[Federal Register Volume 81, Number 127 (Friday, July 1, 2016)]
[Proposed Rules]
[Pages 43126-43130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15598]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
Bureau of Economic Analysis
15 CFR Part 801
[Docket No. 160531475-6475-01]
RIN 0691-AA85
Direct Investment Surveys: BE-13, Survey of New Foreign Direct
Investment in the United States, and Changes to Private Fund Reporting
on Direct Investment Surveys
AGENCY: Bureau of Economic Analysis, Commerce.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would amend regulations of the Department
of Commerce's Bureau of Economic Analysis (BEA) to set forth the
reporting requirements for the BE-13, Survey of New Foreign Direct
Investment in the United States. This proposed rule also provides
information about, and an opportunity to comment on, plans to amend the
reporting requirements for certain private funds on BEA's surveys of
foreign direct investment in the United States, including the BE-605,
Quarterly Survey of Foreign Direct Investment in the United States; the
BE-15, Annual Survey of Foreign Direct Investment in the United States;
and the BE-13, Survey of New Foreign Direct Investment in the United
States.
The BE-13 survey collects information on the acquisition or
establishment of U.S. business enterprises by foreign investors, and
information on expansions by existing U.S. affiliates of foreign
companies. The data collected through the survey are used to measure
the amount of new foreign direct investment in the United States and
ensure complete coverage of BEA's other foreign direct investment
statistics. BEA proposes several changes to the survey that will
simplify reporting and provide more complete information for use in
BEA's direct investment statistics. BEA also proposes
[[Page 43127]]
changes in survey form design and accompanying instructions to improve
the quality of the data collected and reduce respondent burden. This
mandatory BE-13 survey is required from persons subject to the
reporting requirements, whether or not they are contacted by BEA.
DATES: Comments on this proposed rule will receive consideration if
submitted in writing on or before 5:00 p.m. August 30, 2016.
ADDRESSES: You may submit comments, identified by RIN 0691- AA85, and
referencing the agency name (Bureau of Economic Analysis), by any of
the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. For Keyword or ID,
enter ``EAB-2016-0001.''
Email: [email protected].
Mail: Office of the Chief, Direct Investment Division,
U.S. Department of Commerce, Bureau of Economic Analysis, BE-49,
Washington, DC 20233.
Hand Delivery/Courier: Office of the Chief, Direct
Investment Division, U.S. Department of Commerce, Bureau of Economic
Analysis, BE-49, 4600 Silver Hill Road, Suitland, MD 20746.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in the
proposed rule should be sent to BEA through any of the methods above
and also to the Office of Management and Budget (OMB), OIRA, Paperwork
Reduction Project 0608-0035, Attention PRA Desk Officer for BEA, via
email at [email protected], or by FAX at 202-395-7245.
Public Inspection: All comments received are a part of the public
record and will generally be posted to http://www.regulations.gov
without change. All personal identifying information (for example,
name, address, etc.) voluntarily submitted by the commentator may be
publicly accessible. Do not submit confidential business information or
otherwise sensitive or protected information. BEA will accept anonymous
comments (enter N/A in required fields if you wish to remain
anonymous). Attachments to electronic comments will be accepted in
Microsoft Word, Excel, or Adobe portable document file (pdf) formats
only.
FOR FURTHER INFORMATION CONTACT: Patricia Abaroa, Chief, Direct
Investment Division (BE-49), Bureau of Economic Analysis, U.S.
Department of Commerce, 4600 Silver Hill Road, Washington, DC 20233;
phone (301) 278-9591.
SUPPLEMENTARY INFORMATION: BEA will conduct the BE-13 survey under the
authority of the International Investment and Trade in Services Survey
Act (22 U.S.C. 3101-3108). Section 4(a) of the Act provides that the
President shall, to the extent he deems necessary and feasible,
(1) conduct a regular data collection program to secure current
information on international capital flows and information related to
international investment and trade in services, including (but not
limited to) such information as may be necessary for computing and
analyzing the United States balance of payments, employment and taxes
of United States parents and affiliates, and the international
investment and trade in services position of the United States;
(2) conduct such studies and surveys as may be necessary to prepare
reports in a timely manner on specific aspects of international
investment and trade in services which may have significant
implications for the economic welfare and national security of the
United States.
In Section 3 of Executive Order 11961, the President delegated the
responsibility for performing functions under the Act concerning direct
investment to the Secretary of Commerce, who has redelegated the
responsibility to BEA.
