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[Federal Register: September 20, 2010 (Volume 75, Number 181)]
[Proposed Rules]               
[Page 57217-57220]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20se10-13]                         

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DEPARTMENT OF COMMERCE

Bureau of Economic Analysis

15 CFR Part 806

[Docket No. 100217100-0362-01]
RIN 0691-AA74

 
Direct Investment Surveys: BE-11, Annual Survey of U.S. Direct 
Investment Abroad

AGENCY: Bureau of Economic Analysis, Commerce.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This proposed rule would amend regulations of the Department 
of Commerce's Bureau of Economic Analysis (BEA) to set forth the 
reporting requirements for the BE-11, Annual Survey of U.S. Direct 
Investment Abroad. The survey is conducted annually and is a sample 
survey that obtains financial and operating data covering the overall 
operations of U.S. parent companies and their foreign affiliates. BEA 
proposes to amend the BE-11 forms and instructions to bring them into 
conformity with the 2009 BE-10, Benchmark Survey of U.S. Direct 
Investment Abroad. These amendments include changes in form design and 
reporting thresholds, as well as changes in the data items collected. 
The proposed changes also include a change in the reporting criteria 
for foreign affiliates with U.S. Parent (U.S. Reporter) ownership 
between 10 and 20 percent.

DATES: Comments on this proposed rule will receive consideration if 
submitted in writing on or before 5 p.m. November 19, 2010.

ADDRESSES: You may submit comments, identified by RIN 0691-AA74, 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 Keyword or ID, 
enter ``EAB-2010-0002.''
     E-mail: David.Galler@bea.gov.
     Fax: Office of the Chief, Direct Investment Division, 
(202) 606-5318.
     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 0608-0053, Attention PRA Desk Officer for 
BEA, via e-mail at pbugg@omb.eop.gov, or by FAX at 202-395-7245.
    Public Inspection: All comments received are a part of the public 
record and will generally be posted to http://www.regulations.gov 
without change.

[[Page 57218]]

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 (enter N/A in 
required fields if you wish to remain anonymous). Attachments to 
electronic comments will be accepted in Microsoft Word, Excel, 
WordPerfect, or Adobe portable document file (pdf) formats only.

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 (202) 606-9835.

SUPPLEMENTARY INFORMATION: 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-11 survey of U.S. direct investment abroad is a 
mandatory annual survey conducted by BEA under the International 
Investment and Trade in Services Survey Act, 22 U.S.C. 3101-3108 (the 
Act).
    The survey is a sample survey that collects information on a 
variety of measures of the overall operations of U.S. parent companies 
and their foreign affiliates, including total assets, sales, net 
income, employment and employee compensation, research and development 
expenditures, and exports and imports of goods. The sample data are 
used to derive universe estimates in nonbenchmark years from similar 
data reported in the BE-10, Benchmark Survey of U.S. Direct Investment 
Abroad, which is taken every five years. The data are needed to measure 
the size and economic significance of direct investment abroad, to 
measure the changes in such investment, and to assess their impact on 
the U.S. and foreign economies. The data are disaggregated by country 
and industry of the foreign affiliate and by industry of the U.S. 
parent. BEA sends survey forms to potential respondents in March of 
each year; responses are due by May 31.
    This proposed rule would amend 15 CFR 806.14 to set forth the 
reporting requirements for the BE-11, Annual Survey of U.S. Direct 
Investment Abroad. 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).

