[Federal Register Volume 82, Number 143 (Thursday, July 27, 2017)]
[Proposed Rules]
[Pages 34894-34898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-15695]


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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 801

[Docket No.: 170322304-7304-01]
RIN 0691-AA86


Direct Investment Surveys: BE-12, Benchmark Survey of Foreign 
Direct Investment in the United States

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Notice of proposed rulemaking.

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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 2017 BE-12, Benchmark Survey of Foreign 
Direct Investment in the United States. The BE-12 survey is conducted 
every five years; the prior survey covered 2012. The benchmark survey 
covers the universe of foreign direct investment in the United States 
and is BEA's most detailed survey of such investment. For the 2017 
benchmark survey, BEA proposes changes in data items collected, the 
design of the survey forms, and the reporting requirements for the 
survey to satisfy changing data needs, improve data quality and the 
effectiveness and efficiency of data collection.

DATES: Comments on this proposed rule will receive consideration if 
submitted in writing on or before 5 p.m. September 25, 2017.

ADDRESSES: You may submit comments, identified by RIN 0691-AA86, and 
referencing the agency name (Bureau of Economic Analysis), by any of 
the following methods:

[[Page 34895]]

     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments. For Keyword or ID, 
enter ``EAB-2017-0001.''
     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 both to BEA through any of the methods above and to the 
Office of Management and Budget (OMB), O.I.R.A., Paperwork Reduction 
Project 0608-0042, 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-50), Bureau of Economic Analysis, U.S. 
Department of Commerce, Washington, DC 20233; email 
[email protected] or phone (301) 278-9591.

SUPPLEMENTARY INFORMATION: The BE-12, Benchmark Survey of Foreign 
Direct Investment in the United States, is a mandatory survey and is 
conducted once every five years by BEA under the authority of the 
International Investment and Trade in Services Survey Act (22 U.S.C. 
3101-3108), hereinafter, ``the Act.''
    In 2012, BEA issued a rule (77 FR 24373) that established 
guidelines for collecting data on international trade in services and 
direct investment through notices, rather than through rulemaking. 
Persons are required to respond to other BEA surveys conducted under 
these guidelines only when they are contacted by BEA. Under this 
proposed rule, however, persons subject to the reporting requirements 
of the BE-12, Benchmark Survey of Foreign Direct Investment in the 
United States, would be required to respond whether or not they are 
contacted by BEA.
    The benchmark survey covers the universe of foreign direct 
investment in the United States in terms of value and is BEA's most 
detailed survey of such investment. 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 in an unincorporated U.S. business 
enterprise, including a branch.
    The purpose of the benchmark survey is to obtain universe data on 
the financial and operating characteristics of U.S. affiliates and on 
positions and transactions between U.S. affiliates and their foreign 
parent groups (which are defined to include all foreign parents and 
foreign affiliates of foreign parents). These data are needed to 
measure the size and economic significance of foreign direct investment 
in the United States, measure changes in such investment, and assess 
its impact on the U.S. economy. Such data are generally found in 
enterprise-level accounting records of respondent companies. These data 
are used to derive current universe estimates of direct investment from 
sample data collected in other BEA surveys in non-benchmark years. In 
particular, they serve as benchmarks for the quarterly direct 
investment estimates included in the U.S. international transactions, 
international investment position, and national income and product 
accounts, and for annual estimates of the foreign direct investment 
position in the United States and of the activities of the U.S. 
affiliates of foreign companies.
    This proposed rule would amend 15 CFR 801 to set forth the 
reporting requirements for the BE-12, Benchmark Survey of 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

    The proposed changes would amend the regulations and the survey 
forms for the BE-12 benchmark survey. These amendments include changes 
in data items collected, the design of the survey forms, and the 
reporting requirements for the survey.
    BEA proposes to change the reporting requirements for certain 
private funds that file the BE-12 survey. BEA, in cooperation with the 
U.S. Department of the Treasury, 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 
has already been implemented on BEA's other surveys of foreign direct 
investment in the United States: 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. 
Additional information on the change in reporting requirements for 
reporters of investments in private funds that do not meet the 
definition of direct investment and the implementation of changes on 
BEA's surveys of foreign direct investment in the United States can be 
found in the rule issued in 2016 (81 FR 72519).
    BEA proposes to add, delete, and modify some items on the benchmark 
survey forms. Most of the additions are proposed in response to 
suggestions from data users and to provide more information about 
foreign direct investment in the United States. The following items 
would be added to the benchmark survey:
    1. Expand sales of services breakdown on the BE-12A form to include 
sales of services to other U.S. affiliates of the same affiliated 
foreign group, sales to unaffiliated U.S. persons or entities, sales to 
the affiliated foreign group, sales to foreign affiliates owned by the 
U.S. affiliate responding to the survey, and sales to all other foreign 
persons or entities. Previously, BEA collected sales

