[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]
[Proposed Rules]
[Pages 4738-4768]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00447]

[[Page 4737]]

Vol. 82

Friday,

No. 9

January 13, 2017

Part VI

Department of Homeland Security

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8 CFR Parts 204 and 216

EB-5 Immigrant Investor Program Modernization; Proposed Rule

Federal Register / Vol. 82 , No. 9 / Friday, January 13, 2017 /
Proposed Rules

[[Page 4738]]

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DEPARTMENT OF HOMELAND SECURITY

8 CFR Parts 204 and 216

[CIS No. 2555-14; DHS Docket No. USCIS-2016-0006]
RIN 1615-AC07

EB-5 Immigrant Investor Program Modernization

AGENCY: U.S. Citizenship and Immigration Services, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Homeland Security (DHS) proposes to amend
its regulations governing the employment-based, fifth preference (EB-5)
immigrant investor classification and associated regional centers to
reflect statutory changes and modernize the EB-5 program. In general,
under the EB-5 program, individuals are eligible to apply for lawful
permanent residence in the United States if they make the necessary
investment in a commercial enterprise in the United States and create
or, in certain circumstances, preserve 10 permanent full-time jobs for
qualified U.S. workers. This proposed rule would change the EB-5
program regulations to reflect statutory changes and codify existing
policies. It would also change certain aspects of the EB-5 program in
need of reform.

DATES: Written comments must be received on or before April 11, 2017.

ADDRESSES: You may submit comments, identified by DHS Docket No. USCIS-
2016-0006, by any one of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the Web site instructions for submitting comments.
Mail: You may submit comments directly to U.S. Citizenship
and Immigration Services (USCIS) by mail by sending correspondence to
Samantha Deshommes, Acting Chief, Regulatory Coordination Division,
Office of Policy and Strategy, U.S. Citizenship and Immigration
Services, Department of Homeland Security, 20 Massachusetts Avenue NW.,
Washington, DC 20529. To ensure proper handling, please reference DHS
Docket No. USCIS-2016-0006 in your correspondence. This mailing address
may be used for paper or CD-ROM submissions.
Hand Delivery/Courier: You may submit comments directly to
USCIS through hand delivery to Samantha Deshommes, Chief, Regulatory
Coordination Division, Office of Policy and Strategy, U.S. Citizenship
and Immigration Services, Department of Homeland Security, 20
Massachusetts Avenue NW., Washington, DC 20529; Telephone 202-272-8377.
To ensure proper handling, please reference DHS Docket No. USCIS-2016-
0006 in your correspondence.

FOR FURTHER INFORMATION CONTACT: Lori MacKenzie, Division Chief,
Operations Policy and Performance, Immigrant Investor Program Office,
U.S. Citizenship and Immigration Services, Department of Homeland
Security, 131 M Street NE., 3rd Floor, Washington, DC 20529; Telephone
202-357-9214.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Public Participation
II. Executive Summary
A. Purpose of the Regulatory Action
B. Summary of Major Provisions
(1) Priority Date Retention
(2) Increases to the Investment Amounts
(3) TEA Designations
(4) Removal of Conditions
(5) Miscellaneous Changes
C. Legal Authority
D. Costs and Benefits
III. Background
A. The EB-5 Program
B. The Regional Center Program
C. EB-5 Immigrant Visa Process
IV. The Proposed Rule
A. Priority Date Retention
B. Increasing the Minimum Investment Amount
C. Increasing the Minimum Investment Amount for High Employment
Areas
D. Increasing the Minimum Investment Amount for TEAs
E. TEA Designation Process
F. Technical Changes
(1) Separate Filings for Derivatives
(2) Interviews
(3) Process for Issuing Permanent Resident Cards
(4) Miscellaneous Other Changes
V. Statutory and Regulatory Requirements
A. Unfunded Mandates Reform Act of 1995
B. Small Business Regulatory Enforcement Fairness Act of 1996
C. Executive Orders 12866 and 13563
(1) Summary
(2) Background and Purpose of the Proposed Rule
(3) Baseline Program Forecasts
(4) Economic Impacts of the Major Rule Provisions
D. Executive Order 13132
E. Regulatory Flexibility Act
F. Executive Order 12988
G. National Environmental Policy Act
H. Paperwork Reduction Act
Proposed Regulatory Amendments

List of Acronyms and Abbreviations Used

CFR Code of Federal Regulations
CPI Consumer Price Index
CPI-U Consumer Price Index for all Urban Consumers
DHS Department of Homeland Security
DOL Department of Labor
DOS Department of State
EB-5 Employment-Based Fifth Preference
GDP Gross Domestic Product
HSA Homeland Security Act
IEFA Immigration Examinations Fee Account
INA Immigration and Nationality Act
INS Immigration and Naturalization Service
IRFA Initial Regulatory Flexibility Analysis
JCE Job-Creating Entity
MSA Metropolitan Statistical Area
NCE New Commercial Enterprise
NOID--Notice of Intent to Deny
NOIT--Notice of Intent to Terminate
PRA--Paperwork Reduction Act
RFE--Request for Evidence
TEA--Targeted Employment Area
U.S.C.--United States Code
USCIS--United States Citizenship and Immigration Services
UR--Unemployment Rates
VPC--Volume Projections Committee

I. Public Participation

DHS invites comments, data, and information from all interested
parties, including regional centers, investors, advocacy groups,
nongovernmental organizations, community-based organizations, and legal
representatives who specialize in immigration law on any and all
aspects of the proposed amendments. Comments must be submitted in
English, or an English translation must be provided. Comments that will
provide the most assistance to DHS will reference a specific portion of
the proposed amendments; explain the reason for any recommended change;
and include data, information, or authority that support such
recommended change.
In addition to its general call for comments, DHS is specifically
seeking comments on the following proposals:
A. Priority date retention for EB-5 petitioners;
B. Increases to the minimum investment amount for targeted
employment areas (TEAs) and non-TEAs;
C. Revisions to the TEA designation process, including the
elimination of state designation of high unemployment areas as a method
of TEA designation;
D. Revisions to the filing and interview process for removal of
conditions on lawful permanent residence.
DHS also invites comments on the economic analysis supporting this
rule and the proposed form revisions.
Instructions: All submissions must include the DHS Docket No.
USCIS-2016-0006 for this rulemaking. Regardless of the method used for
submitting comments or material, all submissions will be posted,
without change, to the Federal eRulemaking Portal at http://www.regulations.gov, and will include any personal

[[Page 4739]]

information you provide. Therefore, submitting this information makes
it public. You may wish to consider limiting the amount of personal
information that you provide in any voluntary public comment submission
you make to DHS. DHS may withhold information provided in comments from
public viewing that it determines may impact the privacy of an
individual or is offensive. For additional information, please read the
Privacy Act notice that is available via the link in the footer of
http://www.regulations.gov.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov.

II. Executive Summary

A. Purpose of the Regulatory Action

DHS proposes to update its regulations governing EB-5 immigrant
investors and regional centers to reflect statutory changes and codify
existing policies. DHS also proposes changes to areas of the EB-5
program in need of reform.