The purpose of the BE-13 survey is to collect data on the
acquisition or establishment of U.S. business enterprises by foreign
investors and the expansion of existing U.S. affiliates of foreign
companies to establish a new facility where business is conducted. The
data collected on the survey are used to measure the amount of new
foreign direct investment in the United States, assess the impact on
the U.S. economy, and based on this assessment, make informed policy
decisions regarding foreign direct investment in the United States.
Foreign direct investment in the United States is defined as the
ownership or control, directly or indirectly, by one foreign person
(foreign parent) of 10 percent or more of the voting securities of an
incorporated U.S. business enterprise, or an equivalent interest of an
unincorporated U.S. business enterprise, including a branch.
BEA will make the survey available via eFile, BEA's electronic
filing system. Notifications will be mailed to respondents as BEA
becomes aware of a potentially reportable investment or when annual
cost updates are needed. A response is required whether or not the
respondent is contacted by BEA. The forms are due no later than 45 days
after the acquisition is completed, the new U.S. business enterprise is
established, the expansion is begun, the cost update is requested, or a
notification letter is received from BEA by a U.S. business enterprise
that does not meet the filing requirements for the survey.
This proposed rule would amend 15 CFR 801.7 to set forth the
reporting requirements for the BE-13, Survey of New Foreign Direct
Investment in the United States. The Department of Commerce, as part of
its continuing effort to reduce paperwork and respondent burden,
invites the general public and other Federal agencies to comment on
proposed and/or continuing information collections, as required by the
Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520 (PRA).
Description of Changes
BEA proposes to change the reporting requirements for certain
private funds that file BEA's surveys of foreign direct investment in
the United States: The BE-605, Quarterly Survey of Foreign Direct
Investment in the United States; BE-15, Annual Survey of Foreign Direct
Investment in the United States; and the BE-13, Survey of New Foreign
Direct Investment in the United States. The BE-12, Benchmark Survey of
Foreign Direct Investment in the United States, will also be affected
by this change but will be addressed in a separate proposed rule in
2017.
BEA, in cooperation with the Treasury Department, proposes to
instruct reporters of investments in private funds that meet the
definition of direct investment (that is, ownership by one person of 10
percent or more of the voting interest of a business enterprise) but
display characteristics of portfolio investment (specifically,
investors who do not intend to control or influence the management of
an operating company) to report through the Treasury International
Capital (TIC) reporting system, where other related portfolio
investments are already being reported, and not to report on BEA's
direct investment surveys. Direct investment in operating companies,
including investment by and through private funds, will continue to be
reported to BEA. This change will align the U.S. direct investment and
portfolio investment data more closely with the intent of the
investment. In addition, it will reduce burden for respondents, many of
whom now report both to the TIC reporting system and to BEA's direct
investment reporting system. Under the planned change, U.S.
[[Page 43128]]
affiliates that are private funds but do not own, directly or
indirectly, 10 percent or more of the voting interest of another
business enterprise that is not also a private fund or holding company,
will no longer be required to report on BEA surveys of foreign direct
investment in the United States.
The proposed changes also amend the regulations and the survey
forms for the BE-13 survey. These amendments include changes in
reporting requirements and questionnaire design and instructions as
well as data items collected. The following changes are specific to the
BE-13.
BEA proposes to combine Forms BE-13A, Report for Acquisition of a
U.S. Business Enterprise That Remains a Separate Entity, and BE-13C,
Report for Acquisition of a U.S. Business Enterprise That is Merged
With an Existing U.S. Affiliate, into one form and discontinue the use
of Form BE-13C. BEA proposes that these acquisitions be filed on Form
BE-13A along with acquired U.S. business enterprises that will operate
as a separate legal entity after the acquisition. The revised Form BE-
13A will be a report for a U.S. business enterprise when a foreign
entity acquires a voting interest (directly, or indirectly through an
existing U.S. affiliate) in that U.S. business enterprise (including
segments, operating units, or real estate) and (1) the total cost of
the acquisition is greater than $3 million; and (2) by this
acquisition, the foreign entity now owns at least 10 percent of the
voting interest (directly, or indirectly through an existing U.S.
affiliate) in the acquired U.S. business enterprise. BEA originally
offered separate forms to alleviate burden on the merging entities by
not asking unnecessary questions. BEA found that companies often did
not understand the difference between the forms and consequently
reported on the wrong one, resulting in resubmissions. Combining the
forms will eliminate confusion and the need for resubmission. BEA
proposes to redesign Form BE-13A--adding, deleting, and revising
questions--to limit the burden for the merging entities. These changes
will not affect the data reported on the survey.
