On March 4, 2020, the Department of the Treasury issued proposed regulations to establish a filing fee for parties filing notices seeking approval for transactions involving foreign investment with the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”). The proposed regulations do not specify a date for when the final regulations would go into effect, nor for when the filing fee requirement would begin to apply to transactions.

The rule implements section 1723 of the Foreign Investment Risk Review Modernization Act of 2018, which authorizes CFIUS to collect fees. The filing fees apply to “covered transactions” under 31 C.F.R. Part 800 and “covered real estate transactions” under Part 802, discussed in our February Legal Update, when the value of the transaction is at least $500,000. There is no filing fee if parties submit a declaration (a short-form filing with CFIUS regarding a transaction). However, the filing fee applies if the parties to a transaction file a notice with the Committee, including notices filed following the Committee’s assessment of a declaration, and CFIUS requests or suggests that the parties submit a written notice. No additional filing fee is required if the staff chairperson permits the parties to withdraw and resubmit their notice, absent a few exceptions where new information would be presented.

Under the proposed rule, the filing fee ranges from $750 to $300,000 and is based on the value of the transaction:

For purposes of the proposed rule, “transaction value” is 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.

Under the proposed rule, CFIUS will not accept a notice for review until the appropriate fee is paid, thus delaying the CFIUS review timeline for any parties that file their notice before submitting the proper payment. The staff chairperson may also reject a notice upon a determination that the filing fee is insufficient (for example, if the chairperson disagrees with the parties’ valuation of the transaction). Before rejecting a notice, however, the chairperson must inform the parties in writing of the underpayment and give the parties three business days to pay the remainder of the filing fee.

The proposed rule also requires parties to provide additional information in the notice: Parties must include the value of the transaction and the parties’ assessment of the applicable fee, including an explanation of how the parties determined the valuation.

The Treasury published the notice to the Federal Register on March 9. Written comments must be received by April 3, 2020.