B. Summary of Major Provisions

DHS proposes the following major revisions to the EB-5 program
regulations.
(1) Priority Date Retention
DHS proposes to authorize certain EB-5 petitioners to retain the
priority date \1\ of an approved EB-5 immigrant petition for use in
connection with any subsequent EB-5 immigrant petition.\2\ Petitioners
with approved immigrant petitions might need to file new petitions due
to circumstances beyond their control (for instance, DHS might have
terminated a regional center associated with the original petition), or
might choose to do so for other reasons (for instance, a petitioner may
seek to materially change aspects of his or her qualifying investment).
DHS is proposing to generally allow EB-5 petitioners to retain the
priority dates of previously approved petitions so as to avoid further
delays on immigrant visa processing associated with the loss of
priority dates. DHS believes that priority date retention may become
increasingly important due to the strong possibility that the EB-5 visa
category will remain oversubscribed for the foreseeable future.
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\1\ An EB-5 immigrant petition's priority date is normally the
date on which the petition was properly filed. In general, when
demand exceeds supply for a particular visa category, an earlier
priority date is more advantageous than a later one.
\2\ The priority date retention proposal, like other proposals
described in this Executive Summary, is subject to important
conditions and limitations described in more detail elsewhere in
this proposed rule.
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(2) Increases to the Investment Amounts
DHS is proposing to increase the minimum investment amounts for all
new EB-5 petitioners. The increase would ensure that program
requirements reflect the present-day dollar value of the investment
amounts established by Congress in 1990. Specifically, DHS proposes to
initially increase the standard minimum investment amount, which also
applies to high employment areas, from $1 million to $1.8 million. This
change would represent an adjustment for inflation from 1990 to 2015 as
measured by the unadjusted Consumer Price Index for All Urban Consumers
(CPI-U),\3\ an economic indicator that tracks the prices of goods and
services in the United States. For those investors seeking to invest in
a new commercial enterprise that will be principally doing business in
a targeted employment area (TEA), DHS proposes to increase the minimum
investment amount from $500,000 to $1.35 million, which is 75 percent
of the proposed standard minimum investment amount. In addition, DHS is
proposing to make regular CPI-U-based adjustments in the standard
minimum investment amount, and conforming adjustments to the TEA
minimum investment amount, every 5 years, beginning 5 years from the
effective date of these regulations.
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\3\ See Bureau of Labor Statistics, CPI-U Inflation Calculator,
http://data.bls.gov/cgi-bin/cpicalc.pl.
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(3) TEA Designations
DHS proposes to reform the TEA designation process to ensure
consistency in TEA adjudications and ensure that designations more
closely adhere to Congressional intent. First, DHS proposes to allow
any city or town with high unemployment \4\ and a population of 20,000
or more to qualify as a TEA. Currently, TEA designations are not
available at the city or town level, unless a state designates the city
or town as a TEA and provides evidence of such designation to a
prospective EB-5 investor for submission with the Form I-526. See 8 CFR
204.6(i). Second, DHS proposes to eliminate the ability of a state to
designate certain geographic and political subdivisions as high-
unemployment areas; instead, DHS would make such designations directly,
using standards described in more detail elsewhere in this proposed
rule. DHS believes these changes would help address inconsistencies
between and within states in designating high unemployment areas, and
better ensure that the reduced investment threshold is reserved for
areas experiencing significantly high levels of unemployment.
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\4\ An area has ``high unemployment'' if it has an average
unemployment rate of at least 150 percent of the national average
rate.
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(4) Removal of Conditions
DHS proposes to revise the regulations to clarify that derivative
family members must file their own petitions to remove conditions on
their permanent residence when they are not included in a petition to
remove conditions filed by the principal investor. In addition, DHS is
proposing to improve the adjudication process for removing conditions
by providing flexibility in interview locations and to update the
regulation to conform to the current process for issuing permanent
resident cards.
(5) Miscellaneous Changes
Lastly, DHS proposes to update the regulations to reflect
miscellaneous statutory changes made since the regulation was first
published in 1991, as well as to clarify definitions of key terms for
the program. By aligning DHS regulations with statutory changes and
defining key terms, this proposed rule will provide greater certainty
regarding the eligibility criteria for investors and their family
members.

C. Legal Authority

The Secretary of Homeland Security's authority for the proposed
regulatory amendments is found in various provisions of the Immigration
and Nationality Act (INA), 8 U.S.C. 1101 et seq., as well as the
Departments of Commerce, Justice, and State, the Judiciary, and Related
Agencies Appropriations Act, 1993, Public Law 102-395, 106 Stat. 1828;
the 21st Century Department of Justice Appropriations Authorization
Act, Public Law 107-273, 116 Stat. 1758; and the Homeland Security Act
of 2002 (HSA), Public Law 107-296, 116 Stat. 2135, 6 U.S.C. 101 et seq.
General authority for issuing the proposed rule is found in section
103(a) of the INA, 8 U.S.C. 1103(a), which authorizes the Secretary to
administer and enforce the immigration and nationality laws, including
establishing such regulations as the Secretary deems necessary to carry
out his authority; section 101(b)(1)(F) of the HSA, 6 U.S.C.
111(b)(1)(F), which establishes that a primary mission of DHS is to
ensure that the economic security of the United States is not
diminished by the Department's efforts, activities, and programs; and
section 102 of the HSA, 6 U.S.C. 112, which vests all of the

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functions of DHS in the Secretary and authorizes the Secretary to issue
regulations.
The aforementioned authorities for the proposed regulatory
amendments include:
Section 203(b)(5) of the INA, 8 U.S.C. 1153(b)(5), which
makes visas available to immigrants investing in new commercial
enterprises in the United States that will benefit the U.S. economy and
create full-time employment for not fewer than 10 U.S. workers.
Section 204(a)(1)(H) of the INA, 8 U.S.C. 1154(a)(1)(H),
which requires individuals to file petitions with DHS when seeking
classification under section 203(b)(5);
Section 216A of the INA, 8 U.S.C. 1186b, which places
conditions on permanent residence obtained under section 203(b)(5) and
authorizes the Secretary to remove such conditions for immigrant
investors who have met the applicable investment requirements,
sustained such investment, and otherwise conformed to the requirements
of sections 203(b)(5) and 216A.
Section 610 of Public Law 102-395, 8 U.S.C. 1153 note, as
amended, which created the Immigrant Investor Pilot Program (the
``Regional Center Program''), authorizing the designation of regional
centers for the promotion of economic growth, and which authorizes the
Secretary to set aside visas authorized under section 203(b)(5) of the
INA for individuals who invest in regional centers.

D. Costs and Benefits

This rule proposes changes to certain aspects of the EB-5 program
that are in need of reform, and would also update the regulations to
reflect statutory changes and codify existing policies. There are three
major provisions proposed with several minor provisions and some
miscellaneous technical changes. DHS has analyzed these provisions
carefully and has determined that due to data limitations and the
complexity of EB-5 investment structures, which typically involve
multiple layers of investment, finance, development, and legal business
entities, it is difficult to quantify and monetize the costs and
benefits of the proposed provisions, with the exception of total
estimated costs of approximately $91,000 \5\ annually for dependents
who would file the Petition by Entrepreneur to Remove Conditions on
Permanent Resident Status (Form I-829) separately from principal
investors, and familiarization costs to review the rule, estimated at
$501,154 annually.
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\5\ The cost estimate is rounded from $90,762.
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However, DHS does provide qualitative discussions on the potential
costs and benefits of these proposed provisions. One of the main
proposed provisions increases the standard minimum investment amount to
$1.8 million and the minimum investment amount for TEAs to $1.35
million in order to account for inflation since the inception of the
program. DHS has no way to assess the potential reduction in
investments either in terms of past activity or forecasted activity,
and cannot therefore estimate any impacts concerning job creation,
losses or other downstream economic impacts driven by the proposed
investment amount increases. DHS provides a full qualitative analysis
and discussion on the increase in investment amounts in the executive
orders 12866 and 13563 section of this proposed rule. DHS believes
these provisions would increase the integrity, effectiveness, and
economic impact of the program positively, stimulating investment in
areas where it is needed most and generating jobs.
The costs and benefits summary of the proposed provisions is
provided in Table 1, below. In addition, DHS has prepared an Initial
Regulatory Flexibility Analysis (IRFA) under the Regulatory Flexibility
Act (RFA) to discuss any potential impacts to small entities. As
discussed further in the IRFA, DHS cannot estimate the exact impact to
small entities. DHS, however, does expect some impact to regional
centers and non-regional center projects, although it does not
anticipate that this impact will be substantial or significant.