Description of Changes

    The proposed changes revise the regulations for the BE-11 survey 
and bring the BE-11 forms and instructions into conformity with the 
2009 BE-10, Benchmark Survey of U.S. Direct Investment Abroad. These 
amendments include changes in reporting thresholds and data items 
collected, as well as changes in form design. Several of these 
amendments are part of a larger program to align the data collection 
program for multinationals with available resources. BEA is also 
proposing to expand the use of sampling to help align the data 
collection program with resources.
    Beginning with the 2010 annual survey, if this proposed rule is 
made final, U.S. Reporters would report data on all their foreign 
affiliates, regardless of industry, on one of four foreign affiliate 
forms--BE-11B, BE-11C, BE-11D, or BE-11E. Data on foreign affiliates of 
U.S. Reporters that are banks, bank holding companies, or financial 
holding companies would be collected on the same survey forms as data 
on other foreign affiliates. All U.S. Reporters would report data on 
all domestic operations, on a fully consolidated basis, on Form BE-11A, 
Report for U.S. Reporter. Also, under the proposed rule, U.S. Reporters 
with total assets, sales or gross operating revenues, or net incomes 
less than or equal to $300 million would be required to report only 
certain items on Form BE-11A. This reporting threshold is an increase 
from the previous threshold of $225 million.
    Additionally, BEA proposes to require U.S. Reporters to file 
reports annually for foreign affiliates in which they own a 10 to 20 
percent voting interest. These affiliates, some of which are very 
large, fall under both U.S. and international definitions for foreign 
direct investment and must be represented in the statistics, but in the 
past they have been required to be reported in the annual survey only 
in the third year following a benchmark survey. Annual reporting will 
ensure that the activities of these affiliates are accurately reflected 
in the statistics derived from the survey.
    As the survey is proposed, the four foreign affiliate forms are--
    (a) Form BE-11B--Report for majority-owned foreign affiliates with 
total assets, sales or gross operating revenues, or net income greater 
than $60 million, positive or negative; filing of additional items 
would be required for affiliates with assets, sales, or net income 
greater than $300 million, positive or negative. (For 2008, this 
threshold was $250 million.) Form BE-11B would replace 2008 annual 
survey Forms BE-11B(LF) long form, BE-11B(SF) short form, and BE-
11B(FN) for reporting majority-owned foreign affiliates. The proposed 
reporting threshold on the 2010 BE-11B form is $60 million, unchanged 
from that for reporting the smallest foreign affiliates on the 2008 BE-
11B forms;
    (b) Form BE-11C--Report for minority-owned foreign affiliates with 
total assets, sales or gross operating revenues, or net income greater 
than $60 million, positive or negative. This threshold is unchanged 
from that on the 2008 BE-11C form;
    (c) Form BE-11D--Schedule for foreign affiliates established or 
acquired by the U.S. Reporter during the current reporting year with 
total assets, sales or gross operating revenues, or net income greater 
than $25 million, positive or negative, but for which no one of these 
items is greater than $60 million, positive or negative. Form BE-11D 
would replace the 2008 BE-11A Supplement A schedule for reporting newly 
established or acquired foreign affiliates. The reporting threshold 
would increase from $10 million to $25 million; and
    (d) Form BE-11E--Report for foreign affiliates selected by BEA to 
be reported on this form in lieu of Form BE-11B. Form BE-11E would 
replace 2008 Form BE-11B(EZ). BEA would statistically divide into 
panels, affiliates with total assets, sales or gross operating 
revenues, and net income (positive or negative) between $60 million and 
$300 million. At the direction of BEA, U.S. Reporters would alternate 
reporting these affiliates on Form BE-11B and Form BE-11E.
    A Form BE-11B, BE-11C, or BE-11E must be filed for a foreign 
affiliate of the U.S. Reporter that owns another non-exempt foreign 
affiliate even if the foreign affiliate parent is otherwise exempt. 
That is, all affiliates upward in the chain of ownership must be 
reported.
    In addition to the changes in the reporting criteria, BEA proposes 
adding, combining, or deleting some items on the annual survey forms. 
Specifically, BEA proposes to no longer collect selected balance sheet 
items--cash, other current assets, other noncurrent assets, other 
current liabilities and long-term debt, and other noncurrent 
liabilities--as separate items. BEA also proposes to discontinue 
collecting a breakdown of the number of employees and amount of 
employee compensation by occupational classification; the

[[Page 57219]]

composition of external finances; and wholesale and retail trade items 
(specifically, the cost of goods purchased for resale and inventory of 
goods purchased for resale).
    BEA also proposes to add several items. First, BEA proposes to add 
an item on Form BE-11C to collect total liabilities. This information 
will enable BEA to calculate equity positions in minority-owned 
affiliates. BEA proposes to add an item on Form BE-11E to collect 
property, plant, and equipment expenditures, which is one of three key 
indicators that BEA publishes in its advance summary estimates of 
operations of U.S. multinational companies. BEA also proposes to add a 
schedule on Form BE-11B to collect a list of foreign affiliates in 
which the affiliate being reported has a direct equity interest, but 
which are not fully consolidated into the reported foreign affiliate. 
Completion of this list would be required only for foreign affiliates 
with total assets, sales or gross operating revenues, or net income 
greater than $300 million at the end of, or for, the fiscal year. 
Previously this schedule has been collected only once every five years 
on the BE-10 benchmark survey. However, ownership structures of 
multinational companies change frequently, and more frequent data 
collection is required to track them accurately.
    The proposed changes to the BE-11A, U.S. Reporter annual survey 
form, largely parallel the above-described changes to the foreign 
affiliate forms. For the BE-11A, BEA proposes to no longer collect the 
breakdown of number of employees and amount of employee compensation by 
occupational classification and to no longer collect wholesale and 
retail trade items (specifically, the cost of goods purchased for 
resale and inventory of goods purchased for resale). BEA also proposes 
to add a question to Form BE-11A that was introduced in the most recent 
BE-10 benchmark survey, asking if the Reporter is a bank. In addition, 
BEA proposes to add questions to the form to collect information on 
assets, liabilities, and interest receipts and payments that are 
related to banking activities.