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of services to U.S. persons or entities and to foreign persons or 
entities. This expansion will provide information on firm integration 
as well as insight into global value chains.
    2. Expand state-level data items on the BE-12A and BE-12B forms to 
include manufacturing employment; gross book value of property, plant 
and equipment; and the portion of the gross book value that is 
commercial property. BEA added these data items back to the BE-15 
annual survey beginning in 2014, after having eliminated them in 2008. 
This information was previously collected, then discontinued for the 
2012 benchmark survey, but the data are of interest to users and 
Congress provided funding to restore these data items.
    3. Add state of location to the BE-12C form, Part I. This will 
improve estimation of employment and property, plant, and equipment by 
location for smaller entities reporting on this abbreviated form.
    4. Add a question to collect the 20-digit Legal Entity Identifier 
of the U.S. affiliate on the BE-12A and BE-12B forms. This additional 
information will assist in matching entities across databases enabling 
better verification of data and linking to other surveys and publicly 
available data for these entities.
    5. Add a question asking whether the U.S. affiliate is a publicly 
traded company, and if it is, collect the stock exchange on which it is 
listed and the ticker symbol on the BE-12A and BE-12B forms. This 
additional information will assist in matching entities across 
databases enabling better verification of data and linking to other 
surveys and publicly available data for these entities.
    6. Add questions separating payables, receivables, interest 
payments, and interest receipts by foreign parents and foreign 
affiliates of foreign parents (FAFPs) on the BE-12B. Previously, data 
for foreign parents and FAFPs were combined for these data items. This 
change will better align the data collected in the BE-12 benchmark 
survey with the BE-605 quarterly survey and assist in updating the 
statistics on foreign direct investment transactions, positions, and 
income to include the benchmark survey results.
    7. Add a Part III to BE-12C to expand information collected on 
foreign ownership to better align the data collected on the BE-12 
benchmark survey with the BE-605 quarterly survey and assist in 
updating the statistics on foreign direct investment to include the 
benchmark survey results. Part III will include new questions on 
whether each parent has a direct or indirect ownership interest in the 
U.S. affiliate being reported, and if direct, the equity percentage of 
the parent's ownership in the affiliate. Part III will also include 
existing questions that were in Part II of the 2012 BE-12 survey about 
the name and industry of each foreign parent and name, country, and 
industry of each ultimate beneficial owner in addition to the new 
questions. Part III will be preceded by a request at the end of Part II 
to enter the number of foreign parents and instructions to file a Part 
III for each foreign parent. Part III will only be completed by larger 
BE-12C filers (those with assets, sales, or net income greater than $20 
million).
    8. Add a private funds exemption option to the BE-12 Claim for Not 
Filing. This is a change to prior reporting requirements for all BEA 
direct investment surveys and exempts certain private funds that were 
previously required to report.
    9. Add U.S. tax withheld on dividends to the BE-12B Part III to 
better align the data collected in the BE-12 benchmark survey with the 
BE-605 quarterly survey and assist in updating the statistics on 
foreign direct investment to include the benchmark survey results.
    10. Add intercompany debt payables and receivables to the BE-12C 
Part I to provide information on debt transactions of smaller 
affiliates, which will improve the foreign direct investment statistics 
in the U.S. international transactions and international investment 
position accounts.
    11. Add questions to the BE-12C to determine if the U.S. affiliate 
has consolidated and unconsolidated affiliates. Add Supplement A (list 
of the U.S. business enterprises consolidated) and Supplement B (list 
of U.S. business enterprises not consolidated) to the BE-12C. These 
items aid in determining whether correct entities are being 
consolidated, in improving coverage of indirectly-owned affiliates, and 
in linking data across datasets. These items are already a part of the 
BE-12A and BE-12B.
    BEA also proposes to eliminate the following items from the 
benchmark survey: Questions on contract manufacturing services will be 
deleted (BE-12A, items 24, 25, 26, and 27). The data collected have not 
met expectations for use and alternative methods are being developed to 
address the issue. Questions on wholesale and retail trade industry 
activities will be deleted (BE-12A, items 63a, 63b, and 63c). Similar 
information is available from other sources. A question on prior year 
closing balance for voting interest will be removed from the BE-12C. 
This information is not necessary as many of the BE-12C affiliates do 
not file in non-benchmark years so no comparison to prior year is 
needed.
    In addition, BEA proposes to make the following modifications to 
the survey forms: Modifying instructions on the BE-12B form for 
employment by location to explain the expanded state-level data items 
(see Item 2. in Additions). This modification is consistent with the 
change made to the annual survey forms following the addition of the 
data items listed in Item 2. in Additions. Modifying question 87 on the 
BE-12A to separate amounts reported for ``change in entity'' and 
``change in accounting methods or principles.'' Adding a checkbox 
asking if the change in accounting methods or principles is due in 
whole or in part to early implementation of FASB ASU No. 2016-02, 
Leases (Topic 842). Identifying companies that have implemented this 
change early may assist in assessing the impact of full implementation 
on BEA's statistics.

