CFIUS Abruptly Imposes New Notice Filing Fees
Beginning May 1, 2020, the Committee on Foreign Investment in the United States (“CFIUS”) will require a filing fee in connection with any formal notice of a “covered transaction” or a “covered real estate transaction.” The U.S. Treasury Department made the announcement on April 27, 2020 through an interim rule with its request for public comments until June 1, 2020. (See the interim rule here.) As of the date of this post, CFIUS has set the escalating amount of the filing fee based on the value of the underlying transaction according to the following tiers:
|Transaction Value Range||Filing Fee|
|$0 to $499,999.99||$0|
|$500,000 to $4,999,999.99||$750|
|$5,000,000 to $49,999,999.99||$7,500|
|$50,000,000 to $249,999,999.99||$75,000|
|$250,000,000 to $749,999,999.99||$150,000|
|$750,000,000 or more||$300,000|
Historically, CFIUS has not had any authorization from Congress to charge any filing fee. However, under the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), Congress gave CFIUS the power to begin collecting such filing fees. However, despite having had this authority for nearly two years, CFIUS had chosen not to announce the adoption of filing fees even as it went ahead with a number of other key changes. Nevertheless, on March 9, 2020, CFIUS published a notice of proposed rulemaking to establish filing fees for “covered transactions” under the Regulations Pertaining to Certain Investments in the United States by Foreign Persons found in 31 CFR Part 800 (“Part 800”) and for “covered real estate transactions” under the Regulations Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States (“Part 802”).
Given the growing volume of CFIUS’s work and the added government resources that must be devoted to that work, on April 27, CFIUS determined that implementing filing fees was appropriate at this time. Under the new rule, the parties must pay the filing fee electronically to the U.S. Treasury Department and CFIUS will not begin its 45-day review until the applicable filing fee has been paid. Under the rule, the transaction value is “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.” The new rule also provides detailed guidance on determining the value of consideration. Additionally, the new rule makes clear that CFIUS is not bound by the parties’ determination of the transaction value.
Dorsey attorneys are available to advise both U.S. and foreign parties to international investments or acquisitions and to navigate these unique national security review procedures under the CFIUS laws and regulations.