Table 1--Summary of Changes and Impact of the Proposed Provisions
------------------------------------------------------------------------
Current policy Proposed change Impact
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Current DHS regulations do not DHS proposes to Benefits:
permit investors to use the allow an EB-5 Makes visa
priority date of an approved immigrant allocation more
EB-5 immigrant petition for a petitioner to use predictable for
subsequently filed EB-5 the priority date investors with
immigrant petition. of an approved EB- less possibility
5 immigrant for large
petition for a fluctuations in
subsequently visa availability
filed EB-5 dates due to
immigrant regional center
petition for termination.
which the Provides
petitioner greater certainty
qualifies. and stability
regarding the
timing of
eligibility for
investors pursuing
permanent
residence in the
U.S. and thus
lessens the burden
of unexpected
changes in the
underlying
investment.
Provides
more flexibility
to investors to
contribute into
more viable
investments,
potentially
reducing fraud and
improving
potential for job
creation.
Costs:
Not
identified.
The standard minimum investment DHS proposes to Benefits:
amount has been $1 million account for Increases
since 1990 and has not kept inflation in the in investment
pace with inflation. investment amount amounts are
Further, the statute authorizes since the necessary to keep
a reduction in the minimum inception of the pace with
investment amount when such program. DHS inflation and real
investment is made in a TEA by proposes to raise value of
up to 50 percent of the the minimum investments;
standard minimum investment investment amount Raising
amount. Since 1991, DHS to $1.8 million. the investment
regulations have set the TEA DHS also proposes amounts increases
investment threshold at 50 to include a the amount
percent of the minimum mechanism to invested by each
investment amount.. automatically investor and
Similarly, DHS has not proposed adjust the potentially
to increase the minimum minimum increases the
investment amount for investment amount total amount
investments made in a high based on the invested under
employment area beyond the unadjusted CPI-U this program.
standard amount.. every 5 years. For
DHS proposes to regional centers,
decrease the the higher
reduction for TEA investment amounts
investment per investor would
thresholds, and mean that fewer
set the TEA investors would
minimum have to be
investment at 75 recruited to pool
percent of the the requisite
standard amount. amount of capital
Assuming the for the project,
standard so that searching
investment amount and matching of
is $1.8 million, investors to
investment in a projects could be
TEA would less costly.
initially Costs:
increase to $1.35 Some
million.. investors may be
DHS is not unable or
proposing to unwilling to
change the invest at the
equivalency higher proposed
between the levels of
standard minimum investment.
investment amount There may
and those made in be fewer jobs
high employment created if fewer
areas. As such, investors invest
DHS proposes that at the proposed
the minimum higher investment
investment amounts.
amounts in high For
employment areas regional centers,
would be $1.8 the higher amounts
million, and could reduce the
follow the same number of
mechanism for investors in the
future global pool and
inflationary result in fewer
adjustments.. investors and thus
make search and
matching of
investors to
projects more
costly.
Potential
reduced numbers of
EB-5 investors
could prevent
projects from
moving forward due
to lack of
requisite capital.

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An
increase in the
investment amount
could make foreign
investor visa
programs offered
by other countries
more attractive.
A TEA is defined by statute as DHS proposes to Benefits:
a rural area or an area which eliminate state Rules out
has experienced high designation of TEA configurations
unemployment (of at least 150 high unemployment that rely on a
percent of the national areas. DHS also large number of
average rate). Currently, proposes to amend census tracts
investors demonstrate that the manner in indirectly linked
their investments are in a which investors to the actual
high unemployment area in two can demonstrate project tract by
ways: that their numerous degrees
(1) Providing evidence that the investments are of separation.
Metropolitan Statistical Area in a high Potential
(MSA), the specific county unemployment area. to better
within the MSA, or the county (1) In addition to stimulate job
in which a city or town with a MSAs, specific growth in areas
population of 20,000 or more counties within where unemployment
is located, in which the new MSAs, and rates are the
commercial enterprise is counties in which highest.
principally doing business, a city or town Costs:
has experienced an average with a population The
unemployment rate of at least of 20,000 or more proposed TEA
150 percent of the national is located, DHS provision could
average rate or proposes to add cause some
(2) Submitting a letter from an cities and towns projects and
authorized body of the with a population investments to not
government of the state in of 20,000 or more qualify. DHS
which the new commercial to the types of presents the
enterprise is located, which areas that can be potential number
certifies that the geographic designated as a of projects and
or political subdivision of high unemployment investments that
the metropolitan statistical area.. could be affected
area or of the city or town (2) DHS is in Table 5.
with a population of 20,000 or proposing that a
more in which the enterprise TEA may consist
is principally doing business of a census tract
has been designated a high or contiguous
unemployment area. census tracts in
which the new
commercial
enterprise is
principally doing
business if the
weighted average
of the
unemployment rate
for the tract or
tracts is at
least 150 percent
of the national
average..
(3) DHS is also
proposing that a
TEA may consist
of an area
comprised of the
census tract(s)
in which the new
commercial
enterprise is
principally doing
business,
including any and
all adjacent
tracts, if the
weighted average
of the
unemployment rate
for all included
tracts is at
least 150 percent
of the national
average..
------------------------------------------------------------------------
Current technical issues: DHS is proposing Conditions of
The current regulation the following Filing:
does not clearly define the technical Benefits:
process by which derivatives changes: Adds
may file a Form I-829 petition Clarify clarity and
when they are not included on the filing eliminates
the principal's petition. process for confusion for the
Interviews for Form I- derivatives who process of
829 petitions are generally are filing a Form derivatives who
scheduled at the location of I-829 petition file separately
the new commercial enterprise. separately from from the principal
The current the immigrant immigrant
regulations require an investor.. investor.
immigrant investor and his or Provide Costs:
her derivatives to report to a flexibility in Total cost
district office for processing determining the to applicants
of their permanent resident interview filing separately
cards. location related would be $90,762
to the Form I-829 annually.
petition.. Conditions of
Amend the Interview:
regulation by Benefits:
which the Interviews
immigrant may be scheduled
investor obtains at the USCIS
the new permanent office having
resident card jurisdiction over
after the either the
approval of his immigrant
or her Form I-829 investor's
petition because commercial
DHS captures enterprise, the
biometric data at immigrant
the time the investor's
immigrant residence, or the
investor and location where the
derivatives Form I-829
appear at an ASC petition is being
for adjudicated, thus
fingerprinting.. making the
interview program
more effective and
reducing burdens
on the immigrant
investor.
Some
applicants may
have cost savings
from lower travel
costs.
Costs:
Not
estimated.
Investors obtaining
a permanent
resident card:
Benefits:
Cost and
time savings for
applicants for
biometrics data.
Costs:
Not
estimated.
------------------------------------------------------------------------
Current miscellaneous items: DHS is proposing These provisions
8 CFR 204.6(j)(2)(iii) the following are technical
refers to the former U.S. miscellaneous changes and will
Customs Service. changes: have no impact on
Public Law 107-273 DHS is investors or the
eliminated the requirement updating government.
that alien entrepreneurs references at 8 Therefore, the
establish a new commercial CFR benefits and costs
enterprise from both INA Sec. 204.6(j)(2)(iii) for these changes
203(b)(5) and INA Sec. from U.S. Customs were not
216A. Service to U.S. estimated.
8 CFR 204.6(j)(5) and Customs and
8 CFR 204.6(j)(5)(iii) Border
reference ``management''; Protection..
Current regulation at Removing
8 CFR 204.6(j)(5) has the references to
phrase ``as opposed to requirements that
maintain a purely passive role alien
in regard to the investment''; entrepreneurs
Public Law 107-273 establish a new
allows limited partnerships to commercial
serve as new commercial enterprise in 8
enterprises; CFR 204.6 and
Current regulation 216.6..
references the former Removing
Associate Commissioner for references to
Examinations. ``management'' at
8 CFR 204.6(k) 8 CFR 204.6(j)(5)
requires USCIS to specify in and 8 CFR
its Form I-526 decision 204.6(j)(5)(iii);.
whether the new commercial Removing
enterprise is principally the phrase ``as
doing business in a targeted opposed to
employment area. maintain a purely
Sections 204.6 and passive role in
216.6 use the term regard to the
``entrepreneur'' and investment'' from
``deportation.'' These 8 CFR
sections also refer to Forms I- 204.6(j)(5);.
526 and I-829. Clarifies
that any type of
entity can serve
as a new
commercial
enterprise;.
Replacing
the reference to
the former
Associate
Commission for
Examinations with
a reference to
the USCIS AAO..
Amending
8 CFR 204.6(k) to
specify how USCIS
will issue a
decision..
Revising
sections 204.6
and 216.6 to use
the term
``investor''
instead of
``entrepreneur''
and to use the
term ``removal''
instead of
``deportation.''.
Miscellaneous Cost: Applicants would Familiarization
Familiarization cost need to read and costs to read and
of the rule. review the rule review the rule
to become are estimated at
familiar with the $501,154 annually.
proposed
provisions.
------------------------------------------------------------------------