Survey Background

    The BEA conducts the BE-11 survey under the authority of the 
International Investment and Trade in Services Survey Act (22 U.S.C. 
3101-3108), hereinafter, ``the Act.'' Section 4(a) of the Act (22 
U.S.C. 3103(a)) requires that, with respect to United States direct 
investment abroad, the President shall, to the extent he deems 
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 and trade in services position of the United 
States.

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 sufficient to warrant preparation of a Federalism 
assessment under E.O. 13132.

Paperwork Reduction Act

    This proposed rule contains a collection-of-information requirement 
subject to review and approval by OMB under the PRA. The requirement 
will be submitted to OMB for approval as a revision to a collection 
currently approved under OMB control number 0608-0053.
    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.
    The BE-11 survey, as proposed, is expected to result in the filing 
of reports from approximately 1,750 respondents, which is an increase 
from the 1,550 respondents that were required to file reports for the 
2008 BE-11 annual survey. The respondent burden for this collection of 
information will vary from one company to another, but is estimated to 
average 86 hours 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 total respondent burden of the proposed 
survey is estimated at 150,550 hours, which is a decrease from the 
153,800 hours estimated for the 2008 BE-11 annual survey. The decrease 
in overall burden is due to a decrease in the estimated average hours 
per response that resulted from the proposed changes in reporting 
requirements.
    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 (SBA), 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. U.S. companies that have direct investments 
abroad tend to be quite large, and few small U.S. businesses are 
subject to the reporting requirements of this survey. SBA size 
standards are for the most part expressed in either number of employees 
or average annual receipts. SBA has established two widely used size 
standards--500 employees for most manufacturing and mining industries, 
and $7 million in average annual receipts (i.e., sales or gross 
operating revenues) for most nonmanufacturing industries.
    BEA estimates that of the 1,750 U.S. parent companies that will be 
required to respond to the BE-11 annual survey, approximately 200 (or 
10%) of them are small businesses as defined by the SBA. The proposed 
changes in reporting requirements would limit the amount of information 
that would be reported on Form BE-11A by U.S. Reporters with total 
assets, sales or gross operating revenues, and net income less than or 
equal to $300 million (positive or negative). In addition, U.S. 
businesses that meet the SBA small business standards tend to have few 
foreign affiliates, and the foreign affiliates that they do own are 
small. The number of items required to be reported for a foreign 
affiliate is determined by the size of the affiliate's assets, sales, 
and net income. The smallest foreign affiliates would be reported on an 
abbreviated Form BE-11B. The

[[Page 57220]]

estimated burden hours for a small business is about 10 to 25 hours.
    Because a substantial number of small businesses are not impacted 
by this rule, and because those small businesses that are impacted are 
subject to only minimal recordkeeping burdens, the Chief Counsel for 
Regulation certifies that this proposed rule will not have a 
significant economic impact on a substantial number of small entities.

List of Subjects in 15 CFR Part 806

    Economic statistics, Multinational corporations, Penalties, 
Reporting and recordkeeping requirements, U.S. investment abroad.

