BEA Final Rule on Quarterly Foreign Direct Investment Surveys

Content

ACTION:

Final rule.

SUMMARY:

This final rule amends regulations of the Bureau of Economic Analysis (BEA) setting forth reporting requirements for the BE-605
quarterly survey of foreign direct investment in the United States. The survey obtains quarterly sample data on transactions
and positions between foreign-owned U.S. business enterprises (U.S. affiliates) and their “affiliated foreign groups” (i.e., their foreign parents and foreign affiliates of their foreign parents).

Through this rule, BEA will make a number of changes to the BE-605 survey. BEA will discontinue the use of separate forms
for banks. Beginning with the first quarter of 2010, both bank and nonbank U.S. affiliates will file Form BE-605. In conjunction
with this change, BEA will change the title of Form BE-605. BEA will add and delete certain items on the survey form and change
the reporting criteria. BEA will also collect identification information for affiliates filing Form BE-605 for the first time,
and make changes to the BE-605 form and instructions to bring them into conformity with the recently revised annual and benchmark
surveys of foreign direct investment in the United States.

DATES:

This final rule will be effective January 8, 2010.

FOR FURTHER INFORMATION CONTACT:

David H. Galler, Chief, Direct Investment Division (BE-50), Bureau of Economic Analysis, U.S. Department of Commerce, Washington,
DC 20230;e-mail david.galler@bea.gov or phone (202) 606-9835.

SUPPLEMENTARY INFORMATION:

In the September 2, 2009,
Federal Register
, 74 FR 45383-45385, BEA published a notice of proposed rulemaking that set forth revised reporting criteria for the BE-605,
Quarterly Survey of Foreign Direct Investment in the United States—Transactions of U.S. Affiliate with Foreign Parent. No
comments on the proposed rule were received. Thus, the proposed rule is adopted without change. This final rule amends 15
CFR 806.15 to set forth the reporting requirements for the BE-605 quarterly survey of foreign direct investment in the United
States.

The BE-605 survey is a mandatory quarterly survey of foreign direct investment conducted by BEA under the International Investment
and Trade in Services Survey Act (22 U.S.C. 3101-3108). BEA will send BE-605 survey forms to potential respondents each quarter;
responses will be due within 30 days after the end of each quarter, except for the final quarter of the fiscal year when reports
will be due within 45 days of the end of the quarter.

Description of Changes

BEA is making a number of changes to the BE-605 survey. BEA is discontinuing the use of separate forms for banks. Beginning
with the first quarter of 2010, both bank and nonbank U.S. affiliates will file Form BE-605. In conjunction with this change,
BEA is changing the title of Form BE-605 to “Quarterly Survey of Foreign Direct Investment in the United States—Transactions
of U.S. Affiliate with Foreign Parent.” Changes to language and instructions are being made to align Form BE-605 with recent
changes to the annual and benchmark surveys of foreign direct investment.

BEA is adding items to Form BE-605 to collect additional identification information on U.S. affiliates of foreign parents
filing the survey for the first time. (BEA previously collected more extensive identification information on the U.S. business
being established or acquired, and on the new foreign owner, through Form BE-13, Initial Report on a Foreign Person's Direct
or Indirect Acquisition, Establishment, or Purchase of the Operating Assets, of a Business Enterprise, Including Real Estate,
which was recently discontinued.) These additional items include the date the business enterprise became a U.S. affiliate
of a foreign parent, and the U.S. affiliate's industry. BEA is adding a question to the survey that asks U.S. affiliates whether
they are planning to construct, or are in the process of constructing, a new production establishment.

BEA is discontinuing the collection of information on permanent intercompany debt funding, and interest receipts and payments
associated with that funding, between U.S. affiliates that are banks and their foreign parents. This debt funding information
is collected by the Treasury International Capital System, and recent changes in international statistical guidelines call
for it now to be classified as portfolio investment. BEA will no longer collect data on loan loss reserves for banks, which,
along with a number of related items, had been requested on the specialized bank form that will be discontinued. BEA will
continue to collect intercompany debt and related interest data for the units of a consolidated U.S. bank affiliate that have
insurance, real estate, or leasing activities.