III. Background

A. The EB-5 Program

As part of the Immigration Act of 1990, Public Law 101-649, 104
Stat. 4978, Congress established the EB-5 immigrant visa classification
to incentivize employment creation in the United States. Under the EB-5
program, lawful permanent resident (LPR) status is available to foreign
nationals who invest at least $1 million in a new commercial enterprise
(NCE) that will create at least 10 full-time jobs in the United States.
See INA section 203(b)(5), 8 U.S.C. 1153(b)(5). A foreign

[[Page 4742]]

national may also invest $1 million if the investment is in a high
employment area or $500,000 if the investment is in a TEA, defined to
include certain rural areas and areas of high unemployment. Id.; 8 CFR
204.6(f). The INA allots 9,940 immigrant visas each fiscal year for
foreign nationals seeking to enter the United States under the EB-5
classification.\6\ See INA section 201(d), 8 U.S.C. 1151(d); INA
section 203(b)(5), 8 U.S.C. 1153(b)(5). Not less than 3,000 of these
visas must be reserved for foreign nationals investing in TEAs. See INA
section 203(b)(5)(B), 8 U.S.C. 1153(b)(5)(B).
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\6\ An immigrant investor, his or her spouse, and children (if
any) will each use a separate visa number.
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B. The Regional Center Program

Enacted in 1992, section 610 of the Departments of Commerce,
Justice, and State, the Judiciary, and Related Agencies Appropriations
Act, 1993, Public Law 102-395, 106 Stat. 1828, established a pilot
program that requires the allocation of a limited number of EB-5
immigrant visas to individuals who invest through DHS-designated
regional centers.\7\ The Regional Center Program was initially designed
as a pilot program set to expire after 5 years, but Congress has
continued to extend the program to the present day.\8\ The Regional
Center Program was last extended in December 2016.\9\
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\7\ Current law requires that DHS annually set aside 3,000 EB-5
immigrant visas for regional center investors. Section 116 of Public
Law 105-119, 111 Stat. 2440 (Nov. 26, 1997). If this full annual
allocation is not used, remaining visas may be allocated to foreign
nationals who do not invest in regional centers.
\8\ See Section 116 of Public Law 105-119, 111 Stat. 2440, 2467
(Nov. 26, 1997); Section 1 of Public Law 112-176, 126 Stat. 1325,
1325 (Sept. 28, 2012); Section 575 of Public Law 114-113, 129 Stat.
2242, 2526 (Dec. 18, 2015).
\9\ See Public Law 114-254 (Dec. 10, 2016).
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Under the Regional Center Program, foreign nationals base their EB-
5 petitions on investments in new commercial enterprises located within
``regional centers.'' DHS regulations define a regional center as an
economic unit, public or private, that promotes economic growth,
regional productivity, job creation, and increased domestic capital
investment. See 8 CFR 204.6(e). While all EB-5 petitioners go through
the same petition process, those petitioners participating in the
Regional Center Program may meet statutory job creation requirements
based on economic projections of either direct or indirect job
creation, rather than only on jobs directly created by the new
commercial enterprise. See 8 CFR 204.6(m)(3). In addition, Congress
authorized the Secretary to give priority to EB-5 petitions filed
through the Regional Center Program. See section 601(d) of Public Law
102-395, 106 Stat. 1828, as amended by Public Law 112-176, Sec. 1, 126
Stat. 1326 (Sept. 28, 2012).
Requests for regional center designation must be filed with USCIS
on the Application for Regional Center Under the Immigrant Investor
Program (Form I-924). See 8 CFR 204.6(m)(3)-(4). Once designated,
regional centers must provide USCIS with updated information to
demonstrate continued eligibility for the designation by submitting an
Annual Certification of Regional Center (Form I-924A) on an annual
basis or as otherwise requested by USCIS. See 8 CFR 204.6(m)(6)(i)(B).
USCIS may seek to terminate a regional center's participation in the
program if the regional center no longer qualifies for the designation,
the regional center fails to submit the required information or pay the
associated fee, or USCIS determines that the regional center is no
longer promoting economic growth. See 8 CFR 204.6(m)(6)(i). As of
November 1, 2016, there were 864 designated regional centers.\10\
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\10\ USCIS, Immigrant Investor Regional Centers, https://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/immigrant-investor-regional-centers.
---------------------------------------------------------------------------

C. EB-5 Immigrant Visa Process

A foreign national seeking LPR status under the EB-5 immigrant visa
classification must go through a multi-step process. The individual
must first file an Immigrant Petition by Alien Entrepreneur (Form I-
526, or ``EB-5 petition'') with USCIS. The petition must be supported
by evidence that the foreign national's lawfully obtained investment
capital is invested (i.e., placed at risk), or is actively in the
process of being invested, in a new commercial enterprise in the United
States that will create full-time positions for not fewer than 10
qualifying employees. See 8 CFR 204.6(j).
If USCIS approves the EB-5 petition, the petitioner must take
additional steps to obtain LPR status. In general, the petitioner may
either apply for an immigrant visa through a Department of State
consular post abroad \11\ or, if the petitioner is already in the
United States and is otherwise eligible to adjust status, the
petitioner may seek adjustment of status by filing an Application to
Register Permanent Residence or Adjust Status (Form I-485) with
USCIS.\12\ Congress has imposed limits on the availability of such
immigrant visas, including by capping the annual number of visas
available in the EB-5 category and by separately limiting the
percentage of immigrant visas that may be issued on an annual basis to
individuals born in any one country.\13\
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\11\ See INA sections 203, 221 and 222; 8 U.S.C. 1153, 1201, and
1202.
\12\ See INA section 245, 8 U.S.C. 1255.
\13\ See INA sections 201, 202 and 203; 8 U.S.C. 1151, 1152 and
1153.
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To request an immigrant visa while abroad, an EB-5 petitioner must
apply at a U.S. consular post. See INA sections 203(e) and (g), 221 and
222, 8 U.S.C. 1153(e) and (g), 1201 and 1202; see also 22 CFR part 42,
subparts F and G. The petitioner must generally wait to receive a visa
application packet from the DOS National Visa Center to commence the
visa application process. After receiving this packet, the petitioner
must collect required information and file the immigrant visa
application with DOS. As noted above, the wait for a visa depends on
the demand for immigrant visas in the EB-5 category and the
petitioner's country of birth.\14\ Generally, DOS authorizes the
issuance of a visa and schedules the petitioner for an immigrant visa
interview for the month in which the priority date will be current. If
the petitioner's immigrant visa application is ultimately approved, he
or she is issued an immigrant visa and, on the date of admission to the
United States, obtains LPR status on a conditional basis. See INA
sections 211, 216A and 221; 8 U.S.C. 1181, 1186b and 1201.
---------------------------------------------------------------------------