BEA proposes to add an instruction to eliminate the requirement to
file two forms--Form BE-13B (establishment) and Form BE-13A
(acquisition)--when a new U.S. business enterprise is established to
facilitate a single U.S. acquisition that takes place within 30 days.
The U.S. business enterprise will be asked to consolidate the new U.S.
business enterprise with the acquired U.S. business enterprise and
submit a single Form BE-13A. The additional Form BE-13B did not provide
any benefit to BEA's data collection and the elimination of the BE-13B
filing requirement will be a reduction of burden on respondents. A
question will be added to Form BE-13A to capture the names of both the
established and acquired entities in this scenario.
BEA proposes to clarify the reporting requirements for Form BE-13E,
Cost Update for Projects Originally Reported on Forms BE-13B or BE-13D,
by removing the reference to the established or expanded business
enterprise still being under construction. At least one Form BE-13E
must be filed for each reported BE-13B or BE-13D form to obtain actual
costs since the cost data provided on these forms may not be final when
filed.
BEA is not proposing any changes to the reporting requirements for
Form BE-13D, Report for the Expansion of an Existing U.S. Affiliate, or
Form BE-13 Claim for Exemption.
BEA proposes to modify the questions on existing U.S. affiliates in
the ownership chain between the acquired or established U.S. business
enterprise and the foreign parent to narrow the focus to the specific
affiliates needed for analysis and to improve the sample frames of the
other BEA surveys. Currently, the questions about existing U.S.
affiliates are part of the foreign parent section, which is repeated
for each foreign parent, creating duplicate entries for existing U.S.
affiliates that have multiple foreign parents. The revised survey forms
will eliminate this duplication by creating a new section for reporting
ownership by existing U.S. affiliates. The updated questions increase
the value of the collected information, reduce processing time, and
reduce burden on respondents by greatly reducing the likelihood they
provide duplicate or otherwise unneeded information.
BEA proposes to restructure and rephrase the cost questions to more
accurately capture any funding from the affiliated foreign group to
facilitate the new foreign direct investment and to determine whether
the funding was in the form of a loan or capital contribution. These
data are needed to support BEA's U.S. International Transactions
Accounts.
BEA proposes to add an instruction on Forms BE-13B and BE-13D to
direct U.S. businesses to report total expected costs by year based on
their fiscal year end. Previously, the form did not specify whether to
report costs on a calendar or fiscal year end basis.
BEA proposes to add an instruction on Form BE-13 Claim for
Exemption to direct U.S. businesses that are reporting expansions to
skip the questions asking for U.S. affiliates' total assets, total
liabilities, and net income (loss). These questions are not asked on
Form BE-13D, Report for the Expansion of an Existing U.S. Affiliate,
where expected costs are greater than $3 million, so they are not
required for expansions with expected costs of $3 million or less. This
was an oversight when BEA created the survey form. U.S. affiliate total
sales, number of employees, industry code, country of foreign parent,
and country of ultimate beneficial owner will still be required.
BEA proposes to eliminate ``lease'' and ``construction'' from the
list of expected costs on Forms BE-13B and BE-13D. BEA will continue to
collect data on land; property, plant, and equipment (PP&E);
intellectual property rights; fees, taxes, permits, and licenses; and
other costs. Since leased equipment can also be classified as
construction costs or PP&E, respondents struggled with these questions
and the data BEA collected had costs inconsistently classified. BEA
determined that any capitalized lease or construction costs could be
collected as PP&E, so lease and construction can be eliminated. Any
construction costs that are not to be capitalized can be combined with
other costs.
BEA proposes to add a question to Form BE-13D to collect the name
of the expanding U.S. affiliate and to Form BE-13 Claim for Exemption
to collect the name of the acquired, established, or expanding U.S.
business enterprise. BEA has found that the name of the company filing
these forms is often different than the name of the acquired,
established, or expanding U.S. business enterprise. Obtaining the name
of the U.S. business enterprise would help BEA evaluate respondent
compliance.
