently different to 
distinguish the DPA procedures from a rule that requires a general 
notice of proposed rulemaking. In providing the President with expanded 
authority to suspend or prohibit the acquisition, merger, or takeover 
of, or certain other investments in, a U.S. business by a foreign 
person, and certain real estate transactions by a foreign person, if 
such a transaction would threaten to impair the national security of 
the United States, Congress could not have contemplated that 
regulations implementing such authority would be subject to RFA 
analysis. For these reasons, the RFA does not apply to these 
regulations.
    Regardless of whether the RFA applies to this rulemaking, the 
Secretary of the Treasury certifies that this proposed rule, if 
adopted, will not have a significant economic impact on a substantial 
number of small entities.
    The proposed rule would implement a fee for filing a notice of a 
covered transaction and a covered real estate transaction, as those 
terms are defined in Part 800 and Part 802 of CFIUS's regulations. The 
Treasury Department attempted to minimize the burden of this fee 
requirement on small entities. For example, a transaction valued at 
less than $500,000 will have no associated filing fee. Additionally, 
while the Treasury Department has proposed a $750 fee for transactions 
valued at or greater than $500,000 but less than $5,000,000, which may 
affect small entities as they are defined by the Small Business 
Administration (SBA), the fee is relatively small in real terms. At 
that level, the administrative fee represents only 0.15 percent of the 
value of the smallest dollar valuation for a

[[Page 13590]]

transaction that would incur a fee ($500,000).
    Moreover, the fee rules will not impact a ``substantial number'' of 
small entities. There is no single source for information on the number 
of small U.S. businesses that receive foreign investment (direct or 
indirect), including those involved with critical technologies, 
critical infrastructure, or sensitive personal data, such that they 
would be directly impacted by the Part 800 rule. However, the Bureau of 
Economic Analysis (BEA) within the Department of Commerce collects, on 
an annual basis, data on new foreign direct investment in the United 
States through its Survey of New Foreign Direct Investment in the 
United States (Form BE[hyphen]13). While these data are self-reported, 
and include only direct investments in U.S. businesses in which the 
foreign person acquires at least 10 percent of the voting shares (and 
consequently, do not capture investments below 10 percent, which may 
nevertheless be covered transactions), they nonetheless provide 
relevant information on a category of U.S. businesses that receive 
foreign investment, some of which may be covered by the proposed rule.
    According to the BEA, in 2018, the most current year for which data 
is available, foreign persons obtained at least a 10 percent voting 
share in 832 U.S. businesses. See U.S. Bureau of Economic Analysis, 
``Number of Investments Initiated in 2018, Distribution of Planned 
Total Expenditures, Size by Type of Investment,'' available at https://apps.bea.gov/international/xls/Table15-14-15-16-17-18.xls (last visited 
March 2, 2020). The BEA only reports the general size of the investment 
transaction, not the type of the U.S. business involved, nor whether 
the U.S. business is considered a ``small business'' by the SBA, which 
defines small businesses based on annual revenue or number of 
employees. The smallest foreign investment transactions that the BEA 
reports are those with a dollar value below $50,000,000. While not all 
U.S. businesses receiving a foreign investment of less than $50,000,000 
are considered ``small'' for the purposes of the RFA, many might be, 
and the number of U.S. businesses receiving foreign investments of less 
than $50,000,000 can serve as a proxy for the number of transactions 
involving small U.S. businesses that might be subject to CFIUS's 
jurisdiction.
    Of the above mentioned 832 U.S. businesses receiving foreign 
investment in 2018, 576 were involved in transactions valued at less 
than $50,000,000. Although this figure is under inclusive because it 
does not capture all transactions that could potentially fall under the 
rule, it also is over inclusive because it is not limited to any 
particular type of U.S. business. The Treasury Department believes the 
figure of 576 is the best estimate based on the available data of the 
number of small U.S. businesses that may be impacted by this rule, but 
for the reasons set forth below, the impact on those small U.S. 
businesses will not be significant.
    According to the SBA, there were approximately 30,200,000 small 
businesses (defined as ``firms employing fewer than 500 employees'') in 
the United States as of 2018. See ``2018 Small Business Profile,'' 
available at https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf (last visited March 2, 2020). If 
approximately 600 small U.S. businesses will be potentially impacted by 
this rule, then the rule may potentially impact less than one percent 
of all small U.S. businesses.
    There is no single source for information on the number of small 
U.S. businesses that would be involved in some way in the purchase or 
lease by, or concession to a foreign person of real estate that could 
be covered under the Part 802 rule. However, the Treasury Department 
anticipates only 350 real estate transactions, out of the thousands or 
more of the annual number of real estate transactions in the United 
States, will be the subject of a declaration or notice of a covered 
real estate transaction. Further background on this estimate was 
included in the estimate of burden hours submitted to OMB in accordance 
with the Paperwork Reduction Act under Document Control Number 1505-
0121.
    Additionally, as required by FIRRMA, the rule takes into account 
and attempts to minimize the impact it may have on small U.S. 
businesses. For example, the rule contains no fee for transactions 
valued at less than $500,000. In addition, the fee is only $750 where 
the value of the transaction is equal to or greater than $500,000 but 
less than $5,000,000, and the fee is $7,500 where the value of the 
transaction is equal to or greater than $5,000,000 but less than 
$50,000,000. Therefore, to the extent that small U.S. businesses will 
incur a fee for a notice, that fee will represent only a fraction of 
the value of the transaction to the parties. The Treasury Department 
does not expect this filing fee rule to change the estimate of burden 
hours for completing notices which was previously submitted to OMB in 
accordance with the Paperwork Reduction Act under Document Control 
Number 1505-0121.
    Also, as discussed above, the fee is only incurred when parties 
file a notice of a transaction with the Committee. The Treasury 
Department has not proposed any fees to submit a declaration of a 
transaction, and under the Part 800 rule and Part 802 rule, parties may 
submit a declaration of any covered transaction or any covered real 
estate transaction. Declarations will take less time and incur less 
cost for parties to complete. Additional information about 
declarations, including the procedures to file them and their content 
requirements, is available in the final CFIUS rules at 85 FR 3112 (Jan. 
17, 2020) and 85 FR 3158 (Jan. 17, 2020).
    Accordingly, for the reasons stated above, the Secretary of the 
Treasury certifies that the proposed rule, if implemented, will not 
have a ``significant economic impact on a substantial number of small 
entities,'' 5 U.S.C. 605(b). Nevertheless, the Treasury Department is 
interested in any comments on how the proposed rule would affect small 
entities.