\14\ When demand for a visa exceeds the number of visas
available for that category and country, the demand for that
particular preference category and country of birth is deemed
oversubscribed. The Department of State (DOS) publishes a Visa
Bulletin that determines when a visa may be authorized for issuance.
See U.S. Dep't of State, Bureau of Consular Aff., Visa Bulletin,
available at https://travel.state.gov/content/vis.../bulletin.html. Specifically, an individual cannot be issued
an immigrant visa unless the individual's ``priority date,'' i.e.,
the date USCIS received the properly filed Form I-526, is earlier
than the ``final action date'' indicated in the ``date for filing
application'' chart in the current Visa Bulletin for the relevant
category and country of birth. See 8 CFR 204.6(d) (defining the
``priority date'' for EB-5 petitioners).
---------------------------------------------------------------------------

Alternatively, an EB-5 petitioner who is in the United States in
lawful nonimmigrant status generally may seek LPR status by filing with
USCIS an Application to Register Permanent Residence or Adjust Status
(Form I-485, or ``application for adjustment of status''). See INA
section 245, 8 U.S.C. 1255; 8 CFR part 245. Before filing such an
application, however, the EB-5 petitioner must wait until an immigrant
visa is ``immediately available.'' See INA section 245(a), 8 U.S.C.
1255(a); 8 CFR 245.2(a)(2)(i)(A). Generally, an immigrant visa is
considered

[[Page 4743]]

``immediately available'' if the petitioner's priority date under the
EB-5 category is earlier than the relevant date indicated in the
monthly DOS Visa Bulletin.\15\ See 8 CFR 245.1(g)(1).
---------------------------------------------------------------------------

\15\ More specifically, an individual generally may file an
application for adjustment of status with USCIS only if his or her
priority date is earlier than the cut-off date for the relevant
category and country of birth in the ``final action dates'' chart in
the relevant Visa Bulletin. However, when USCIS determines that
there are more immigrant visas available for the fiscal year than
there are known applicants for such visas, USCIS will state on its
Web site that, during that month, applicants may instead use the
``dates for filing visa applications'' chart in the Visa Bulletin
for purposes of determining whether they may file applications for
adjustment of status with USCIS. DOS, moreover, may not issue a visa
and USCIS may not grant adjustment of status unless the individual's
priority date is earlier than the corresponding cut-off date in the
``final action date'' chart listed in the Visa Bulletin.
---------------------------------------------------------------------------

Whether obtained pursuant to issuance of an immigrant visa or
adjustment of status, LPR status based on an EB-5 petition is granted
on a conditional basis. See INA section 216A(a)(1), 8 U.S.C.
1186b(a)(1). Within the 90-day period preceding the second anniversary
of the date the immigrant investor obtains conditional permanent
resident status, the immigrant investor is required to file with USCIS
a Petition by Entrepreneur to Remove Conditions on Permanent Resident
Status (Form I-829). See INA section 216A(c) and (d), 8 U.S.C. 1186b(c)
and (d); 8 CFR 216.6(a)(1). Failure to timely file Form I-829 results
in automatic termination of the immigrant investor's conditional
permanent resident status and the initiation of removal proceedings.
See INA section 216A(c), 8 U.S.C. 1186b(c); 8 CFR 216.6(a)(5). In
support of the petition to remove conditions, the investor must show,
among other things, that he or she established the commercial
enterprise, that he or she invested or was actively involved in the
process of investing the requisite capital, that he or she sustained
those actions for the period of residence in the United States, and
that job creation requirements were met or will be met within a
reasonable time. See 8 CFR 216.6(a)(4). If approved, the conditions on
the investor's permanent residence are removed as of the second
anniversary of the date the investor obtained conditional permanent
resident status. See 8 CFR 216.6(d)(1).

IV. The Proposed Rule

DHS has not comprehensively revised the EB-5 program regulations
since they were published in 1993, see 58 FR 44606 (1993), but has
issued policy guidance to conform agency practice to intervening
changes in the governing statutes. In addition to proposing changes to
portions of the EB-5 program that are in need of reform, this proposed
rule would codify and clarify certain policies. For example, the
current regulation requires that the interview for the petition to
remove conditions take place at the USCIS office located in the same
location as the new commercial enterprise, although there is no
requirement that the EB-5 immigrant petitioner reside in that vicinity.
See 8 CFR 216.6(b)(2). In some instances, DHS has been allowing the
interview to take place at a variety of different locations, including
the USCIS office closest to the immigrant petitioner's residence, as
DHS recognizes the burden of conducting an interview in a location that
is a considerable distance from an immigrant petitioner's residence.
DHS is proposing conforming revisions to the regulations in order to
reflect this practice. See proposed 8 CFR 216.6(b)(2).

A. Priority Date Retention

DHS proposes to allow an EB-5 immigrant petitioner to use the
priority date of an approved EB-5 immigrant petition for any
subsequently filed EB-5 immigrant petition for which the petitioner
qualifies. See proposed 8 CFR 204.6(d). This provision would not apply
where DHS revoked the original petition's approval based on fraud,
willful misrepresentation of a material fact, or a determination that
DHS approved the petition based on a material error. Id. Similarly,
priority date retention would not be available once the investor uses
the priority date to obtain conditional LPR status based upon the
approved petition (e.g., when such an investor fails to remove the
conditional basis of that status and thus loses his or her LPR status).
Should DHS seek to revoke the approval of an immigrant petition, DHS
would provide notice of the revocation detailing the reasons for
revocation.\16\ If the revocation is not based on fraud, a willful
misrepresentation of a material fact, or material DHS error, the
investor would be able to utilize the priority date of that petition
should he or she seek to file another immigrant petition under the EB-5
program. See proposed 8 CFR 204.6(d). An investor seeking to use a
retained priority date should provide a copy of the original immigrant
petition's approval notice indicating the earlier priority date when
filing the new EB-5 immigrant petition. Under this proposal, denied
petitions would not establish a priority date, and a priority date
would not be transferable to another investor. See proposed 8 CFR
204.6(d).
---------------------------------------------------------------------------

\16\ See 8 CFR 205.2.
---------------------------------------------------------------------------

The current regulation does not permit investors to use the
priority date of an approved EB-5 immigrant petition for a subsequently
filed EB-5 immigrant petition. See 8 CFR 204.6(d). DHS has generally
allowed beneficiaries in the employment-based first, second, and third
preference categories to retain the priority date of their previously
approved immigrant petitions unless DHS revokes petition approval. See
8 CFR 204.5(e). DHS recently issued a final rule that will expand the
ability of beneficiaries in these preference categories to retain their
priority dates even when their petitions have been revoked, so long as
the approval was not revoked based on fraud, willful misrepresentation
of a material fact, material error, or the revocation or invalidation
of the labor certification associated with the petition.\17\ See 8 CFR
204.5(e)(2). DHS's proposal in this regulation to allow priority date
retention for those in the EB-5 category would bring the EB-5 priority
date retention policy into harmony with those other employment-based
preference categories. See proposed 8 CFR 204.6(d).
---------------------------------------------------------------------------

\17\ See Retention of EB-1, EB-2, and EB-3 Immigrant Workers and
Program Improvements Affecting High-Skilled Nonimmigrant Workers, 81
FR 82398, 82485 (Nov. 18, 2016).
---------------------------------------------------------------------------