BEA proposes to add a question to Form BE-13 Claim for Exemption to
collect the state where the new investment is located in cases when
this form is being filed to report a new investment that met all the
requirements for filing on Forms BE-13A, BE-13B, or BE-13D except the
$3 million reporting threshold. This addition will improve BEA's data
on new investment by state.
Executive Order 12866
This proposed rule has been determined to be not significant for
purposes of E.O. 12866.
Executive Order 13132
This proposed rule does not contain policies with Federalism
implications
[[Page 43129]]
sufficient to warrant preparation of a Federalism assessment under E.O.
13132.
Paperwork Reduction Act
This proposed rule contains a collection-of-information requirement
subject to review and approval by OMB under the PRA. The requirement
will be submitted to OMB for approval as a reinstatement, with change,
of a previously approved collection under OMB control number 0608-0035.
Notwithstanding any other provisions of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA unless that collection displays a currently
valid OMB control number.
The BE-13 survey, as proposed, is expected to result in the filing
of reports from approximately 2,550 U.S. affiliates each year. The
respondent burden for this collection of information will vary from one
company to another, but is estimated to average 1.1 hours per response,
including time for reviewing instructions, searching existing data
sources, gathering and maintaining the data needed, and completing and
reviewing the collection of information. Thus the total respondent
burden for this survey is estimated at 2,805 hours, compared to 2,160
hours for the previous BE-13 survey estimate. The increase in burden
hours is due to the increase in the number of respondents expected to
file. The previous estimate of the number of respondents was made
before the survey was launched; the revised estimate is based on two
years of data collection.
Comments are requested concerning: (a) 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; (b) The accuracy of the burden estimate; (c)
Ways to enhance the quality, utility, and clarity of the information
collected; and (d) Ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
Written comments regarding the burden-hour estimates or other
aspects of the collection-of-information requirements contained in the
proposed rule should be sent to both BEA and OMB following the
instructions given in the ADDRESSES section above.
Regulatory Flexibility Act
The Chief Counsel for Regulation, Department of Commerce, has
certified to the Chief Counsel for Advocacy, Small Business
Administration, under the provisions of the Regulatory Flexibility Act
(RFA), 5 U.S.C. 605(b), that this proposed rulemaking, if adopted, will
not have a significant economic impact on a substantial number of small
entities.
Most of the U.S. business enterprises that are required to file the
survey are units of multinational enterprises. In order to qualify as a
small business, the multinational enterprise as a whole must be
evaluated when determining if the business meets the size standards set
by the Small Business Administration. While BEA only collects
information on the U.S. portion of the multinational enterprise, BEA
estimates, based on private subscription-based databases, that fewer
than 2 percent of the U.S. businesses required to file the BE-13 survey
are units of foreign multinational enterprises that would be considered
small businesses.
For the few small businesses that meet the reporting requirements
of the survey, BEA has attempted to keep burden to a minimum by asking
only those questions that are considered essential. The questions
required are for data items that a company would ordinarily have
obtained when planning an acquisition, establishment, or expansion and
therefore the answers are likely to be readily available from the
existing records of the business.
Because few small businesses are required to file the survey and
because those that are impacted are subject to only a minimal reporting
burden, the Chief Counsel for Regulation certifies that this proposed
rule will not have a significant economic impact on a substantial
number of small entities.
List of Subjects in 15 CFR Part 801
Economic statistics, Foreign investment in the United States,
International transactions, Penalties, Reporting and record keeping
requirements.
Dated: June 17, 2016.
Brian Moyer,
Director, Bureau of Economic Analysis.
For reasons set forth in the preamble, BEA proposes to amend 15 CFR
part 801 as follows:
PART 801--SURVEY OF INTERNATIONAL TRADE IN SERVICES BETWEEN U.S.
AND FOREIGN PERSONS AND SURVEYS OF DIRECT INVESTMENT
0
1. The authority citation for 15 CFR part 801 continues to read as
follows:
Authority: 5 U.S.C. 301; 15 U.S.C. 4908; 22 U.S.C. 3101-3108;
E.O. 11961 (3 CFR, 1977 Comp., p. 86), as amended by E.O. 12318 (3
CFR, 1981 Comp. p. 173); and E.O. 12518 (3 CFR, 1985 Comp. p. 348).
0
2. Amend Sec. 801.7 to read as follows:
Sec. 801.7 Rules and regulations for the BE-13, Survey of New Foreign
Direct Investment in the United States.