List of Subjects

31 CFR Part 800

    Foreign investments in the United States, Investments, Investment 
companies, National defense, Fees.

31 CFR Part 802

    Foreign investments in the United States, Federal buildings and 
facilities, Government property, Investigations, Investments, 
Investment companies, Land sales, National defense, Public lands, Real 
property acquisition, Reporting and Recordkeeping requirements, Fees.

    For the reasons set forth in the preamble, the Treasury Department 
proposes to amend 31 CFR parts 800 and 802 as follows:

PART 800--REGULATIONS PERTAINING TO CERTAIN INVESTMENTS IN THE 
UNITED STATES BY FOREIGN PERSONS

0
1. The authority citation for part 800 continues to read:

    Authority: 50 U.S.C. 4565; E.O. 11858, as amended, 73 FR 4677.

Subpart E--Notices


Sec.  800.501  [Amended]

0
2. Amend Sec.  800.501:
0
a. In paragraph (a) by adding ``, and paying the fee required under 
subpart K of this part'' after ``including the certification required 
under paragraph (l) of that section''; and

[[Page 13591]]

0
b. In paragraph (f) by adding ``, and payment of the fee required under 
subpart K of this part,'' after ``including the certification required 
by Sec.  800.502(l)''.

0
3. Amend Sec.  800.502 by revising paragraph (c)(1)(viii) to read as 
follows:


Sec.  800.502   Contents of voluntary notices.

* * * * *
    (c) * * *
    (1) * * *
    (viii)(A) The value of the transaction in U.S. dollars, as 
determined pursuant to Sec.  800.1103, and the parties' assessment of 
the applicable fee due under Sec.  800.1101, including an explanation 
of the methodology used to determine such valuation and applicable fee; 
and
    (B) If different than the value of the transaction provided in 
paragraph (c)(1)(viii)(A) of this section, a good faith approximation 
of the net value of the interest acquired in the U.S. business in U.S. 
dollars, as of the date of the notice.
* * * * *

0
4. Amend Sec.  800.503:
0
a. In paragraph (a)(1), by removing the word ``and'';
0
b. By redesignating paragraph (a)(2) as paragraph (a)(3); and
0
c. By adding new paragraph (a)(2).
    The addition reads as follows:


Sec.  800.503   Beginning of 45-day review period.

    (a) * * *
    (2) Confirmed that the applicable fee required under subpart K of 
this part has been paid, or waived; and
* * * * *

0
6. Amend Sec.  800.504 by redesignating paragraphs (a)(3) and (4) as 
paragraphs (a)(4) and (5), respectively, and adding new paragraph 
(a)(3) to read as follows:


Sec.  800.504   Deferral, rejection, or disposition of certain 
voluntary notices.