DHS is proposing to allow priority date retention in order to: (1)
Address situations in which petitioners may become ineligible through
circumstances beyond their control (e.g., the termination of a regional
center) as they wait for their EB-5 visa priority date to become
current; and (2) provide investors with greater flexibility to deal
with changes to business conditions. For example, investors involved
with an underperforming or failing investment project would be able to
move their investment funds to a new, more promising investment project
without losing their place in the visa queue.
Providing EB-5 investors with the opportunity to retain their
priority dates is increasingly important as the demand for EB-5 visas
outpaces the statutorily limited supply of such visas, which lengthens
wait times for visa numbers. Since the severe economic recession
between 2007 and 2009,\18\ the EB-5 program has experienced a dramatic
increase in participation. Prior to 2008, the EB-5 program received an
average of fewer than 600 EB-5 immigrant petitions per year. In the
following years, the EB-5 program has received an

[[Page 4744]]

average of over 5,500 petitions per year. And between FY 2014 and FY
2015 alone, the program received over 25,000 petitions.\19\ As a
result, demand for EB-5 visas by investors has now outpaced the annual
supply, resulting in visa backlogs for certain petitioners and their
family members. Individuals affected by those backlogs frequently wait
for one year or more before they can obtain conditional permanent
residence.
---------------------------------------------------------------------------

\18\ The Nat'l Bureau of Econ. Research, U.S. Business Cycle
Expansions and Contractions, available at http://www.nber.org/cycles.html.
\19\ Statistics provided by USCIS Immigrant Investor Program
Office.
---------------------------------------------------------------------------

The EB-5 program began to experience oversubscription (i.e., demand
that outpaced the supply in visa numbers) for the first time during FY
2014. At that time, DOS announced that EB-5 visas were no longer
available for the remainder of the fiscal year for individuals born in
China.\20\ Since then, the program has continued to experience annual
demand from individuals born in China that has outpaced the supply in
visas, resulting in increasingly long backlogs every year for those
individuals.\21\ This trend is anticipated to continue and likely
worsen for the foreseeable future, especially considering that
individuals born in China currently file about 80 percent of the EB-5
immigrant visas granted on an annual basis.\22\ Indeed, given the
20,000 EB-5 petitions currently pending with USCIS, DHS estimates that
there are currently 16,000 EB-5 petitions pending for individuals born
in China.\23\
---------------------------------------------------------------------------

\20\ DOS issued a statement in August 2014 indicating the EB-5
preference category was unavailable for Chinese nationals through
the end of FY2014. See Nataliya Rymer, U.S. Department of State
Announces EB-5 Visas for China Unavailable Until October 1, 2014,
Nat'l L. Rev., Aug. 23, 2014, http://www.natlawreview.com/article/us-department-state-announces-eb-5-visas-china-unavailable-until-october-1-2014.
\21\ While the demand has exceeded supply for investors from
China, the demand has not exceeded supply for investors from any
other countries as of December 2016.
\22\ Dep't of State, Visa Statistics, Report of the Visa Office,
available at https://travel.state.gov/content/visas/en/law-and-policy/statistics.html.
\23\ USCIS, Number of I-526 Immigrant Petitions by Alien
Entrepreneurs by Fiscal Year, Quarter, and Case Status 2008-2016,
(May 25, 2016) available at https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/Immigration%20Forms%20Data/Employment-based/I526_performancedata_fy2016_qtr2.pdf.
---------------------------------------------------------------------------

Although Congress sets visa numbers, DHS recognizes that having to
wait for a visa can create difficulties for individuals seeking to
invest in the United States. There are also consequences for investors
who invest through a regional center that is subsequently terminated
through no fault of the investor. When a regional center is terminated,
EB-5 immigrant petitions filed through that regional center are
generally also denied or revoked depending on the procedural status of
the petition. The filers of such petitions may have met all
requirements to participate in the EB-5 program, but absent priority
date retention they will lose their place in the immigrant visa queue.
Currently, an investor in this situation who wants to continue with the
EB-5 immigrant visa process must start the process all over again by
investing in a new commercial enterprise and going to the end of the
EB-5 visa queue. Allowing priority date retention would allow such an
investor to retain his or her place in the queue, thereby alleviating
the harsh consequences of regional center terminations and other
material changes that occur unexpectedly and through no fault of the
investor.
Finally, priority date retention would also benefit other investors
with approved EB-5 immigrant petitions who, while waiting for their
priority dates to become current, learn that they have invested in
severely delayed projects that are likely not to succeed. Under current
regulations, such investors cannot reinvest their investment funds
without losing their place in the immigrant visa queue. Under the
proposed rule, such investors would be able to reinvest in new projects
while retaining their previously established priority dates. By
allowing priority date retention, DHS is thus eliminating an external
incentive that currently distorts market forces and increases financial
risk for investors.
DHS welcomes public comment on the proposal to allow investors in
certain circumstances to retain their priority dates. DHS also welcomes
comment on the proposed standards that may be considered when
determining whether or not to allow for priority date retention,
including alternative suggestions to those standards.

B. Increasing the Minimum Investment Amount

In 1990, Congress set the minimum investment amount for the program
at $1 million and authorized the Attorney General (now the Secretary of
Homeland Security) to increase the minimum investment amount, in
consultation with the Secretaries of State and Labor. INA section
203(b)(5)(C)(i), 8 U.S.C. 1153(b)(5)(C)(i). Neither the former INS nor
DHS has exercised its authority to increase the minimum investment
amount. As a result, over the past 25 years inflation has eroded the
present-day value of the minimum investment required to participate in
the EB-5 program.\24\ After consulting with the Departments of State
and Labor, DHS proposes to account for inflation by increasing the
minimum investment amount consistent with increases in the CPI-U during
the intervening period, for a new minimum investment amount of $1.8
million.\25\ As discussed below, DHS also proposes to include a
mechanism for future adjustments every 5 years, based on the CPI-U.
---------------------------------------------------------------------------

\24\ DHS also notes that prior to the passage of IMMACT, the
former INS provided a written response to Senator Simon regarding
the ``creation of a subcategory for immigrant investors'' and stated
that the ``minimum investment amount would be set in terms of the
value of the dollar at the time of enactment and would be adjusted
periodically based on some criteria such as the Consumer Price
Index.'' A Bill to Amend the Immigration and Nationality Act to
Effect Changes in the Numerical Limitation and Preference System for
the Admission of Immigrants: Hearing on S. 1611 Before the S.
Subcomm. on Immigr. & Refugee Aff. of the S. Comm. on the Judiciary,
100th Cong. 90 (1987) (statement of Mark W. Everson, Deputy Comm'r
of the Immigr. and Naturalization Serv.).
\25\ DHS may conduct further consultations following receipt of
public comment and prior to issuing a final rule. The $1.8 million
figure is rounded down to the nearest hundred thousand from
approximately $1,813,443, based on an inflation factor of 1.813443
between 1990 and 2015. The actual increase in prices is obtained as
((CPI-U2015/CPI-U1990)-1). Using a base period
of 1982-84, the CPI-U increased from 130.7 in 1990 to 237.017 in
2015, for an actual increase in price of approximately 81.34
percent. DHS rounded the figure down for ease of agency
administration and the convenience of all stakeholders. The CPI-U
data is publicly available at http://www.bls.gov/data/#prices.
---------------------------------------------------------------------------

DHS believes that it is appropriate to adjust the minimum
investment amount upward based on inflation, without regard for the
amount of capital that would likely be required to fulfill the
statutory requirement to create 10 jobs. As a preliminary matter, DHS
notes that Congress did not provide for adjustments in the investment
threshold to be related in any way to the EB-5 job creation
requirements. Indeed, based on the controlling statutory authorities,
Congress itself does not appear to have tied the statutory investment
thresholds to the job creation requirement. For example, when Congress
first created the EB-5 category, Congress established a single job
creation standard (i.e., the direct creation of at least 10 jobs) but
authorized three different levels of qualifying investments:
(1) The standard minimum investment amount of $1 million;
(2) The reduced minimum investment amount of no less than 50
percent of the standard for investments in targeted employment areas;
and
(3) A higher minimum investment amount of up to three times the
standard amount for investments in high employment areas.

