E9-21132. Direct Investment Surveys: BE-605, Quarterly Survey of Foreign Direct Investment in the United States-Transactions of U.S. Affiliate With Foreign Parent

AGENCY:

Bureau of Economic Analysis, Commerce.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

This proposed 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).

BEA proposes a number of changes to the BE-605 survey. BEA proposes to discontinue the use of separate forms for banks. Beginning with the first quarter of 2010, both bank and nonbank U.S. affiliates would file Form BE-605. In conjunction with this change, BEA proposes to change the title of Form BE-605. BEA proposes to add and delete certain items on the survey form and change the reporting criteria. BEA also proposes to collect identification information for affiliates filing Form BE-605 for the first time, and to 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:

Comments on this proposed rule will receive consideration if submitted in writing on or before 5 p.m. November 2, 2009.

ADDRESSES:

You may submit comments, identified by RIN 0691-AA70, and referencing the agency name (Bureau of Economic Analysis), by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. For agency, select “Commerce Department—all.”
• E-mail: [e-mail].
• Fax: Office of the Chief, Direct Investment Division, [phone].
• Mail: Office of the Chief, Direct Investment Division, U.S. Department of Commerce, Bureau of Economic Analysis, BE-50, Washington, DC 20230.
• Hand Delivery/Courier: Office of the Chief, Direct Investment Division, U.S. Department of Commerce, Bureau of Economic Analysis, BE-50, Shipping and Receiving, Section M100, 1441 L Street NW., Washington, DC 20005.

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 through any of the methods above and to the Office of Management and Budget (OMB), O.I.R.A., Paperwork Reduction Project 0608-0009, Attention PRA Desk Officer for BEA, via e-mail at [e-mail], or by FAX at [phone].

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.

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; phone [phone].

SUPPLEMENTARY INFORMATION:

This proposed rule would amend 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 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”).

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 (“the Act”). 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 proposes a number of changes to the BE-605 survey. First, BEA proposes to discontinue the use of separate forms for banks. Beginning with the first quarter of 2010, both bank and nonbank U.S. affiliates would file Form BE-605. In conjunction with this change, BEA proposes to change 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 will be made to align Form BE-605 with recent changes to the annual and benchmark surveys of foreign direct investment.

BEA also proposes to add 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 also proposes to add 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.

In addition, BEA proposes to discontinue collecting 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 also proposes to discontinue collecting 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.

Finally, BEA proposes to increase 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 proposed increase in the reporting threshold.

Survey Background

The BEA conducts the BE-605 survey under the International Investment and Trade in Services Survey 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 nonbenchmark 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 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 as that term is defined in E.O. 13132.

Paperwork Reduction Act

This proposed rule contains a collection-of-information requirement subject to review and approval by the Office of Management and Budget (“OMB”) under the Paperwork Reduction Act (“PRA”). The requirement will be submitted to OMB for approval as a revision to a collection currently approved under OMB 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 PRA unless that collection displays a currently valid OMB control number.

As proposed, the BE-605 survey is expected to result in the filing of approximately 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 proposed increase in the reporting threshold.

Comments are requested concerning: (a) 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; (b) the accuracy of the burden estimate; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) 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 (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.

Few small U.S. businesses are subject to the reporting requirements of this survey. Under the proposed regulations, foreign-owned U.S. businesses would be required to report on the BE-605 survey only if they have total assets, sales or gross operating revenues, or net income after U.S. income taxes that exceed $60 million. These reporting thresholds will exempt the majority of small businesses from the survey. For most industries, the size standard used by the Small Business Administration (SBA) for designating businesses as “small” is based on receipts or employment. For the industries designated as small based on receipts, the SBA size standards, as published in the Table of Small Business Size Standards, are all significantly below $60 million; it is reasonable to assume that few, if any, of the businesses in these industries would have to file the BE-605. For industries where the small business size standard is based on employment, a direct comparison with the BE-605 reporting criteria is not possible because employment is not used as a reporting criterion and is not collected on the survey. However, after examining the employment-based standards, and under the assumption they are roughly comparable to the receipts-based indicators in terms of the size of firm that is to be designated as small, BEA has concluded that it is unlikely that many small businesses in these industries would be required to file the BE-605. For certain types of banking and finance companies, the SBA size standard is based on assets. Approximately 20 small businesses in these industries would be required to file the BE-605. This number represents a small percentage (0.5%) of the expected total number of 4,000 filers of the BE-605. Additionally, based on the estimated average burden of one hour per response per quarter, BEA estimates the total respondent burden for the BE-605 on these businesses would be only 80 hours annually, while the total estimated respondent burden for all companies is 16,000 hours.

Because few small businesses are subject to the reporting requirements, and because those small businesses that are subject to reporting are subject to minimal record keeping burdens, the Chief Counsel for Regulation certifies that this proposed rule will not have a significant impact on a substantial number of small entities.

List of Subjects in 15 CFR Part 806

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

Dated: July 30, 2009.

J. Steven Landefeld,

Director, Bureau of Economic Analysis.

For reasons set forth in the preamble, BEA proposes to amend 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).

2. 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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