    (a) * * *
    (3) Reject any voluntary notice upon determining that the filing 
fee paid by the parties was insufficient under subpart K of this part, 
subject to Sec.  800.1108.
* * * * *

0
7. Add subpart K to read as follows:

Subpart K--Filing Fees

Sec.
800.1101 Amount of fee.
800.1102 Timing of payment.
800.1103 Valuation.
800.1104 Manner of payment.
800.1105 Refunds.
800.1106 Waiver.
800.1107 Resubmissions.
800.1108 Rejection of voluntary notice.

Subpart K--Filing Fees


Sec.  800.1101   Amount of fee.

    The parties filing a voluntary notice of a transaction with the 
Committee under Sec.  800.501(a) shall pay a filing fee as follows:
    (a) Where the value of the transaction is less than $500,000: No 
fee;
    (b) Where the value of the transaction is equal to or greater than 
$500,000 but less than $5,000,000: $750;
    (c) Where the value of the transaction is equal to or greater than 
$5,000,000 but less than $50,000,000: $7,500;
    (d) Where the value of the transaction is equal to or greater than 
$50,000,000 but less than $250,000,000: $75,000;
    (e) Where the value of the transaction is equal to or greater than 
$250,000,000 but less than $750,000,000: $150,000;
    (f) Where the value of the transaction is equal to or greater than 
$750,000,000: $300,000.


Sec.  800.1102   Timing of payment.

    Subject to Sec. Sec.  800.1106 through 800.1108, the Staff 
Chairperson shall not accept a voluntary notice under Sec.  800.503(a) 
until payment of any fee required under this section is received by the 
Department of the Treasury in the manner specified on the Committee's 
section of the Department of the Treasury website.


Sec.  800.1103   Valuation.

    (a) Except as provided in paragraph (c) of this section, the value 
of the transaction for purposes of determining the required fee amount 
in this section means the total value of all consideration that has 
been or will be provided in the context of the transaction by or on 
behalf of the foreign person that is a party to the transaction, 
including cash, assets, shares or other ownership interests, debt 
forgiveness, or services or other in-kind consideration.
    (b) Determining the value of consideration:
    (1) Where the consideration includes securities traded on a 
national securities exchange, the value of the securities is the 
closing price on the national securities exchange on which the 
securities are primarily traded on the trading day immediately prior to 
the date the parties file the voluntary notice with the Committee 
pursuant to Sec.  800.501(a), or if the securities were not traded on 
that day, the last published closing price.
    (2) Where the consideration includes other non-cash assets, 
services, interests, or in-kind consideration, the value of the assets, 
services, interests, or in-kind consideration is their fair market 
value as of the date the parties file the notice.
    (3) Where the transaction is a lending transaction, the value of 
the consideration is the cash value of the loan, or similar financing 
arrangement, made available or provided by or on behalf of the foreign 
person that is a party to the transaction.
    (4) Where the transaction arises from the conversion of a 
contingent equity interest previously acquired by a foreign person that 
is a party to the transaction, the value of the transaction includes 
the consideration that was paid by or on behalf of the foreign person 
to initially acquire the contingent equity interest, in addition to any 
other consideration paid in connection with the conversion.
    (c) Exceptions:
    (1) Where the consideration to be paid by the foreign person has 
not been, or cannot reasonably be determined as of the date the parties 
file the notice, the value of the transaction is the fair market value 
of the assets being acquired in the transaction as of the date the 
parties file the notice.
    Note to Sec.  800.1103(c)(1): The consideration amount may be 
determined notwithstanding minor standard adjustments that are to be 
made at closing.
    (2) Where the transaction involves a merger or the contribution of 
a U.S. business to a joint venture, the value of the transaction is the 
fair market value of the U.S. business being merged or contributed.
    (3) Where the value of a transaction is $5,000,000 or more, but the 
transaction includes one or more non-U.S. businesses, and the value of 
the interests or rights acquired in the U.S. business is less than 
$5,000,000, the filing fee under Sec.  800.1101(b) is applicable. The 
value of the U.S. business, for purposes of this paragraph, is the fair 
market value of the assets of the U.S. business.
    (d) Fair market value means the price that would be received in 
exchange for selling an asset or interest, or paid to receive a service 
or to transfer liability, in an orderly transaction between market 
participants.
    (1) In determining the fair market value of assets or interests, 
parties shall make a good faith estimate and generally may rely on the 
last valuation of the assets as presented in financial statements 
prepared in accordance with generally accepted accounting principles 
(GAAP) or other widely recognized accounting principles, such as the 
International Financial Reporting Standards (IFRS), or the valuation of 
an independent appraiser; provided, however, that if no valuation has

