[Federal Register Volume 81, Number 203 (Thursday, October 20, 2016)]
[Rules and Regulations]
[Pages 72519-72522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25208]


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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 801

[Docket No. 160531475-6465-01]
RIN 0691-0691-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: Final rule.

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SUMMARY: The final rule amends 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 rule also amends 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 will make several changes to the survey that will 
simplify reporting and provide more complete information for use in 
BEA's direct investment statistics. BEA will also change the 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: This final rule will be effective November 21, 2016.

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; or via email at [email protected].

SUPPLEMENTARY INFORMATION: On July 1, 2016, BEA published a notice of 
proposed rulemaking that set forth revised reporting criteria for the 
BE-13, Survey of New Foreign Direct Investment in the United States (81 
FR 43126-43130). One comment on the proposed rule was received.
    The comment was written by a group representing U.S. asset 
management firms whose combined assets under management exceed $30 
trillion. The letter was generally supportive of the changes to the 
reporting requirements for private funds, but it did raise two points, 
one of which lead to a clarification in the reporting requirements for 
private funds which is outlined below.
    One point raised in the letter led to an adjustment to the language 
of the reporting requirements for private funds used in the proposed 
rule. As stated in the proposed rule, a foreign-owned U.S. private fund 
would be required to report on BEA's direct investment surveys if it 
owns at least 10 percent of an operating company. The letter pointed 
out that under this standard a private fund may be required to report 
on direct investment surveys even though in certain cases its foreign 
parent may own less than 10 percent of an operating company. For 
example, if a foreign parent owns 10 percent voting interest in a U.S. 
private fund, and that private fund owns 10 percent of an operating 
company, under the proposed rule the U.S. private fund would be 
required to report even though the foreign parent's indirect ownership 
interest in the operating company is just 1 percent. It was not BEA's 
intention to include investments of less than 10 percent foreign 
ownership in the direct investment statistics. In this final rule, BEA 
has clarified language regarding the private fund reporting 
requirements to indicate that if the foreign parent of a U.S. private 
fund does not own through the private fund 10 percent or more of an 
operating company, the private fund is not required to file.
    The letter also indicated that the burden estimate provided on the 
BE-13 form is understated. BEA's burden estimate is an average across 
the various BE-13 survey forms and across survey respondents with 
different levels of complexity and different activities or transactions 
that may be reported on the survey. BEA has noted the input from the 
private fund industry on burden estimates.
    This final rule amends 15 CFR part 801.7 to set forth the reporting 
requirements for the BE-13, Survey of New Foreign Direct Investment in 
the United States.
    BEA conducts the BE-13 survey under the authority of the 
International Investment and Trade in Services Survey Act (22 U.S.C. 
3101-3108).
    The BE-13 survey collects 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.

Description of Changes

    BEA amends 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

[[Page 72520]]

will be addressed in a proposed rule in 2017.
    BEA, in cooperation with the U.S. Treasury Department, will 
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 aligns the U.S. direct investment and 
portfolio investment data more closely with the intent of the 
investment with respect to management control. In addition, it reduces 
burden for respondents, many of whom now report both to the TIC 
reporting system and to BEA's direct investment reporting system. Under 
the revised regulations, U.S. affiliates that are private funds but 
whose foreign parents do not own through the private fund 10 percent or 
more of the voting interest of another business enterprise that is not 
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 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 will 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. These acquisitions should 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 will 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. A question will be added to Form BE-13A to capture 
the names of both the established and acquired entities in this 
scenario.
    BEA will 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 will not change 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 will 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.
    BEA will 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.
    BEA will 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.
    BEA will 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.
    BEA will 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.
    BEA will 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 will 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.

Executive Order 12866

    This final rule has been determined to be not significant for 
purposes of E.O. 12866.

Executive Order 13132

    This final rule does not contain policies with Federalism 
implications sufficient to warrant preparation of a Federalism 
assessment under E.O. 13132.

Paperwork Reduction Act

    The collection-of-information in this final rule was submitted to 
the Office of Management and Budget (OMB) pursuant to the requirements 
of the Paperwork Reduction Act (PRA). OMB approved the information 
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 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 2,860 hours, compared to 2,160 hours for 
the

[[Page 72521]]

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.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in the 
final rule should be sent to both BEA via email at 
[email protected], and to OMB, O.I.R.A., Paperwork Reduction 
Project 0608-0035, Attention PRA Desk Officer for BEA, via email at 
[email protected].

Regulatory Flexibility Act

    The Chief Counsel for Regulation, Department of Commerce, certified 
at the proposed rule stage 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 final rule will not 
have a significant economic impact on a substantial number of small 
entities. The factual basis for the certification was published in the 
proposed rule and is not repeated here. No comments were received 
regarding the certification or the economic impact of the rule more 
generally aside from the comment regarding the burden estimate. No 
final regulatory flexibility analysis was prepared.

List of Subjects in 15 CFR Part 801

    Economic statistics, Foreign investment in the United States, 
International transactions, Penalties, Reporting and recordkeeping 
requirements.

    Dated: October 6, 2016.
Brent Moulton,
Acting Director, Bureau of Economic Analysis.

    For reasons set forth in the preamble, BEA amends 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. Revise 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, persons, or their agents, that are 
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 
paragraph (b)(4) of this section, 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 fund and its foreign 
parent does not own through the private fund 10 percent or more of the 
voting interest of a business enterprise that is not also a private 
fund or a holding company, the private fund 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 shall 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

[[Page 72522]]

enterprise that does not meet the filing requirements for the survey.
[FR Doc. 2016-25208 Filed 10-19-16; 8:45 am]
 BILLING CODE 3510-06-P