The BE-13, Survey of New Foreign Direct Investment in the United
States, is conducted to collect data on the acquisition or
establishment of U.S. business enterprises by foreign investors and the
expansion of existing U.S. affiliates of foreign companies to establish
new facilities where business is conducted. Foreign direct investment
is defined as the ownership or control by one foreign person (foreign
parent) of 10 percent or more of the voting securities of an
incorporated U.S. business enterprise, or an equivalent interest of an
unincorporated U.S. business enterprise, including a branch. All legal
authorities, provisions, definitions, and requirements contained in
Sec. Sec. 801.1 through 801.2 and Sec. Sec. 801.4 through 801.6 are
applicable to this survey. Specific additional rules and regulations
for the BE-13 survey are given in paragraphs (a) through (d) of this
section. More detailed instructions are given on the report forms and
instructions.
(a) Response required. A response is required from persons subject
to the reporting requirements of the BE-13, Survey of New Foreign
Direct Investment in the United States, contained herein, whether or
not they are contacted by BEA. Also, a person, or their agent, who is
contacted by BEA about reporting in this survey, either by sending them
a report form or by written inquiry, must respond in writing pursuant
to this section. This may be accomplished by filing the properly
completed BE-13 report (BE-13A, BE-13B, BE-13D, BE-13E, or BE-13 Claim
for Exemption).
(b) Who must report. A BE-13 report is required of any U.S.
business enterprise, except certain private funds, see exception in
item (b.4.), in which:
(1) A foreign direct investment in the United States relationship
is created;
(2) An existing U.S. affiliate of a foreign parent establishes a
new U.S. business enterprise, expands its U.S. operations, or acquires
a U.S. business enterprise, or;
(3) BEA requests a cost update (Form BE-13E) for a U.S. business
enterprise that previously filed Form BE-13B or BE-13D.
(4) Certain private funds are exempt from reporting on the BE-13
survey. If a U.S. business enterprise is a private
[[Page 43130]]
fund and does not own, directly or indirectly, 10 percent or more of
another business enterprise that is not also a private fund or a
holding company, it is not required to file any BE-13 report except to
indicate exemption from the survey if contacted by BEA.
(c) Forms to be filed. Depending on the type of investment
transaction, U.S. affiliates would report their information on one of
five forms--BE-13A, BE-13B, BE-13D, BE-13E, or BE-13 Claim for
Exemption.
(1) Form BE-13A--Report for a U.S. business enterprise when a
foreign entity acquires a voting interest (directly, or indirectly
through an existing U.S. affiliate) in that U.S. business enterprise
including segments, operating units, or real estate; and
(i) The total cost of the acquisition is greater than $3 million;
and
(ii) By this acquisition, the foreign entity now owns at least 10
percent of the voting interest (directly, or indirectly through an
existing U.S. affiliate) in the acquired U.S. business enterprise.
(2) Form BE-13B--Report for a U.S. business enterprise when it is
established by a foreign entity or by an existing U.S. affiliate of a
foreign parent; and
(i) The expected total cost to establish the new U.S. business
enterprise is greater than $3 million; and
(ii) The foreign entity owns at least 10 percent of the voting
interest (directly, or indirectly through an existing U.S. affiliate)
in the new U.S. business enterprise.
(3) Form BE-13D--Report for an existing U.S. affiliate of a foreign
parent when it expands its operations to include a new facility where
business is conducted and the expected total cost of the expansion is
greater than $3 million.
(4) Form BE-13E--Report for a U.S. business enterprise that
previously filed Form BE-13B or BE-13D. Form BE-13E collects updated
cost information and will be collected annually until the establishment
or expansion of the U.S. business enterprise is complete.
(5) Form BE-13 Claim for Exemption--Report for a U.S. business
enterprise that:
(i) was contacted by BEA but does not meet the requirements for
filing Forms BE-13A, BE-13B, or BE-13D; or
(ii) whether or not contacted by BEA, met all requirements for
filing Forms BE-13A, BE-13B, or BE-13D except the $3 million reporting
threshold.
(d) Due date. The BE-13 forms are due no later than 45 calendar
days after the acquisition is completed, the new U.S. business
enterprise is established, the expansion is begun, the cost update is
requested, or a notification letter is received from BEA by a U.S.
business enterprise that does not meet the filing requirements for the
survey.
[FR Doc. 2016-15598 Filed 6-30-16; 8:45 am]
BILLING CODE 3510-06-P