[[Page 13592]]

occurred within the prior two fiscal quarters, or if there have been 
significant changes to the fair market value since the last valuation, 
the parties shall make a good faith estimate as of the filing date, or, 
if the parties are filing after the completion of the transaction, the 
date that the transaction was completed.
    (2) In determining the fair market value of services, the parties 
may rely upon the value of services determined by the parties as set 
forth in an executed written agreement, or make an estimate as of the 
date of filing based upon rates charged to third parties or upon recent 
industry reports or other sources of comparable commercial data; 
provided, however, if such sources are unavailable, the parties shall 
make a good faith estimate. If the parties are filing after completion 
of the transaction, the parties shall make an estimate of the fair 
market value as of the date the transaction was completed.
    (3) The Staff Chairperson is not bound by the parties' 
characterization of the transaction and its value or the parties' good 
faith approximation provided to the Committee pursuant to Sec.  
800.502(c)(1)(viii).
    (e) Examples:
    (1) Example 1. Corporation A, a foreign person, proposes to acquire 
all of the issued and outstanding shares of Corporation B, a U.S. 
business, in exchange for $100,000,000 in cash. Assuming no other 
relevant facts, the value of the transaction is $100,000,000, and the 
filing fee is $75,000.
    (2) Example 2. Corporation A, a foreign person, proposes to acquire 
all of the issued and outstanding shares of Corporation B, a U.S. 
business, in a two-for-one stock swap transaction whereby a holder of a 
share of Corporation B's stock is entitled to receive two shares of 
Corporation A's stock. Corporation A's stock is listed on the NASDAQ, a 
national securities exchange. In aggregate, the holders of Corporation 
B's stock will receive 10,000,000 shares of Corporation A's stock in 
the transaction. On the trading day immediately prior to the filing of 
the joint voluntary notice, the closing price of Corporation A's stock 
on NASDAQ was $20 per share. Assuming no other relevant facts, the 
value of the transaction is $200,000,000, and the filing fee is 
$75,000.
    (3) Example 3. Corporation B, a U.S. business, is issuing new 
shares that will represent 50 percent of its issued and outstanding 
shares. Corporation A, a foreign person, proposes to acquire these 
shares. As consideration, Corporation A will contribute to Corporation 
X certain inventory, machines, and other non-cash assets. The parties 
to the transaction estimate in good faith, based on the most recent 
quarterly financial statements of Corporation A, which were prepared in 
accordance with GAAP, that the fair market value of the assets is 
$40,000,000. Assuming no other relevant facts, the value of the 
transaction is $40,000,000, and the filing fee is $7,500.
    (4) Example 4. Corporation A and Corporation B are establishing a 
joint venture, JV Corp., which will be controlled by Corporation B, a 
foreign person. Corporation A contributes a U.S. business, the fair 
market value of which is $150,000,000, to JV Corp. Corporation B 
contributes $150,000,000 in cash to JV Corp. The value of the 
transaction is $150,000,000, which is equal to the value of the U.S. 
business being contributed. Assuming no other relevant facts, the 
filing fee is $75,000.
    (5) Example 5. Corporation A, a foreign person, enters into a stock 
purchase agreement with Person Z to acquire 100 percent of the issued 
and outstanding shares of Corporation B, a U.S. business. The value of 
the consideration has not been determined because it will only be 
payable once Corporation B achieves certain development and sales 
milestones, and it will be 10 percent of Corporation B's revenue over a 
future five-year period. The parties estimate in good faith that the 
fair market value of Corporation B is $30,000,000 based on a number of 
factors, including application of well-known accounting standards such 
as Financial Accounting Standards Board Statement 157, a recent 
valuation conducted by a third-party auditor, and a proposal to acquire 
Corporation B made by another bidder for approximately $30,000,000 in 
cash. Assuming no other relevant facts, the value of the transaction is 
$30,000,000, and the filing fee is $7,500.
    (6) Example 6. Corporation A, a foreign person, proposes to acquire 
100 percent of the equity interest of Corporation B, a foreign person, 
for $100,000,000. Corporation B has subsidiaries in several countries, 
including Corporation C, a U.S. business. The fair market value of 
Corporation C's assets is $1,000,000. Assuming no other relevant facts, 
under paragraph (d)(3) of this section, a $750 filing fee is required.
    (f) Timing rule for calculation of filing fee:
    (1) Where a transaction will be effectuated in multiple phases or 
involves the acquisition of contingent equity interests, the value of 
the transaction is the total value of the transaction including the 
multiple phases or contingent equity interests, if such total value can 
be reasonably determined, the conditions that lead to completion will 
occur imminently, and the conditions are within the control of the 
acquiring party.
    (2) Example: Corporation A, a foreign person, proposes to acquire 
Corporation B, a U.S. business. The transaction will be effectuated in 
two phases. First, Corporation A will acquire 50 percent of the voting 
interest of Corporation B in exchange for $30,000,000 (Phase 1). Two 
months later, Corporation A will have the option to acquire the 
remaining 50 percent of the voting interest of Corporation B in 
exchange for another $30,000,000 (Phase 2). The option to convert is 
imminent, the option to acquire the remaining voting interest is in the 
control of Corporation A, and the amount of voting interest acquired 
can be reasonably determined. The value of consideration of Phase 2 is 
part of the consideration of the transaction. Assuming no other 
relevant facts, the value of the consideration is $60,000,000 (the 
total consideration for both stages), and the filing fee is $75,000.
    (g) The determination of the value of the transaction for purposes 
of calculating the filing fee in no way limits the Committee's 
jurisdiction or its authority to review, investigate, mitigate, or take 
any other action regarding any covered transaction.