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 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 0608-0042.
    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-12 survey, as proposed, is expected to result in the filing 
of reports from approximately 22,700 U.S. affiliates. Total annual 
burden is calculated by multiplying the estimated number of submissions 
of each form (A, B, C, and Claim for Not Filing) by the average hourly 
burden per form and summing the results for the four forms. The 
respondent burden for this collection of information will vary from one 
company to another. The estimated

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average time per respondent is 11.0 hours (249,625 hours/22,700 
respondents) 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 
249,625 hours, compared to 194,150 hours for the previous (2012) 
benchmark survey. An increase in the number of foreign-owned companies 
accounts for over 80 percent of the increase in the estimated 
respondent burden, and the new survey questions account for the rest of 
the increase.
    Comments are requested concerning: 1. 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; 2. the accuracy of the burden estimate; 3. ways 
to enhance the quality, utility, and clarity of the information 
collected; and 4. 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. 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, the size 
determination takes into account the sizes of both the U.S. businesses 
and their foreign parents. BEA estimates that fewer than 1 percent of 
the U.S. businesses required to file the BE-12 survey are considered 
small businesses based on the SBA size standards.
    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 amount of 
information required to be reported by each U.S. affiliate is 
determined by the size of the affiliate's assets, sales, or net income 
or loss. The reporting thresholds for Form BE-12A (the longest form) 
and Form BE-12B are $300 million and $60 million, respectively. All 
affiliates below $60 million will file on Form BE-12C (the shortest 
form). The smallest affiliates, those below $20 million, are only 
required to report a few items on Form BE-12C. These data items are 
likely to be readily available from existing business records. 
Compliance with the survey should take less than one hour. The cost 
should be less than $40.00 to a small business. Because few small 
businesses are required to file the survey and because those impacted 
are subject to only 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 direct investment in the United 
States, International transactions, Multinational enterprises, 
Penalties, Reporting and recordkeeping requirements.

    Dated: July 17, 2017.
Brian C. 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. Revise Sec.  801.3 to read as follows:


Sec.  801.3  Reporting requirements.

    Except for surveys subject to rulemaking in Sec. Sec.  801.7, 
801.8, 801.9, and 801.10, reporting requirements for all other surveys 
conducted by the Bureau of Economic Analysis shall be as follows:
    (a) Notice of specific reporting requirements, including who is 
required to report, the information to be reported, the manner of 
reporting, and the time and place of filing reports, will be published 
by the Director of the Bureau of Economic Analysis in the Federal 
Register prior to the implementation of a survey;
    (b) In accordance with section 3104(b)(2) of title 22 of the United 
States Code, persons notified of these surveys and subject to the 
jurisdiction of the United States shall furnish, under oath, any report 
containing information which is determined to be necessary to carry out 
the surveys and studies provided for by the Act; and
    (c) Persons not notified in writing of their filing obligation by 
the Bureau of Economic Analysis are not required to complete the 
survey.
0
3. Amend Sec.  801.10 to read as follows:


Sec.  801.10  Rules and regulations for BE-12, Benchmark Survey of 
Foreign Direct Investment in the United States--2017.