[[Page 4745]]

As noted, Congress originally provided for up to three different
qualifying investment amounts but did not vary the job creation
requirements to correspond to the level of investment. Congress also
did not tie investment levels to job creation criteria when it
established the regional center program. For regional center
investments, Congress used the same three investment levels as the
original program but varied the job creation requirement by including
both direct and indirect job creation. Based on the plain language of
INA section 203(b)(5)(C)(i) and the regional center legislation,
Congress does not appear to have intended to tie the minimum investment
amounts to the number of jobs to be created.

DHS considered a number of different measures upon which to base
the proposed adjustment and future adjustments. Among these, DHS is
proposing to rely on the Consumer Price Index (CPI), which ``is a
measure of the average change over time in the prices paid by urban
consumers for a market basket of consumer goods and services.'' \26\
According to the Bureau of Labor Statistics at the Department of Labor
(DOL), the CPI is--
---------------------------------------------------------------------------

\26\ Bureau of Labor Statistics, Consumer Price Index:
Frequently Asked Questions, available at http://www.bls.gov/cpi/cpifaq.htm; Bureau of Labor Statistics, Consumer Price Index:
Addendum to Frequently Asked Questions, available at http://www.bls.gov/cpi/cpiadd.htm#2_1.

the most widely used measure of inflation . . . . It provides
information about price changes in the Nation's economy to
government, business, labor, and private citizens and is used by
them as a guide to making economic decisions. . . . The CPI and its
components are used to adjust other economic series for price
changes and to translate these series into inflation-free
dollars.\27\
---------------------------------------------------------------------------

\27\ Id.

The specific CPI index that DHS proposes to rely on is the unadjusted
All Items CPI-U. The CPI-U is the ``broadest and most comprehensive
CPI,'' and using unadjusted data is more appropriate for this purpose,
because seasonally adjusted CPI data is subject to revision for up to
five years after their original release, making such data difficult to
use for escalation purposes.\28\
---------------------------------------------------------------------------

\28\ See id.
---------------------------------------------------------------------------

DHS also considered other indices used by the Bureau of Labor
Statistics to measure different aspects of inflation.\29\ One of these
is the Producer Price Indexes, which ``measure changes in the selling
prices received by domestic producers of goods and services.'' \30\
Although the Producer Price Indexes could also provide an appropriate
measure for adjusting the standard minimum investment amount, DHS
believes the CPI-U is a better measure because it is more widely relied
upon.\31\ The BLS also produces a number of other business cost
statistics that measure labor costs or the costs of goods and
services,\32\ but DHS chose not to propose these as measures as they
are more narrowly focused on different and discrete aspects of economic
activity.
---------------------------------------------------------------------------

\29\ Bureau of Labor Statistics, Overview of BLS Statistics on
Inflation and Prices, available at http://www.bls.gov/bls/inflation.htm.
\30\ Bureau of Labor Statistics, Producer Price Indexes:
Frequently Asked Questions, available at http://www.bls.gov/ppi/ppifaq.htm.
\31\ Bureau of Labor Statistics, Consumer Price Index: Addendum
to Frequently Asked Questions, available at http://www.bls.gov/cpi/cpiadd.htm. For additional comparison of CPI and PPI, see Bureau of
Labor Statistics, Comparing the Producer Price Index for Personal
Consumption with the U.S. All Items CPI for All Urban Consumers,
available at https://www.bls.gov/cpi/cpiadd.htm.
\32\ Bureau of Labor Statistics, Overview of BLS Statistics on
Business Costs, available at http://www.bls.gov/bls/business.htm.
---------------------------------------------------------------------------

Because the EB-5 program is focused on investment, DHS also
considered adjusting the standard minimum investment amount based on
changes in the overall value of a specific stock index, such as the Dow
Jones Industrial Average or the Standard and Poor's 500 Stock Index.
But these indexes are based on trades in the secondary market that are
tied to the value of existing companies strictly for investment
purposes. By comparison, investment in the EB-5 program is related to
job creation, which in turn results from an adequately capitalized
enterprise (as determined by the costs of goods or services required to
do business). DHS believes the CPI-U is a more appropriate indicator of
the costs of goods and services necessary for an EB-5 enterprise to be
adequately capitalized for the purpose of job creation.
DHS believes that increasing the standard minimum investment amount
to account for inflation since creation of the EB-5 program would both
modernize the program and ensure a level of capital investment in the
United States that more closely adheres to congressional intent. DHS
also believes that this change will benefit the U.S. economy by
increasing the amount of foreign investment in the United States. This
conclusion is supported by the fact that the EB-5 program has recently
suffered from oversubscription at current investment levels; that
investors' economic resources have likely increased since the program's
creation by at least the rate of inflation; and that even with the
proposed increases, the EB-5 program would remain extremely competitive
with other countries' investor visa programs, which typically require
higher investment thresholds.\33\
---------------------------------------------------------------------------

\33\ The United Kingdom's Tier 1 Investor visa requires a
minimum investment of [pound]2,000,000 (approximately $2.5 million
USD), and offers permanent residence to those who have invested at
least [pound]5 million (approximately $6.3 million USD). Tier 1
(Investor) Visa, Gov.UK, https://www.gov.uk/tier-1-investor/overview. Australia's Significant and Premium Investment Visa
Programs require AU $5 million (approximately $3.7 million USD) and
AU $15 million (approximately $11.2 million USD), respectively; its
``investor stream'' visa program requires an AU $1.5 million
(approximately $1.1 million USD) investment and a host of other
requirements. Business Innovation and Investment Visa, Australian
Government, http://www.border.gov.au/Trav/Visa-1/188-. Canada's
Immigrant Investor Venture Capital Pilot Program requires a minimum
investment of CDN $2 million (approximately $1.5 million USD) and a
net worth of CDN $10 million (approximately $7.6 million USD) or
more. Immigrant Investor Venture Capital Pilot Program, Government
of Canada, http://www.cic.gc.ca/english/immigra...ligibility.asp. New Zealand's Investor 1 Resident Visa requires a
NZ $10 million (approximately $7.2 million USD) investment, and its
Investor 2 Resident Visa requires a NZ $2.5 million (approximately
$1.8 million USD) investment. Investor Visas, New Zealand Now,
https://www.newzealandnow.govt.nz/mo.../investor-visa. Currency exchange calculations are as of
December 2016.
---------------------------------------------------------------------------

In addition to raising the standard minimum investment amount
effective as of the date specified in the final rule, DHS proposes that
the minimum investment amount be adjusted every 5 years based on the
CPI-U. See proposed 8 CFR 204.6(f)(1). DHS proposes that each such
future adjustment will be in effect for a 5-year period beginning on
October 1 of the year of the adjustment. Id. DHS believes it is
important to include a periodic inflation-adjustment mechanism in the
regulations to avoid a recurrence of the current situation, where the
minimum investment amount remains unchanged for a lengthy period and is
eroded by inflation. DHS also proposes to adjust the investment
threshold every 5 years, rather than on an annual basis, as a way of
balancing the need to counteract inflation with the need to provide
predictability and reliability to stakeholders. Such predictability is
especially helpful for investors and project developers who need to
prepare for the infusion of pooled EB-5 capital into new commercial
enterprises. DHS estimates that more than 96 percent of all EB-5
immigrant petitions filed are based on pooled investments involving
more than one EB-5 investor in the same new commercial enterprise. In
addition, a 5-year adjustment period would be straightforward for the
agency to administer in adjudicating multiple petitions based on
investments in the

