Rule2021-28599
Certain Investments in the United States by Foreign Persons and Certain Transactions by Foreign Persons Involving Real Estate in the United States
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 6, 2022
Effective
February 4, 2022
Issuing agencies
Treasury DepartmentInvestment Security Office
Abstract
This final rule adopts without change the proposed rule modifying the definitions of "excepted foreign state" and "excepted real estate foreign state" by extending by one year the effective date of one of two criteria set forth in the definitions in the regulations implementing certain provisions of Section 721 of the Defense Production Act of 1950, as amended.
Full Text
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<title>Federal Register, Volume 87 Issue 4 (Thursday, January 6, 2022)</title>
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[Federal Register Volume 87, Number 4 (Thursday, January 6, 2022)]
[Rules and Regulations]
[Pages 731-732]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-28599]
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DEPARTMENT OF THE TREASURY
Office of Investment Security
31 CFR Parts 800 and 802
Certain Investments in the United States by Foreign Persons and
Certain Transactions by Foreign Persons Involving Real Estate in the
United States
AGENCY: Office of Investment Security, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: This final rule adopts without change the proposed rule
modifying the definitions of ``excepted foreign state'' and ``excepted
real estate foreign state'' by extending by one year the effective date
of one of two criteria set forth in the definitions in the regulations
implementing certain provisions of Section 721 of the Defense
Production Act of 1950, as amended.
DATES: This final rule is effective on February 4, 2022.
FOR FURTHER INFORMATION CONTACT: For questions about this rule,
contact: Laura Black, Director of Investment Security Policy and
International Relations, Meena R. Sharma, Deputy Director of Investment
Security Policy and International Relations, or Richard Rowe, Senior
Policy Advisor, at U.S. Department of the Treasury, 1500 Pennsylvania
Avenue NW, Washington, DC 20220; telephone: (202) 622-3425; email:
<a href="/cdn-cgi/l/email-protection#91d2d7d8c4c2bfd7d8c3c3dcd0d1e5e3f4f0e2e4e3e8bff6fee7"><span class="__cf_email__" data-cfemail="0b484d425e58254d425959464a4b7f796e6a787e7972256c647d">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
A. Definitions of Excepted Foreign State and Excepted Real Estate
Foreign State--Sections 800.218 and 802.214
On November 15, 2021, the Department of the Treasury (Treasury
Department) published a proposed rule amending the definitions of
``excepted foreign state'' and ``excepted real estate foreign state''
in 31 CFR part 800 and 31 CFR part 802, respectively. 86 FR 62978.
These terms operate together with other relevant terms to provide an
exception from the jurisdiction of the Committee on Foreign Investment
in the United States (CFIUS or the Committee) over covered investments
by certain foreign persons who meet specific criteria establishing
sufficiently close ties to certain foreign states, as well as certain
other provisions of the Foreign Investment Risk Review Modernization
Act of 2018.
The preamble to the proposed rule provides background on CFIUS's
statutory authority and the rationale for these definitional changes.
The public was provided an opportunity to comment on the proposed rule
and comments were due by December 10, 2021. The Treasury Department
received two comments prior to the deadline, which are described in the
next section.
B. Excepted Foreign States and Excepted Real Estate Foreign States
As described in the preamble to the proposed rule, ``excepted
foreign state'' and ``excepted real estate foreign state'' are each
defined by a two-criteria conjunctive test, with delayed effectiveness
for the second criterion. This second criterion is a Committee
determination under Sec. 800.1001(a) for each eligible foreign state
that it has established and ``is effectively utilizing'' a robust
process to analyze foreign investments for national security risks and
to facilitate coordination with the United States on matters relating
to investment security, and a Committee determination under Sec.
802.1001(a) for each eligible foreign state that it has ``made
significant progress'' toward establishing and effectively utilizing
the robust process that is described in Sec. 800.1001. The final rule
extends the effectiveness of the second criterion with respect to each
definition. Instead of becoming effective on February 13, 2022, each
such second criterion will become effective on February 13, 2023.
II. Summary of Comments
During the public comment period, the Treasury Department received
two comments to the proposed rule. The Treasury Department considered
each submitted comment. All comments received by the end of the comment
period are available on the public rulemaking docket at <a href="https://www.regulations.gov">https://www.regulations.gov</a> and addressed herein.
[[Page 732]]
One comment supported the proposed rule and asked whether foreign
states understand the determination criteria set forth in Sec.