Sec.  800.1104   Manner of payment.

    Parties to a transaction must pay any filing fee by electronic 
payment. The filing fee must be paid in U.S. dollars. Instructions for 
paying filing fees are available on the Committee's section of the 
Department of the Treasury website.


Sec.  800.1105   Refunds.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
the Department of the Treasury shall not refund a filing fee in whole 
or in part.
    (b) If the Committee determines that the transaction is not a 
covered transaction, the filing fee shall be refunded.
    (c) In response to a petition by a party, if the Staff Chairperson 
determines, based on the information and representations contained in 
the voluntary notice, as well as any other information provided by the 
parties, that a party or the parties to a transaction paid a filing fee 
in an amount greater than required at the time of filing, the 
Department of the Treasury shall refund the amount of overpayment to 
the party or parties who paid the filing fee.

[[Page 13593]]

Sec.  800.1106   Waiver.

    If the Staff Chairperson determines that extraordinary 
circumstances relating to national security warrant, the Staff 
Chairperson may waive the filing fee in whole or in part and will 
notify the parties in writing. No waiver shall be implied, even where 
the Staff Chairperson does not reject a voluntary notice under Sec.  
800.1108 for failure to pay the filing fee.


Sec.  800.1107   Resubmissions.

    The parties to a transaction shall not be required to pay an 
additional filing fee in the event that the Staff Chairperson permits 
the parties to withdraw and resubmit a notice pursuant to Sec.  
800.509(c)(2), unless the Staff Chairperson determines that a material 
change to the transaction has occurred, or a material inaccuracy or 
omission was made by the parties in information provided to the 
Committee, that requires the Committee to consider new information, in 
which case the Staff Chairperson will inform the parties in writing.


Sec.  800.1108   Rejection of voluntary notice.

    The Staff Chairperson may reject a voluntary notice pursuant to 
Sec.  800.504(a) upon a determination that the amount of the filing fee 
paid by the parties was insufficient under this section. Prior to 
rejecting a notice under this paragraph, the Staff Chairperson shall 
inform the parties in writing of the insufficiency of payment and 
provide the parties three business days to pay the remainder of the 
filing fee. If the Staff Chairperson does not reject a voluntary notice 
pursuant to Sec.  800.504(a) upon a determination that the amount of 
the filing fee payment paid by the parties was insufficient under this 
section, the balance of the fee remains payable unless the Staff 
Chairperson notifies the parties in writing that the payment has been 
waived in whole or in part.

PART 802--PROVISIONS PERTAINING TO CERTAIN TRANSACTIONS BY FOREIGN 
PERSONS INVOLVING REAL ESTATE IN THE UNITED STATES

0
8. The authority citation for part 802 continues to read:

    Authority: 50 U.S.C. 4565; E.O. 11858, as amended, 73 FR 4677.

Subpart E--Notices


Sec.  802.501  [Amended]

0
9. Amend Sec.  802.501:
0
 a. In paragraph (a) by adding ``, and paying the fee required under 
subpart K of this part'' after ``including the certification required 
under paragraph (h) of that section'';
0
 b. In paragraph (f) by adding ``, and payment of the fee required 
under subpart K of this part,'' after ``including the certification 
required by Sec.  800.502(h)''; and

0
10. Amend Sec.  802.502 by revising paragraph (b)(1)(ix) to read as 
follows:


Sec.  802.502   Contents of voluntary notices.

