SUTHERLAND ASBILL & BRENNAN LLP 700 Sixth Street, NW, Suite 700 Washington, DC 20001

- 3980

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FAX 202.637.3593

25800479.4 March 30, 2015

VIA ELECTRONIC SUBMISSION

Mr. Christopher Stein Chief, Services Surveys Branch Bureau of Economic Analysis Department of Commerce 1441 L Street, NW Washington, DC 20005

Re: International Services Surveys: BE

- 180, Benchmark Survey of Financial Services Transactions Between U.S. Financial Services Providers and Foreign Persons (RIN: 0691

- AA84)

Dear Mr. Stein:

I. I NTRODUCTION

On behalf of The Commercial Energy Working Group (the “ Working Group ”), Sutherland Asbill & Brennan LLP hereby submits these comments in response to the Notice of Proposed Rulemaking, International Services Surveys: BE

- 180, Benchmark Survey of Financial

Se rvices Transactions Between U.S. Financial Services Providers and Foreign Persons (“ BE

- 180 NOPR ” or “ Proposed Rule ”) issued by the Bureau of Economic Analysis (“ BEA ”). 1

The Working Group believes that the BEA does not intend for the BE

- 180 NOPR to apply to any member of the Working Group or commercial energy firm as they are not primarily engaged in intermediating or brokering financial transactions or otherwise providing financial services. As such, the comments and suggestions contained herein are limi ted in scope and designed to ensure that the BEA’s final rules reflect that intent.

The Working Group is a diverse group of commercial firms in the energy industry whose primary business activity is the physical delivery of one or more energy commodities t o others, including industrial, commercial and residential consumers. Members of the Working Group are

1 Notice of Proposed Rulemaking, International Services Surveys: BE

- 180, Benchmark Survey of Financial

Services Transactions Between U.S. Financial Services Providers and Foreign Persons , 80 Fed. Reg. 4,228 (Jan. 27, 2015), available at http://www.gpo.gov/fdsys/pkg/FR

- 2015

- 01

- 27/pdf/2015

- 01491.pdf

.Christopher Stein March 30, 2015 Page 2

producers, processors, merchandisers and owners of energy commodities. Among the members of the Working Group are some of the largest users of energy d erivatives in the United States and globally. The Working Group considers and responds to requests for comment regarding regulatory and legislative developments with respect to the trading of energy commodities, including derivatives and other contracts t hat reference energy commodities.

II. P OTENTIAL A PPLICATION OF THE BE

- 180 NOPR TO N ON

- F INANCIAL E NTITIES

As proposed, the BE

- 180 NOPR would require U.S. financial service providers to respond to Form BE

- 180 if, during their 2014 fiscal year, they had fina ncial services transactions totaling $3 million or more on a consolidated basis directly with non

- U.S. persons. This requirement would be a change from the prior construct, where entities became obligated to file a

Form BE

- 180 only if solicited by the BEA . The consequences of being required to file Form

BE

- 180 are not insignificant. Compiling the necessary data for a large corporate family to file the form could be both time consuming and costly.

A central concern is that the definition of “financial s ervice provider” is nebulous and may errantly capture commodity firms. Under the Proposed Rule, a financial services provider includes anyone engaged in “securities and commodity contracts intermediation and brokerage (including investment banking and sec urities dealing, securities brokerage, commodity contracts and dealing, and commodity contracts brokerage).” 2 The concept of “commodity contracts dealing” captures “establishments primarily engaged in acting as principals ( i.e. , investors who buy or sell for their own account) in buying or selling spot or futures commodity contracts or options, such as precious metals, foreign currency, oil, or agricultural products, generally on a spread basis.” 3

The scope of the definition of “commodity contracts dealing ” and, therefore, “financial services provider,” is unclear. Is a commodity merchant that actively trades spot physical natural gas and makes profits on the change in value of the commodity primarily engaged in commodity contracts dealing? Is an entity t hat hedges the risks of its affiliates using commodity futures captured?

Under an overly broad reading of the definition of “commodity contract dealing,” such entities might be viewed as financial services providers. However, we do not think that is the BEA’s intent. Specifically, Form BE

- 180 is intended to capture data on purchases and sales of financial services by U.S. persons to and from foreign persons. The instructions to Form BE

- 180 provide greater clarity on what amounts are reported as purchas es or sales of financial services. The instructions require a filer to:

2 See BE

- 180 NOPR at 4,231.

3 See the definition of “Commodity Contracts Dealing” for purposes of the North American Industry Classification System: http://www.census.gov/econ/isp/sampler.php?naicscode=52313&naicslevel=5#

.Christopher Stein March 30, 2015 Page 3

“Report origination fees in connection with the over

- the

- counter derivative financial instruments only if the fees are separately identified in transaction documentation issued by the dealers in the instruments to the customers, and are not considered undifferentiated components of overall trading or market making gains. Do not report income where you were a dealer or other principal who was at risk of incurring a loss on the financia l instruments rather than acting solely as the broker. For example, exclude income from marking positions to market and inherent earnings from dealer markups on buy and sell transactions ( i.e. , bid/ask price spreads in dealing in bonds, foreign currencies , and other financial instruments)...Do not report fees for commodity or merchandise brokerage services, real estate brokerages, and business services brokerage because they are not considered to be financial services (as opposed to fees for purchasing or se lling commodity futures and other financial instruments that are reportable on this survey).” 4

The instructions further state that “earnings of principals from buying and selling (including dealing, trading, holding, or arbitrage) of financial instruments...are considered to be ‘capital gains’ rather than payments for financial services, and are therefore not covered.” 5

If the intent of Form BE

- 180 is to capture fees paid to and received from foreign persons

in connection with financial services and not profits captured from, among other things, the trading of financial instruments including commodity swaps and futures or trading commodities for physical delivery, then the BEA should amend the definition of “financial services provider”

to reflec t that intent. Accordingly, the Working Group respectfully suggests that the BEA remove uncertainty with respect to who must file Form BE

- 180 by providing guidance that entities that are primarily in the business of generating revenue that would not be re portable on

Form BE

- 180 (such as trading commodities physically or financially as principals) are not required to file Form BE

- 180.

In the absence of providing clarifying guidance, the BEA should revert to its prior method of collecting the data on Form BE

- 180. Specifically, the BEA should require only those entities notified by the BEA that they are obligated to file Form BE

- 180 to d o so. This approach would allow the BEA to apply the definition of “financial services provider” in a manner that reflects its intent without creating uncertainty for the remainder of market participants.

4 See Instructions to Form BE

- 180 at 11. Available at: https://www.bea.gov/surveys/pdf/be180_web.pdf

.

5 Id

.Christopher Stein March 30, 2015 Page 4

III. C ONCLUSION

The Working Group appreciates th is opportunity to provide comments on the BE

- 180 NOPR and respectfully requests the BEA’s consideration of these comments as it develops any final rulemaking in this proceeding.

If you have any questions, please contact the undersigned.

Respectfull y submitted,

/s/ David T. McIndoe

David T. McIndoe

Alex S. Holtan

Counsel to The Commercial Energy Working Group