802.1001(a). The Treasury Department notes that there is additional
information with respect to the factors that the Committee will
consider in making determinations under Sec. Sec. 800.1001(a) and
802.1001(a) on its website, available at <a href="https://home.treasury.gov/policy-issues/international/the-committee-on-foreign-investment-in-the-united-states-cfius/cfius-excepted-foreign-states">https://home.treasury.gov/policy-issues/international/the-committee-on-foreign-investment-in-the-united-states-cfius/cfius-excepted-foreign-states</a>. The public
disclosure of the factors that CFIUS will consider in its
determinations is informative to foreign states of the progress needed
to meet the definitions of excepted foreign state and excepted real
estate foreign state. CFIUS also engages with foreign counterparts on
investment screening issues.
Another comment asked about the impact of the pandemic and the
excepted foreign state determinations. Extending the effective date of
the second criterion in each definition provides foreign states with
additional time to meet the determination factors. As stated in the
preamble to the proposed rule, the Committee had determined that
extending the time period before which such requirements become
applicable is desirable given certain ongoing changes to foreign
investment review regimes. The proposed rule does not make any change
to the two-part conjunctive tests or to the factors set forth under
Sec. Sec. 800.1001(a) and 802.1001(a) for the second criterion. These
tests and factors continue to provide the basis for CFIUS to designate
excepted foreign states and excepted real estate foreign states.
Upon review and consideration of these comments, the Treasury
Department has determined that the proposed rule is desirable given
certain ongoing changes to foreign investment review regimes. The final
rule therefore adopts the proposed rule without change.
III. Rulemaking Requirements
Executive Order 12866
These regulations are not subject to the general requirements of
Executive Order 12866, which covers review of regulations by the Office
of Information and Regulatory Affairs in the Office of Management and
Budget (OMB), because they relate to a foreign affairs function of the
United States, pursuant to section 3(d)(2) of that order. In addition,
these regulations are not subject to review under section 6(b) of
Executive Order 12866 pursuant to section 7(c) of the April 11, 2018,
Memorandum of Agreement between the Treasury Department and OMB, which
states that CFIUS regulations are not subject to OMB's standard
centralized review process under Executive Order 12866.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq., RFA)
generally requires an agency to prepare a regulatory flexibility
analysis unless the agency certifies that the rule will not, once
implemented, have a significant economic impact on a substantial number
of small entities. The final rule extends the delayed effectiveness
period for the second criterion in each of 31 CFR part 800 and 31 CFR
part 802 without making any change to the two-criteria conjunctive test
in either the definition of excepted foreign state or excepted real
estate foreign state. The final rule therefore does not change the
circumstances of any investor. Both before and after the final rule's
effectiveness, any investor with sufficiently close ties to an eligible
foreign state may be excepted from certain aspects of CFIUS's
jurisdiction, including if engaging in a transaction with a small
business. Such exception would be expected to lessen the burden on any
such small business. The final rule therefore does not impose any
additional burden on potential filers, including small businesses.
Considering the foregoing, the Secretary of the Treasury certifies,
pursuant to 5 U.S.C. 605(b), that this final rule will not have a
significant economic impact on a substantial number of small entities.
Congressional Review Act
This rule has been submitted to the Office of Information and
Regulatory Affairs (OIRA), which has determined that the rule is not a
``major'' rule under the Congressional Review Act.
List of Subjects
31 CFR Part 800
Foreign investments in the United States, Investments.
31 CFR Part 802
Real estate transactions in the United States, Investments.
For the reasons set forth in the preamble, the Treasury Department
amends 31 CFR parts 800 and 802 regarding the definition of excepted
foreign state and excepted real estate foreign state as follows:
PART 800--REGULATIONS PERTAINING TO CERTAIN INVESTMENTS IN THE
UNITED STATES BY FOREIGN PERSONS
0
1. The authority citation for part 800 continues to read:
Authority: 50 U.S.C. 4565; E.O. 11858, as amended, 73 FR 4677.
Subpart B--Definitions
Sec. 800.218 [Amended]
0
2. Amend Sec. 800.218 introductory text by removing the year ``2022''
wherever it appears and adding in its place ``2023''.
PART 802--REGULATIONS PERTAINING TO CERTAIN TRANSACTIONS BY FOREIGN
PERSONS INVOLVING REAL ESTATE IN THE UNITED STATES
0
3. The authority citation for part 802 continues to read:
Authority: 50 U.S.C. 4565; E.O. 11858, as amended, 73 FR 4677.
Subpart B--Definitions
Sec. 802.214 [Amended]
0
4. Amend Sec. 802.214 introductory text by removing the year ``2022''
wherever it appears and adding in its place ``2023''.
Larry McDonald,
Acting Assistant Secretary for International Markets.
[FR Doc. 2021-28599 Filed 1-5-22; 8:45 am]
BILLING CODE 4810-AK-P
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