March 11, 2020

National Security: Treasury Proposes CFIUS Filing Fee

The Foreign Investment Risk Review Modernization Act, or FIRRMA, authorizes CFIUS to establish a filing fee not to exceed the lesser of 1% of the transaction value or $300,000 (adjusted annually for inflation) for parties that make notifications to CFIUS.  This Ropes & Gray memo notes that the Treasury Department has recently proposed rules that would implement this filing fee requirement for parties that submit voluntary notices to CFIUS.

But as the memo notes, the proposed filing fee wouldn’t apply to all notifications, and that may influence some companies decisions about the approach they want to take:

Importantly, the Proposed Rule would not establish a filing fee for transactions that are notified to CFIUS via a declaration, the abbreviated notification process introduced by FIRRMA. Accordingly, parties to covered transactions (and covered real estate transactions) will have an additional factor to consider in determining whether to submit an abbreviated declaration, versus full-form filing:

Abbreviated declaration: No filing fee, less preparation time, and potential for faster resolution, but no guarantee of final action by the Committee.
Full-form notice: Filing fee, more preparation and review time, but guarantee of final action by the Committee.

The filing fee would also not apply to (1) unilateral reviews initiated by CFIUS; or (2) voluntary notices filed by the parties after submission of an abbreviated declaration. Along similar lines, the filing fee would not apply to re-submitted voluntary notices (i.e., if CFIUS requests that the parties withdraw and refile their notice, the parties will not be required to pay an additional filing fee), unless the Committee determines “a material change to the transaction has occurred, or a material inaccuracy or omission was made by the parties in information provided to the Committee.”

The proposal would permit the filing fee to be waived if “extraordinary circumstances relating to national security warrant,” although the memo says such waivers are likely to be infrequent.  The proposal would also require the fee to be refunded if CFIUS concludes that a voluntary notified transaction isn’t a covered transaction.  The comment period on the rule proposal expires April 8th.

John Jenkins