J. Steven Landefeld,
Director, Bureau of Economic Analysis.
    For the 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. Revise paragraphs (b)(1) and (f)(3) of Sec.  806.14 to read as 
follows: 806.14 U.S. direct investment abroad.
* * * * *
    (b) * * *
    (1) The affiliates are in the same BEA 4-digit industry as defined 
in the Guide to Industry Classifications for International Surveys, 
2007; or
* * * * *
    (f) * * *
    (3) BE-11--Annual Survey of U.S. Direct Investment Abroad: A 
report, consisting of Form BE-11A and Form(s) BE-11B, BE-11C, BE-11D 
and/or BE-11E, is required of each U.S. Reporter that, at the end of 
the Reporter's fiscal year, had a foreign affiliate reportable on Form 
BE-11B, BE-11C, BE-11D or BE-11E. Forms required and the criteria for 
reporting on each are as follows:
    (i) Form BE-11A (Report for U.S. Reporter) must be filed by each 
U.S. person having a foreign affiliate reportable on Form BE-11B, BE-
11C, BE-11D or BE-11E. If the U.S. Reporter is a corporation, Form BE-
11A is required to cover the fully consolidated U.S. domestic business 
enterprise.
    (A) If for a U.S. Reporter any one of the following three items--
total assets, sales or gross operating revenues excluding sales taxes, 
or net income after provision for U.S. income taxes--was greater than 
$300 million (positive or negative) at the end of, or for, the 
Reporter's fiscal year, the U.S. Reporter must file a complete Form BE-
11A. It must also file a Form BE-11B, BE-11C, BE-11D or BE-11E, as 
applicable, for each nonexempt foreign affiliate.
    (B) If for a U.S. Reporter no one of the three items listed in 
paragraph (f)(3)(i)(A) of this section was greater than $300 million 
(positive or negative) at the end of, or for, the Reporter's fiscal 
year, the U.S. Reporter is required to file on Form BE-11A only items 1 
through 26 and Part IV. It must also file a Form BE-11B, BE-11C, BE-
11D, or BE-11E as applicable, for each nonexempt foreign affiliate.
    (ii) Forms BE-11B, BE-11C, BE-11D, and BE-11E (Report for Foreign 
Affiliate).
    (A) Form BE-11B must be reported for each majority-owned foreign 
affiliate, whether held directly or indirectly, for which any one of 
the following three items--total assets, sales or gross operating 
revenues excluding sales taxes, or net income after provision for 
foreign income taxes--was greater than $60 million (positive or 
negative) at the end of, or for, the affiliate's fiscal year, unless 
the foreign affiliate is selected to be reported on Form BE-11E.
    (B) Form BE-11C must be reported for each minority-owned foreign 
affiliate, whether held directly or indirectly, for which any one of 
the three items listed in paragraph (f)(3)(ii)(A) of this section was 
greater than $60 million (positive or negative) at the end of, or for, 
the affiliate's fiscal year.
    (C) Form BE-11D must be reported for majority- or minority-owned 
foreign affiliates, whether held directly or indirectly, established or 
acquired during the year for which any one of the three items listed in 
paragraph (f)(3)(ii)(A) of this section was greater than $25 million 
(positive or negative), but for which no one of these items was greater 
than $60 million (positive or negative), at the end of, or for, the 
affiliate's fiscal year. Form BE-11D is a schedule; a U.S. Reporter 
would submit one or more pages of the form depending on the number of 
affiliates that are required to be filed on this form.
    (D) Form BE-11E must be reported for each foreign affiliate that is 
selected by BEA to be reported on this form in lieu of Form BE-11B. BEA 
statistically divides into panels, affiliates for which any one of the 
three items listed in paragraph (f)(3)(ii)(A) of this section was 
greater than $60 million (positive or negative), but for which no one 
of these items was greater than $300 million (positive or negative), at 
the end of, or for, the affiliate's fiscal year. At the direction of 
BEA, U.S. Reporters would alternate reporting these affiliates on Form 
BE-11B and Form BE-11E.
    (iii) Based on the preceding, an affiliate is exempt from being 
reported if none of the three items listed in paragraph (f)(3)(ii)(A) 
of this section exceeds $60 million (positive or negative). However, 
affiliates that were established or acquired during the year and for 
which at least one of the items was greater than $25 million but not 
over $60 million must be listed, and key items reported, on schedule-
type form BE-11D.
    (iv) Notwithstanding paragraph (f)(3)(iii) of this section, a Form 
BE-11B, BE-11C, or BE-11E must be filed for a foreign affiliate of the 
U.S. Reporter that owns another non-exempt foreign affiliate of that 
U.S. Reporter, even if the foreign affiliate parent is otherwise 
exempt. That is, all affiliates upward in the chain of ownership must 
be reported.
* * * * *
[FR Doc. 2010-23428 Filed 9-17-10; 8:45 am]
BILLING CODE 3510-06-P
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