Filing fees — one of the long awaited (and dreaded) innovations of the 2018 Foreign Investment Risk Review Modernization Act (FIRRMA) that has transformed the Committee on Foreign Investment in the United States (CFIUS) — have finally arrived.
For more than 30 years, transactions could be submitted to CFIUS for review without a fee payable to the federal government. However, on March 4, 2020, the Department of the Treasury released proposed regulations, authorized by FIRRMA, that would assess filing fees in connection with the submission of voluntary written notices for “covered transactions” and “covered real estate transactions” as defined by CFIUS. (You can read our prior client alerts discussing these and other CFIUS concepts here.) Filing fees would not be assessed in connection with the submission of any declarations; provided, however, that a filing fee would apply in circumstances where parties to a covered transaction or a covered real estate transaction choose to submit a written notice after the Committee has completed its assessment of a declaration and the Committee either (i) requests that the parties file a written notice or (ii) informs parties that it is not able to conclude action and that the parties may file a written notice.
Treasury has proposed that the filing fees be determined by the value of the notified transaction, with transactions having a value of less than $500,000 not subject to a fee. For transactions with values equal to or exceeding $500,000, the filing fee would be tiered, 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 would be 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 would be 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 would be 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 would be assessed.
- Where the value of the transaction is equal to or greater than $750,000,000, a filing fee of $300,000 would be assessed.
Generally speaking, the filing fee would be due for payment prior to the Department of the Treasury accepting the notice for review. The proposed rule notes that the CFIUS Staff Chairperson may waive the fee in certain extraordinary circumstances; the proposal also indicates that waivers would be granted only sparingly.
The proposed rule addresses such matters as how the value of a transaction is calculated for purposes of assessing the fee, as well as timing rules for calculation of the fee. It also contains a number of examples illustrating various scenarios.
Comments on the proposed regulations are due 30 days after the proposed regulations are filed with the Federal Register, which was today. We tentatively estimate that this deadline will fall on or about April 3, 2020, but the deadline date will be fixed with certainty when the proposed regulations are published in the Federal Register, which is expected to be on Monday, March 9, 2020.