The U.S. Department of the Treasury late yesterday released a draft set of regulations that would establish, for the first time, filing fees for most transactions submitted to the Committee on Foreign Investment in the United States (CFIUS). Under the draft regulations, CFIUS would assess fixed filing fees based on the size of reviewed transactions—with fees ranging from $750 for small transactions to $300,000 for large transactions. Payment of the requisite filing fee would be required before CFIUS commenced its review of the relevant transaction.
The Treasury Department release solicited public input on the proposed filing fees and various related issues. The release especially sought feedback on the Treasury Department’s conclusion that the proposed fees would not discourage transactions or voluntary filings with CFIUS, allowing parties to continue the practice of determining whether to file for CFIUS review based on an evaluation of the facts and circumstances of each transaction. Interested parties must submit any comments regarding the proposed regulations within 30 days after submission of the release to the U.S. Federal Register (March 4).
CFIUS does not currently assess filing fees on transactions submitted for national security review as it historically lacked statutory authority to impose such fees. However, the Foreign Investment Risk Review and Modernization Act of 2018 (FIRRMA) provided CFIUS with the authority to assess and collect filing fees for most transactions submitted for its review and clearance. FIRRMA did not specify exact filing fee amounts—leaving that issue for CFIUS to establish through regulation—but did require that CFIUS base fee amounts on the overall value of the transaction. It further limited CFIUS from establishing fees in an amount greater than one percent of the value of a transaction, or $300,000, adjusted annually for inflation.
Proposed Filing Fees
Consistent with the FIRRMA requirements, the proposed filing fees would be based on the value of a transaction, with the smallest transactions (i.e., those with a value of less than $500,000) exempt from any filing fees. For transactions with values equal to or exceeding $500,000, the proposed regulations would adopt the following tiered, fixed-fee approach:
Transaction value from $500,000 to $4,999,999 – $750 filing fee
Transaction value from $5,000,000 to $49,999,999 – $7,500 filing fee
Transaction value from $50,000,000 to $249,999,999 – $75,000 filing fee
Transaction value from $250,000,000 to $749,999,999 – $150,000 filing fee
Transaction value greater than $750,000,000 – $300,000 filing fee
Under the proposed regulations, CFIUS would impose filing fees only on transactions submitted to it pursuant to its traditional joint voluntary notice filing process. Transactions submitted via the short-form declaration filing process recently implemented by CFIUS would not be subject to filing fees. The proposed regulations require that transaction parties remit the applicable filing fee at the time they file the notice by electronic payment in U.S. dollars. CFIUS would not begin its review of a transaction until payment of the requisite fee. The Treasury Department’s release further states that CFIUS would not, as a general matter, provide refunds of filing fees unless it subsequently determines that it lacked jurisdiction to review a transaction.
The proposed regulations permit the CFIUS Staff Chair to waive filing fees, in whole or in part, if the Staff Chair determines that “extraordinary circumstances” relating to national security warrant such a waiver. Additionally, the proposed rules would not require transaction parties to pay an additional filing fee in the event they withdrew and refiled their notice, unless the CFIUS Staff Chair determined that a material change to the transaction had occurred or a material inaccuracy or omission had been made to CFIUS by the parties.
For purposes of calculating the value of the transaction, the proposed regulations state that it would be calculated as the total value of all consideration that had been or would be paid in the context of the transaction by the foreign investor, including cash, assets, shares or other ownership interests, debt forgiveness, services or other in-kind consideration. If the consideration included 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 filed the notice. For transactions effectuated in multiple phases, the value of the transaction would equal the total value of the combined transactions, including the multiple phases or any contingent equity interests.
Imposition of filing fees for transaction reviews continues CFIUS’s evolution from an ad hoc transaction-specific inquiry to a highly formalized and structured review process. In proposing fixed fees based on transaction values, moreover, the Treasury Department undoubtedly was informed by other U.S. government transaction review processes that have adopted similar approaches (e.g., Hart-Scot-Rodino Act antitrust reviews).
The proposed regulations closely track the requirements of FIRRMA and, generally speaking, do not include any unforeseen requirements or exceptions. The filing fee exemption for short-form declaration filings is notable, but tracks the requirements of FIRRMA. Nevertheless, this exemption should be closely monitored as it may help to spur certain transaction parties to pursue the more expedited (and now lower cost) clearance process provided for declaration filings.
It is unlikely that final regulations implementing the filing fee proposals will be effective for some time. As such, transaction parties that anticipate making notice filings with CFIUS at any point in the next several months should not be subject to filing fees.