BEA is increasing the exemption level for reporting on Form BE-605 from $30 million to $60 million. The exemption level is
stated in terms of the U.S. affiliate's total assets, sales or gross operating revenues, and net income after U.S. income
taxes. At the new reporting threshold, BEA expects about 4,000 U.S. affiliates to report each quarter. This number is slightly
higher than the number—3,950—estimated at the time of the last clearance of the survey. However, the increase reflects growth
in the number of foreign-owned firms, and would be significantly higher in the absence of the increase in the reporting threshold.

Survey Background

The BEA conducts the BE-605 survey under the International Investment and Trade in Services Survey Act (“the Act”). Section
4(a) of the Act provides that, with respect to foreign direct investment in the United States, the President shall, to the
extent he deems it necessary and feasible, “conduct a regular data collection program to secure current information on international
capital flows and other information related to international investment and trade in services, including (but not limited
to) such information as may be necessary for computing and analyzing the United States balance of payments, the employment
and taxes of United States parents and affiliates, and the international investment * * * position of the United States.”

In section 3 of Executive Order 11961, as amended by Executive Orders 12318 and 12518, the President delegated the responsibility
for performing functions under the Act concerning direct investment to the Secretary of Commerce, who has redelegated it to
BEA.

The BE-605 quarterly survey is a sample survey that collects data on transactions and positions between foreign-owned U.S.
business enterprises and their “affiliated foreign groups” (i.e., their foreign parents and foreign affiliates of their foreign parents). The sample data are used to derive universe estimates
in non-benchmark years from similar data reported in the BE-12, Benchmark Survey of Foreign Direct Investment in the United
States, which is conducted every five years. The data are used in the preparation of the U.S. international transactions accounts,
national income and product accounts, and input-output accounts. The 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.

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 has been submitted to the Office of Management and Budget (OMB) under the
Paperwork Reduction Act (PRA). OMB approved the information collection under control number 0608-0009.

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 Paperwork Reduction Act
unless that collection displays a currently valid OMB control number.

The BE-605 survey is expected to result in the filing of about 4,000 reports each financial quarter. The respondent burden
for this collection of information is estimated to vary from one-half hour to three hours per response, with an average of
one hour 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. (The burden will vary depending, in part, on
the size and ownership structure of the U.S. business enterprise that is being reported.) Because reports are filed 4 times
per year, 16,000 responses annually are expected. Thus, the average total annual respondent burden of the survey is estimated
at 16,000 hours (4,000 respondents filing 4 times per year multiplied by 1 hour average burden). This estimate is slightly
higher than the 15,800 burden hours currently in the OMB inventory for this survey because the increase in burden due to the
growth in the number of foreign-owned firms slightly exceeds the reduction in burden resulting from the increase in the reporting
threshold.

Written comments regarding the burden-hour estimates or any other aspect of the collection-of-information requirements contained
in the final rule should be sent both to the Bureau of Economic Analysis via mail to U.S. Department of Commerce, Bureau of
Economic Analysis, Office of the Chief, Direct Investment Division, BE-50, Washington, DC 20230; via e-mail at David.Galler@bea.gov; or by FAX at (202) 606-5311, and to the Office of Management and Budget, O.I.R.A., Paperwork Reduction Project 0608-0009,
Attention PRA Desk Officer for BEA, via e-mail at pbugg@omb.eop.gov, or by FAX at (202) 395-7245.

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 (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 economic impact of the rule. As a result, no final regulatory flexibility analysis
  was prepared.

List of Subjects in 15 CFR Part 806

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

Dated: November 16, 2009. J. Steven Landefeld, Director, Bureau of Economic Analysis. Regulatory Text For the reasons set forth in the preamble, BEA amends 15 CFR Part 806 as follows:

PART 806—DIRECT INVESTMENT SURVEYS

1. The authority citation for 15 CFR part 806 continues to read as follows:

Authority:

5 U.S.C. 301; 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).

1. Section 806.15(h) is revised to read as follows:

§ 806.15 Foreign direct investment in the United States.

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(h) Quarterly report form. BE-605, Quarterly Survey of Foreign Direct Investment in the United States—Transactions of U.S. Affiliate with Foreign Parent:
One report is required for each U.S. affiliate exceeding an exemption level of $60 million.

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[FR Doc. E9-29312 Filed 12-8-09; 8:45 am] BILLING CODE 3510-06-P

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