Department of the Treasury.
This final regulation amends regulations in part 800 of 31 CFR that implement section 721 of the Defense Production Act of 1950. The regulation amends a provision that pertains to the circumstances under which the Committee on Foreign Investment in the United States completes action following an investigation of a notified transaction, consistent with the amendments to section 721 made by the Foreign Investment and National Security Act of 2007 (“FINSA”).
Effective date: March 21, 2008.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Nova Daly, Deputy Assistant Secretary, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220; telephone: (202) 622-2752; or e-mail: Nova.Daly@do.treas.gov.End Further Info End Preamble Start Supplemental Information
On July 26, 2007, President Bush signed into law the Foreign Investment and National Security Act of 2007 (“FINSA”) (Pub. L. 110-49), which amends section 721 of the Defense Production Act of 1950 (50 U.S.C. App. 2170 et seq.) (“section 721”), to codify the structure, role, process, and responsibilities of the Committee on Foreign Investment in the United States (“CFIUS”). Section 721 requires that, upon receipt by Treasury of written notification of a “covered transaction” (i.e., a merger, acquisition, or takeover by or with any foreign person that could result in foreign control of any person engaged in interstate commerce in the United States), the President, acting through CFIUS, shall review the transaction within 30 days to determine its effects on national security, based on any relevant factors, including several new factors FINSA added to an illustrative list contained in section 721. If, during its review, CFIUS determines that (1) the transaction threatens to impair U.S. national security and the threat has not yet been mitigated, (2) the lead agency recommends an investigation and CFIUS concurs, (3) the transaction would result in foreign government control, or (4) the transaction would result in the control of any U.S. critical infrastructure that could impair U.S. national security and the threat has not yet been mitigated, then CFIUS must conduct and complete within 45 days an investigation of the transaction. (The latter two grounds for an investigation do not mandate an investigation if the Secretary or Deputy Secretary of the Treasury and the equivalent lead agency counterparts jointly determine that the transaction will not impair U.S. national security.)
FINSA does not require CFIUS, upon completion or termination of an investigation, to refer a transaction to the President for a final decision. On January 23, 2008, President Bush signed Executive Order 13456 (further amending Executive Order 11858) that sets forth the circumstances under which a transaction shall be referred to the President for a final decision. Specifically, Section 6(c) of Executive Order 11858, as amended, provides that CFIUS “shall send a report to the President requesting the President's decision with respect to a review or investigation of a transaction in the following circumstances:
(i) The Committee recommends that the President suspend or prohibit the transaction;
(ii) The Committee is unable to reach a decision on whether to recommend that the President suspend or prohibit the transaction; or
(iii) The Committee requests that the President make a determination with regard to the transaction.”
The current regulations, by contrast, require CFIUS, upon completion or termination of any investigation, to report to the President and include a recommendation for action. This final regulation conforms the regulations to FINSA and Executive Order 11858, as amended, by removing the requirement to report to the President following completion or termination of an investigation, except in the circumstances set forth in Executive Order 11858.
Procedural Matters: It has been determined that this rule is not a significant regulatory action as defined in Executive Order 12866; therefore, a regulatory assessment is not required. Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. Pursuant to 5 U.S.C. 553(a)(1), this final rule relates to a foreign affairs function of the United States, and therefore is not subject to the delayed effective date provisions of the Administrative Procedures Act.
Section 709 of the Defense Production Act (DPA) (50 U.S.C. App. 2159) states that any regulation issued under the DPA shall be published in the Federal Register and opportunity for public comment shall be provided for not less than 30 days. In addition, FINSA requires regulations that carry out section 721 to be promulgated subject to notice and comment. However, this regulation is not being issued pursuant to the DPA or FINSA. Consequently, the Start Printed Page 15079Department is amending this regulation without prior notice and comment. This final rule merely removes an internal CFIUS procedural requirement that was neither required by the DPA nor by any subsequent amendment, and brings the regulations in line with the newly amended Executive Order. The procedural change will affect only CFIUS in its processing of cases and will not affect parties to notified transactions. Accordingly, the Department finds that this final rule is not subject to the notice and comment provision of the DPA or FINSA.Start List of Subjects
List of Subjects in 31 CFR Part 800
- Foreign investments in United States
- National defense
- Reporting and recordkeeping requirements
For the reasons stated in the preamble, the Department of the Treasury amendsEnd Amendment Part Start Part
PART 800—REGULATIONS PERTAINING TO MERGERS, ACQUISITIONS AND TAKEOVERS BY FOREIGN PERSONSEnd Part Start Amendment Part
1. The authority citation for part 800 is revised to read as follows:End Amendment Part Start Amendment Part
2. Amend § 800.504 by revising paragraph (b) to read as follows:End Amendment Part
(b) In circumstances when the Committee sends a report to the President requesting the President's decision upon completion or termination of an investigation, such report shall include information relevant to subparagraph (d)(4) of section 721, and shall present the Committee's recommendation. If the Committee is unable to reach a decision to present a single recommendation to the President, the Chairman shall submit a report of the Committee to the President setting forth the differing views and presenting the issues for decision.
Dated: March 7, 2008.
Assistant Secretary for International Affairs.
[FR Doc. E8-5707 Filed 3-20-08; 8:45 am]
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