* * * * *
    (b) * * *
    (1) * * *
    (ix)(A) The value of the transaction in U.S. dollars, as determined 
pursuant to Sec.  802.1103, and the parties' assessment of the 
applicable fee due under Sec.  802.1101, including an explanation of 
the methodology used to determine such valuation and applicable fee; 
and
    (B) If different than the value of the transaction provided in 
paragraph (b)(1)(ix)(A) of this section, a good faith approximation of 
the fair market value of the interest acquired in the covered real 
estate in U.S. dollars, as of the date of the notice.
* * * * *

0
11. Amend Sec.  802.503:
0
a. In paragraph (a)(1) by removing the word ``and'';
0
b. By redesignating paragraph (a)(2) as paragraph (a)(3); and
0
c. By adding new paragraph (a)(2).
    The addition reads as follows:


Sec.  802.503   Beginning of 45-day review period.

    (a) * * *
    (2) Confirmed that the applicable fee required under subpart K of 
this part has been paid or waived; and
* * * * *

0
12. Amend Sec.  802.504 by redesignating paragraphs (a)(3) and (4) as 
paragraphs (a)(4) and (5), respectively, and adding paragraph (a)(3) to 
read as follows:


Sec.  802.504   Deferral, rejection, or disposition of certain 
voluntary notices.

    (a) * * *
    (3) Reject any voluntary notice upon determining that the filing 
fee paid by the parties was insufficient under subpart K of this part, 
subject to Sec.  802.1108.
* * * * *

0
13. Add subpart K to read as follows:

Subpart K--Filing Fees

Sec.
802.1101 Amount of fee.
802.1102 Timing of payment.
802.1103 Valuation.
802.1104 Manner of payment.
802.1105 Refunds.
802.1106 Waiver.
802.1107 Resubmissions.
802.1108 Rejection of voluntary notice.

Subpart K--Filing Fees


Sec.  802.1101   Amount of fee.

    The parties filing a voluntary notice of a transaction with the 
Committee under Sec.  802.501(a) shall pay a filing fee as follows:
    (a) Where the value of the transaction is less than $500,000: No 
fee;
    (b) Where the value of the transaction is equal to or greater than 
$500,000 but less than $5,000,000: $750;
    (c) Where the value of the transaction is equal to or greater than 
$5,000,000 but less than $50,000,000: $7,500;
    (d) Where the value of the transaction is equal to or greater than 
$50,000,000 but less than $250,000,000: $75,000;
    (e) Where the value of the transaction is equal to or greater than 
$250,000,000 but less than $750,000,000: $150,000;
    (f) Where the value of the transaction is equal to or greater than 
$750,000,000: $300,000.


Sec.  802.1102   Timing of payment.

    Subject to Sec.  802.1106 through Sec.  802.1108, the Staff 
Chairperson shall not accept a voluntary notice under Sec.  802.503(a) 
until payment of any fee required under this section is received by the 
Department of the Treasury in the manner specified on the Committee's 
section of the Department of the Treasury website.


Sec.  802.1103   Valuation.

    Except as provided in paragraph (e) of this section, the value of 
the transaction for purposes of determining the required fee amount in 
this section shall be determined as follows:
    (a) For a transaction structured as a purchase, by the total value 
of all consideration that has been or will be provided in the context 
of the transaction by or on behalf of the foreign person that is a 
purchaser in the transaction, including cash, assets, shares or other 
ownership interests, debt forgiveness, or services or other in-kind 
consideration.
    (b) For a transaction structured as a lease, by the value of the 
sum of, as applicable:
    (1) Any fixed payments to be paid by the foreign person that is a 
lessee in the transaction to, or for the benefit of, the lessor over 
the term of the lease;
    (2) Any variable payments that depend on an index or a rate (such 
as a market interest rate) to be paid by the foreign person that is a 
lessee in the transaction to, or for the benefit of, the lessor, over 
the term of the lease, measured for purposes of this section by

[[Page 13594]]

