CFIUS Filing Fees Become Reality

The U.S. Department of the Treasury (“Treasury”) announced that on Friday, May 1, 2020, the first-ever filing fees will become effective for joint voluntary notices submitted to the Committee on Foreign Investment in the United States (CFIUS). Notices submitted to CFIUS on or after May 1 will be subject to a filing fee of up to $300,000.

As discussed in our previous client alert, the new rule implements CFIUS’s authority to collect filing fees under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). Treasury accepted public comments through April 3, 2020, on the proposed filing fee rule issued last month. Although Treasury received several comments during this process—which focused generally on the potential impact of the filing fees on foreign investment in the United States, and on specific concerns such as calculating the filing fee based on complicated transaction structures—the final (interim) rule does not include any significant changes from the proposed rule. Treasury has extended the period for public comments on the interim rule through June 1, 2020.

The filing fees will apply to joint voluntary notices submitted to CFIUS for “covered transactions” and “covered real estate transactions,” as such terms are defined in the CFIUS regulations.  Filing fees do not apply to CFIUS declarations. The fees will follow a tiered scale based on the overall value of the transaction, which Treasury reiterated in the interim rule is intended to minimize the impact of these fees on small business concerns and on foreign investment in the United States more broadly. The structure of the filing fees is shown in the following table:

Parties to a CFIUS notice will be required to explain the methodology for calculating the filing fee based on the transaction value, and CFIUS will need to confirm that the applicable fee has been paid before beginning the initial 45-day notice review period. The rule also provides for filing fee waivers in cases where the CFIUS Staff Chairperson determines that extraordinary circumstances relating to national security warrant the filing fee being waived in whole or in part.

It remains to be seen what impact the new fee structure will have on parties’ decision-making with respect to submitting CFIUS filings, including whether it will encourage more parties to consider the declaration process as an alternative to filing a full CFIUS notice, particularly for transactions that are less sensitive from a national security perspective.