    A BE-12, Benchmark Survey of Foreign Direct Investment in the 
United States, will be conducted covering 2017. 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-12 survey 
are given in paragraphs (a) through (e) 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-12, Benchmark Survey of Foreign 
Direct Investment in the United States--2017, contained in this 
section, whether or not they are contacted by BEA. Also, a person, or 
their agent, contacted by BEA about reporting in this survey, either by 
sending them a report form or by written inquiry, must respond in 
writing pursuant this section. This may be accomplished by filing a 
properly completed BE-12 report (BE-12A, BE-12B, BE-12C, or BE-12 Claim 
for Not Filing);
    (b) Who must report. A BE-12 report is required for each U.S. 
affiliate (except certain private funds as described below), that is, 
for each U.S. business enterprise in which a foreign person (foreign 
parent) owned or controlled, directly or indirectly, 10 percent or more 
of the voting securities in an incorporated U.S. business enterprise, 
or an equivalent interest in an unincorporated U.S. business 
enterprise, at the end of the business enterprise's fiscal year that 
ended in

[[Page 34898]]

calendar year 2017. Certain private funds are exempt from reporting on 
the BE-12 survey. If a U.S. business meets ALL of the following 3 
criteria, it is not required to file any BE-12 report except to 
indicate exemption from the survey if contacted by BEA: (1) The U.S. 
business enterprise is a private fund; (2) the private fund does not 
own, directly or indirectly through another business enterprise, an 
``operating company''--i.e., a business enterprise that is not a 
private fund or a holding company--in which the foreign parent owns at 
least 10 percent of the voting interest; AND (3) if the foreign parent 
owns the private fund indirectly (through one or more other U.S. 
business enterprises); there are no U.S. ``operating companies'' 
between the foreign parent and the indirectly-owned private fund.
    (c) Forms to be filed. (1) Form BE-12A must be completed by a U.S. 
affiliate that was majority-owned by one or more foreign parents (for 
purposes of this survey, a ``majority-owned'' U.S. affiliate is one in 
which the combined direct and indirect ownership interest of all 
foreign parents of the U.S. affiliate exceeds 50 percent) if, on a 
fully consolidated basis, or, in the case of real estate investment, on 
an aggregated basis, if any one of the following three items for the 
U.S. affiliate (not just the foreign parent's share) was greater than 
$300 million (positive or negative) at the end of, or for, its fiscal 
year that ended in calendar year 2017:
    (i) Total assets (do not net out liabilities);
    (ii) Sales or gross operating revenues, excluding sales taxes; or
    (iii) Net income after provision for U.S. income taxes.
    (2) Form BE-12B must be completed by:
    (i) A majority-owned U.S. affiliate if, on a fully consolidated 
basis, or, in the case of real estate investment, on an aggregated 
basis, any one of the three items listed in paragraph (c)(1) of this 
section (not just the foreign parent's share), was greater than $60 
million (positive or negative) but none of these items was greater than 
$300 million (positive or negative) at the end of, or for, its fiscal 
year that ended in calendar year 2017.
    (ii) A minority-owned U.S. affiliate (for purposes of this survey, 
a ``minority-owned'' U.S. affiliate is one in which the combined direct 
and indirect ownership interest of all foreign parents of the U.S. 
affiliate is 50 percent or less) if, on a fully consolidated basis, or, 
in the case of real estate investment, on an aggregated basis, any one 
of the three items listed in paragraph (c)(1) of this section (not just 
the foreign parent's share), was greater than $60 million (positive or 
negative) at the end of, or for, its fiscal year that ended in calendar 
year 2017.
    (3) Form BE-12C must be completed by a U.S. affiliate if, on a 
fully consolidated basis, or, in the case of real estate investment, on 
an aggregated basis, none of the three items listed in paragraph (c)(1) 
of this section for a U.S. affiliate (not just the foreign parent's 
share), was greater than $60 million (positive or negative) at the end 
of, or for, its fiscal year that ended in calendar year 2017.
    (4) BE-12 Claim for Not Filing will be provided for response by 
persons that are not subject to the reporting requirements of the BE-12 
survey but have been contacted by BEA concerning their reporting 
status.
    (d) Aggregation of real estate investments. All real estate 
investments of a foreign person must be aggregated for the purpose of 
applying the reporting criteria. A single report form must be filed to 
report the aggregate holdings, unless written permission has been 
received from BEA to do otherwise. Those holdings not aggregated must 
be reported separately on the same type of report that would have been 
required if the real estate holdings were aggregated.
    (e) Due date. A fully completed and certified Form BE-12A, BE-12B, 
BE-12C, or BE-12 Claim for Not Filing is due to be filed with BEA not 
later than May 31, 2018 (or by June 30, 2018 for reporting companies 
that use BEA's eFile system).

[FR Doc. 2017-15695 Filed 7-26-17; 8:45 am]
 BILLING CODE 3510-06-P