[Federal Register Volume 73, Number 56 (Friday, March 21, 2008)]
[Rules and Regulations]
[Pages 15078-15079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-5707]


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DEPARTMENT OF THE TREASURY

Office of International Investment

31 CFR Part 800


Regulations Pertaining to Mergers, Acquisitions and Takeovers

AGENCY: Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This final regulation amends regulations in part 800 of 31 CFR 
that implement section 721 of the Defense Production Act of 1950. The 
regulation amends a provision that pertains to the circumstances under 
which the Committee on Foreign Investment in the United States 
completes action following an investigation of a notified transaction, 
consistent with the amendments to section 721 made by the Foreign 
Investment and National Security Act of 2007 (``FINSA'').

DATES: Effective date: March 21, 2008.

FOR FURTHER INFORMATION CONTACT: Nova Daly, Deputy Assistant Secretary, 
U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW., 
Washington, DC 20220; telephone: (202) 622-2752; or e-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Background

    On July 26, 2007, President Bush signed into law the Foreign 
Investment and National Security Act of 2007 (``FINSA'') (Pub. L. 110-
49), which amends section 721 of the Defense Production Act of 1950 (50 
U.S.C. App. 2170 et seq.) (``section 721''), to codify the structure, 
role, process, and responsibilities of the Committee on Foreign 
Investment in the United States (``CFIUS''). Section 721 requires that, 
upon receipt by Treasury of written notification of a ``covered 
transaction'' (i.e., a merger, acquisition, or takeover by or with any 
foreign person that could result in foreign control of any person 
engaged in interstate commerce in the United States), the President, 
acting through CFIUS, shall review the transaction within 30 days to 
determine its effects on national security, based on any relevant 
factors, including several new factors FINSA added to an illustrative 
list contained in section 721. If, during its review, CFIUS determines 
that (1) the transaction threatens to impair U.S. national security and 
the threat has not yet been mitigated, (2) the lead agency recommends 
an investigation and CFIUS concurs, (3) the transaction would result in 
foreign government control, or (4) the transaction would result in the 
control of any U.S. critical infrastructure that could impair U.S. 
national security and the threat has not yet been mitigated, then CFIUS 
must conduct and complete within 45 days an investigation of the 
transaction. (The latter two grounds for an investigation do not 
mandate an investigation if the Secretary or Deputy Secretary of the 
Treasury and the equivalent lead agency counterparts jointly determine 
that the transaction will not impair U.S. national security.)
    FINSA does not require CFIUS, upon completion or termination of an 
investigation, to refer a transaction to the President for a final 
decision. On January 23, 2008, President Bush signed Executive Order 
13456 (further amending Executive Order 11858) that sets forth the 
circumstances under which a transaction shall be referred to the 
President for a final decision. Specifically, Section 6(c) of Executive 
Order 11858, as amended, provides that CFIUS ``shall send a report to 
the President requesting the President's decision with respect to a 
review or investigation of a transaction in the following 
circumstances:
    (i) The Committee recommends that the President suspend or prohibit 
the transaction;
    (ii) The Committee is unable to reach a decision on whether to 
recommend that the President suspend or prohibit the transaction; or
    (iii) The Committee requests that the President make a 
determination with regard to the transaction.''
    The current regulations, by contrast, require CFIUS, upon 
completion or termination of any investigation, to report to the 
President and include a recommendation for action. This final 
regulation conforms the regulations to FINSA and Executive Order 11858, 
as amended, by removing the requirement to report to the President 
following completion or termination of an investigation, except in the 
circumstances set forth in Executive Order 11858.
    Procedural Matters: It has been determined that this rule is not a 
significant regulatory action as defined in Executive Order 12866; 
therefore, a regulatory assessment is not required. Because no notice 
of proposed rulemaking is required, the provisions of the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) do not apply. Pursuant to 5 U.S.C. 
553(a)(1), this final rule relates to a foreign affairs function of the 
United States, and therefore is not subject to the delayed effective 
date provisions of the Administrative Procedures Act.
    Section 709 of the Defense Production Act (DPA) (50 U.S.C. App. 
2159) states that any regulation issued under the DPA shall be 
published in the Federal Register and opportunity for public comment 
shall be provided for not less than 30 days. In addition, FINSA 
requires regulations that carry out section 721 to be promulgated 
subject to notice and comment. However, this regulation is not being 
issued pursuant to the DPA or FINSA. Consequently, the

[[Page 15079]]

Department is amending this regulation without prior notice and 
comment. This final rule merely removes an internal CFIUS procedural 
requirement that was neither required by the DPA nor by any subsequent 
amendment, and brings the regulations in line with the newly amended 
Executive Order. The procedural change will affect only CFIUS in its 
processing of cases and will not affect parties to notified 
transactions. Accordingly, the Department finds that this final rule is 
not subject to the notice and comment provision of the DPA or FINSA.

List of Subjects in 31 CFR Part 800

    Foreign investments in United States, Investigations, National 
defense, Reporting and recordkeeping requirements.

0
For the reasons stated in the preamble, the Department of the Treasury 
amends 31 CFR part 800 as follows:

PART 800--REGULATIONS PERTAINING TO MERGERS, ACQUISITIONS AND 
TAKEOVERS BY FOREIGN PERSONS

0
1. The authority citation for part 800 is revised to read as follows:

    Authority: Section 721 of Pub. L. 100-418, 102 Stat. 1107, made 
permanent law by section 8 of Pub. L. 102-99, 105 Stat. 487 (50 
U.S.C. App. 2170) and amended by section 837 of the National Defense 
Authorization Act for Fiscal Year 1993, Pub. L. 102-484, 106 Stat. 
2315, 2463 and Pub. L. 110-49, 121 Stat 246; E.O. 11858, as amended 
by E.O. 12661, and further amended by Executive Order 13456.

0
2. Amend Sec.  800.504 by revising paragraph (b) to read as follows:


Sec.  800.504  Completion or termination of investigation and report to 
the President.

* * * * *
    (b) In circumstances when the Committee sends a report to the 
President requesting the President's decision upon completion or 
termination of an investigation, such report shall include information 
relevant to subparagraph (d)(4) of section 721, and shall present the 
Committee's recommendation. If the Committee is unable to reach a 
decision to present a single recommendation to the President, the 
Chairman shall submit a report of the Committee to the President 
setting forth the differing views and presenting the issues for 
decision.

    Dated: March 7, 2008.
Clay Lowery,
Assistant Secretary for International Affairs.
[FR Doc. E8-5707 Filed 3-20-08; 8:45 am]
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