using the index or rate as of the date the parties file the notice; and
    (3) Any non-cash or in-kind consideration to be provided by the 
foreign person that is a lessee in the transaction to, or for the 
benefit of, the lessor, over the term of the lease, as may be 
reasonably determined as of the date the parties file the notice.
    (c) For a transaction structured as a concession, by the value of 
the sum of all rent, fees, and charges to be paid by the foreign person 
to the grantor and any non-cash or in-kind consideration to be provided 
by such foreign person to, or for the benefit of, the grantor, over the 
term of a concession agreement, as may be reasonably determined as of 
the date the parties file the notice.
    (d) Determining the value of consideration:
    (1) Where the consideration includes securities traded on a 
national securities exchange, the value of the securities is the 
closing price on the national securities exchange on which the 
securities are primarily traded on the trading day immediately prior to 
the date the parties file the voluntary notice with the Committee 
pursuant to Sec.  802.501(a), or if the securities were not traded on 
that day, the last published closing price.
    (2) Where the consideration includes other non-cash assets, 
services, or interests, including real property contributed by a 
foreign person that is party to a transaction involving the exchange of 
land or contribution to a joint venture, the value of the assets, 
service, or interests is their fair market value at the time of filing.
    (3) Where the transaction is a lending transaction, the value of 
the consideration is the cash value of the mortgage, loan, or similar 
financing arrangement, made available or provided by or on behalf of 
the foreign person that is a party to the transaction.
    (4) Where the transaction arises from the conversion of a 
contingent equity interest previously acquired by a foreign person that 
is a party to the transaction, the value of the transaction includes 
the consideration that was paid by or on behalf of the foreign person 
to initially acquire the contingent equity interest, in addition to any 
other consideration.
    (e) Exceptions:
    (1) In the case of a purchase, where the consideration to be 
provided by the foreign person has not been, or cannot reasonably be 
determined as of the date the parties file the notice, the value of the 
transaction is the fair market value of the assets being purchased in 
the transaction as of the date the parties file the notice.
    Note 1 to Sec.  802.1103(e)(1): The consideration amount may be 
determined notwithstanding minor standard adjustments that are to be 
made at closing.
    (2) In the case of a lease or concession, where the consideration 
to be provided by the foreign person has not been, or cannot reasonably 
be determined at the time of filing, or, where the parties cannot 
reasonably determine the value of rent, fees, charges, or services 
pursuant to paragraph (c) of this section, the filing fee required 
shall be that required under Sec.  802.1101(b).
    (f) The Staff Chairperson is not bound by the parties' 
characterization of the transaction and its value or their good faith 
approximation provided to the Committee pursuant to Sec.  
802.502(b)(1)(ix).
    (g) Fair market value means the price that would be received in 
exchange for sale of an asset or interest, or paid to convey a service 
or to transfer liability, in an orderly transaction between market 
participants.
    (1) In determining the fair market value of assets or interests, 
parties shall make a good faith estimate and generally may rely on the 
last valuation as presented in financial statements prepared in 
accordance with generally accepted accounting principles (GAAP) or 
other widely recognized accounting principles, such as the 
International Financial Reporting Standards (IFRS), or the valuation of 
an independent appraiser; provided, however, that if no valuation has 
occurred within the prior two fiscal quarters, or if there have been 
significant changes to the fair market value since the last valuation, 
the parties shall make a good faith estimate at the time of filing, or, 
if the parties are filing after completion of the transaction, the date 
the transaction was completed.
    (2) In determining the fair market value of services, the parties 
may rely upon the value of services determined by the parties as set 
forth in an executed written agreement, or make an estimate at the time 
of filing based upon rates charged to third parties or recent industry 
reports or other sources of comparable commercial data; provided, 
however, if such sources are unavailable, the parties shall make a good 
faith estimate. If the parties are filing after completion of the 
transaction, the parties shall make an estimate of the fair market 
value as of the date the transaction was completed.
    (h) Examples:
    (1) Example 1. Corporation A, a foreign person, enters into an 
agreement for the purchase of a parcel of covered real estate (Parcel 
X) from Corporation B. The purchase is a covered real estate 
transaction. The fair market value of Parcel X is $37,000,000. In 
exchange for ownership of Plot X, Corporation A forgives a debt owed to 
it by Corporation B that is valued at $5,000,000 and pays $35,000,000 
to Corporation B. Assuming no other relevant facts, the value of the 
transaction is $40,000,000, and the filing fee is $7,500.
    (2) Example 2. Corporation A, a foreign person, enters into an 
agreement to lease a parcel of covered real estate from Corporation B. 
The lease is a covered real estate transaction. Pursuant to a signed 
agreement, Corporation A will pay Corporation B a fixed annual payment 
of $300,000 for a term of three years, with an option to renew the 
lease at the end of the term. Assuming no other relevant facts, the 
value of the transaction is $900,000, and the filing fee is $750.
    (3) Example 3. Corporation A, a foreign person, proposes to enter 
into a concession agreement with a U.S. public entity for the right to 
use certain covered real estate for the purpose of developing and 
operating terminal infrastructure at a covered port. The concession is 
a covered real estate transaction. The concession agreement is for a 
five-year term. Under the concession agreement, Corporation A will pay 
the U.S. public entity a use charge of $450,000 per year starting in 
the second year. The concession agreement also requires Corporation A 
to pay utility fees and common area maintenance charges of $5,000 per 
month for the full concession term. Terminal development is scheduled 
to be completed 12 months after signing of the concession agreement, 
and Corporation A intends to commence operations immediately. Assuming 
no other relevant facts, the value of the transaction is $2,100,000, 
based on the $1,800,000 use charge and $300,000 in utility fees. The 
filing fee is $750.
    (4) Example 4. Corporation A, a foreign person, pays a lease bonus 
of $1,000 per acre as an inducement to execute an oil, gas and mineral 
lease with respect to a 10-acre parcel of covered real estate. The 
lease has a 10-year term. Corporation A must pay a royalty of 12.5% in 
amount or value of oil or gas production removed or sold from the 
leased land. Prior to such production, the foreign person is obligated 
to pay a delay rental fee of $1,000 per acre per year for the first 
five years and $2,000 per acre thereafter. A minimum royalty in lieu of 
the delay rental fee is due once oil or gas has been discovered on the 
leased land, equal to

[[Page 13595]]

the annual delay rental fee that would otherwise have been due. 
Assuming no other relevant facts, the value of the transaction is 
$160,000 and there is no filing fee.
    (i) Timing rule for calculation of filing fee:
    (1) Where a transaction will be effectuated in multiple phases or 
involves the acquisition of contingent equity interests, the value of 
the transaction is the total value of the transaction including the 
multiple phases or contingent equity interests, if such total value can 
be reasonably determined, the conditions that lead to completion will 
occur imminently, and the conditions are within the control of the 
acquiring party.
    (2) Example: Corporation A, a foreign person, proposes to purchase 
Plot X and acquire an option to purchase Plot Y, both of which are 
covered real estate. The transaction will be completed in two phases. 
First, Corporation A will acquire Plot X and the option related to Plot 
Y in exchange for $30,000,000 (Phase 1). Corporation A informs its 
shareholders that within two months, Corporation A will exercise its 
option to purchase Plot Y in exchange for another $30,000,000 (Phase 
2). The second purchase is imminent and in the control of Corporation 
A, and the value of acquisition can be reasonably determined. Assuming 
no other relevant facts, the value of the consideration is $60,000,000 
(the total consideration for both phases), and the filing fee is 
$75,000.
    (j) The determination of the value of the transaction for purposes 
of calculating the filing fee in no way limits the Committee's 
jurisdiction or its authority to review, investigate, mitigate, or take 
any other action regarding any covered real estate transaction.


Sec.  802.1104   Manner of payment.

    Parties to a transaction must pay any filing fee by electronic 
payment. The filing fee must be paid in U.S. dollars. Instructions for 
paying filing fees are available on the Committee's section of the 
Department of the Treasury website.


Sec.  802.1105   Refunds.

    (a) Except as provided in this paragraph, the Department of the 
Treasury shall not refund a filing fee in whole or in part.
    (b) If the Committee determines that the transaction is not a 
covered real estate transaction, the filing fee shall be refunded.
    (c) In response to a petition by a party, if the Staff Chairperson 
determines, based on the information and representations contained in 
the voluntary notice, as well as any other information provided by the 
parties, that a party or the parties to a transaction paid a filing fee 
in an amount greater than required at the time of filing, the 
Department of the Treasury shall refund the amount of overpayment to 
the party or parties who paid the filing fee.


Sec.  802.1106   Waiver.

    If the Staff Chairperson determines that extraordinary 
circumstances relating to national security warrant, the Staff 
Chairperson may waive the filing fee in whole or in part and will 
notify the parties in writing. No waiver shall be implied by the 
parties, even where the Staff Chairperson does not reject a voluntary 
notice under Sec.  802.1108 for failure to pay the filing fee.


Sec.  802.1107   Resubmissions.

    The parties to a transaction shall not be required to pay an 
additional filing fee in the event that the Staff Chairperson permits 
the parties to withdraw and resubmit a notice pursuant to Sec.  
802.509(c)(2), unless the Staff Chairperson determines that a material 
change to the transaction has occurred, or a material inaccuracy or 
omission was made by the parties in information provided to the 
Committee, that requires the Committee to consider new information, in 
which case the Staff Chairperson will inform the parties in writing.


Sec.  802.1108   Rejection of voluntary notice.

    The Staff Chairperson may reject a voluntary notice pursuant to 
Sec.  802.504(a) upon a determination that the amount of the filing fee 
paid by the parties was insufficient under this section. Prior to 
rejecting a notice under this paragraph, the Staff Chairperson shall 
inform the parties in writing of the insufficiency of payment and 
provide the parties three business days to pay the remainder of the 
filing fee. If the Staff Chairperson does not reject a voluntary notice 
pursuant to Sec.  802.504(a) upon a determination that the amount of 
the filing fee payment paid by the parties was insufficient under this 
section, the balance of the fee remains payable unless the Staff 
Chairperson notifies the parties in writing that the payment has been 
waived in whole or in part.

    Dated: March 2, 2020.
Thomas Feddo,
Assistant Secretary for Investment Security.
[FR Doc. 2020-04641 Filed 3-4-20; 4:15 pm]
 BILLING CODE 4810-25-P