[[Page 4746]]

same new commercial enterprise and business plan, filed over a period
of several years.
Finally, DHS proposes that each investor will be required to
contribute the minimum investment amount that is designated at the time
the initial petition is filed. See proposed 8 CFR 204.6(f)(1). EB-5
investors may qualify for the program based either on having made their
investment prior to petition filing or by being in the process of
investing at the time of filing. However, all EB-5 investors must
demonstrate a present commitment of the full minimum amount of required
investment at the time the petition is filed. DHS believes that tying
the required minimum investment amount to the amount designated at the
time of filing provides clarity for stakeholders and simplifies the
adjudication process for the agency.
DHS seeks public comment on all aspects of this proposal, including
the proposed increase of the standard minimum investment amount to $1.8
million, the proposed 5-year inflation-adjustment periods, the proposed
use of the CPI-U as the basis for the initial increase and the periodic
adjustments, the proposal to round future adjustments down to the
nearest 100,000, and the proposed requirement that the minimum
investment amount be set at the time of filing the EB-5 immigrant
petition. DHS recognizes that under this proposal, the required minimum
investment amount would increase significantly, in relative and
absolute terms, to account for a quarter century of inflation. DHS is
seeking comment on whether it should increase the standard minimum
investment amount as proposed under this rule, or whether a different
methodology or different investment amount would be more appropriate.
DHS also seeks comment on whether it should implement any such increase
incrementally or by another method that reduces impacts on
stakeholders. DHS notes, however, that incremental increases may result
in a lack of clarity for stakeholders and may pose operational burdens
on adjudicators.

C. Increasing the Minimum Investment Amount for High Employment Areas

Congress also provided DHS with the authority to set the qualifying
investment amount for high employment areas to an amount greater than--
but not three times greater than--the standard minimum investment
amount. See INA section 203(b)(5)(C)(iii), 8 U.S.C. 1153(b)(5)(C)(iii).
At the outset of the program, the former INS did not wish to increase
the investment for these areas beyond $1 million. See 56 FR 60897,
60903. Because the standard minimum investment amount has applied to
such areas since the program's inception, DHS has not tracked which
projects have been set in high employment areas. DHS thus does not have
sufficient information at this time to determine whether to increase
the investment threshold for such areas. DHS recently adjusted its
forms to capture this information, which, once collected and analyzed,
may help the Department determine whether to adjust the minimum
investment amount for high employment areas. For now, however, DHS is
not proposing an increase beyond the standard minimum investment
amount, and therefore proposes applying the standard investment
threshold in high employment areas. See proposed 8 CFR 204.6(f)(3). DHS
also proposes that the minimum investment amount for high employment
areas be adjusted consistent with adjustments to the standard
investment threshold--i.e., every five years based on increases in the
CPI-U and rounded down to the nearest 100,000.
DHS seeks public comment on all aspects of this proposal, including
the continuing application of the standard investment threshold to high
employment areas, which would increase the threshold to $1.8 million,
the proposed 5-year inflation-adjustment periods, the proposed use of
the CPI-U as the basis for the periodic adjustments, and the proposal
to round future adjustments down to the nearest 100,000.

D. Increasing the Minimum Investment Amount for TEAs

In 1990, Congress set the minimum investment amount for the program
at $1 million and authorized DHS to set a different amount for
investments made in TEAs (i.e., rural areas and areas of high
unemployment). See INA section 203(b)(5)(C)(ii), 8 U.S.C.
1153(b)(5)(C)(ii). Specifically, Congress authorized DHS to reduce the
minimum investment amount in a TEA by up to 50 percent of the standard
minimum investment amount. Id. The former INS subsequently issued
regulations in 1991 setting the TEA investment threshold at 50 percent
of the minimum investment amount, or $500,000.\34\ See 8 CFR
204.6(f)(2).
---------------------------------------------------------------------------

\34\ In the final rule published in 1991, the former INS noted
that 82 commenters called for the maximum percentage reduction
because they believed that ``lowering the investment capital
requirement would promote the purpose of the Act to stimulate
investment in rural and high unemployment areas.'' 56 FR 60897 (Nov.
29, 1991). ``They further felt that viable businesses could be
maintained with the lower investment amount.'' Id.
---------------------------------------------------------------------------

In establishing two tiers of investment, and setting aside 3,000
visas for those investing in rural areas and areas subject to high
unemployment, Congress sought to incentivize investment in such
areas.\35\ But although some in Congress expected that most investors
would invest at the higher amount,\36\ experience shows that such
investments have become relatively rare. An agency analysis of
petitions filed in 2015 indicates that approximately 97 percent of all
investments by EB-5 petitioners are made in TEAs and thus at the
reduced amount of $500,000. In other words, while Congress expressed
concern about investments in TEAs and thus set aside approximately 30
percent of visas at a reduced investment amount for such purpose,
investments in TEAs have effectively become the settled norm. As
investments in TEAs have dominated the program in recent years, the de
facto standard threshold has become $500,000, thus undermining
congressional aims to also encourage investments at the standard
minimum investment amount of $1 million.
---------------------------------------------------------------------------

\35\ See 135 Cong. Rec. S7858-02 (July 13, 1989) (statement of
Sen. Boschwitz) (stating that the amendment's purpose was to
``attract significant investments to rural America.''); 136 Cong.
Rec. S17106-01 (Oct. 26, 1990) (statement of Sen. Simon) (``We are
mindful of the need to target investments to rural America and areas
with particularly high unemployment--areas that can use the job
creation the most . . . America's urban core and rural areas have
special job creation needs.'').
\36\ See 136 Cong. Rec. S17106-01 (Oct. 26, 1990) (statement of
Sen. Simon) (``The general rule-and the vast majority of the
investor immigrants will fit in this category-is that the investor
must invest $1 million and create 10 U.S. jobs.'').
---------------------------------------------------------------------------

Accordingly, DHS has determined that the large differential between
the standard and reduced investment amounts has failed to strike the
balance that Congress appears to have intended by creating a multi-
leveled investment framework in the EB-5 program. Moreover, based on
its 25-year history implementing the program, DHS believes that the
differential--and the sizable monetary incentive it presents--has the
potential of distorting general market forces and the business
decisions that follow from such forces to an unintended degree. To
strike a better balance between investments at the standard and reduced
thresholds, and to reduce the degree to which the differential between
the thresholds affects investment decisions, DHS is proposing to reduce
the difference between the two investment thresholds. Specifically, DHS
is proposing to set the

[[Page 4747]]

minimum amount for investments in TEAs at 75 percent of the standard
amount (i.e., change the percentage reduction for investments in TEAs
from 50 percent of the standard amount to 25 percent of the standard
amount). See proposed 8 CFR 204.6(f)(2). Because DHS has proposed to
set the standard investment amount at $1.8 million, the effect of this
change is to set the TEA investment amount at $1.35 million (i.e., 75%
of $1.8 million).
DHS considered changing the percentage reduction for TEA
investments to various degrees but settled on a 25 percent reduction
for several reasons. First, DHS believes that reducing the TEA
investment discount by half will significantly reduce the potential for
unintended distortions in investment decisions. Second, DHS notes that
a 25 percent reduction represents a midway point between the two
extremes allowed by Congress--applying the maximum 50 percent reduction
and applying no reduction at all. Because DHS is seeking to reduce the
investment imbalance caused by the 50 percent differential on the one
hand, while continuing to effectuate the congressional intent of
incentivizing investments in rural and high unemployment areas on the
other, DHS believes that proposing the midway point between the two
possible extremes for public comment is appropriate. Third, DHS
determined that due to other proposed changes to the standard minimum
investment amount in this rulemaking, the impact of a 25 percent
reduction for TEA investments would initially be softened by the fact
that the difference between the standard amount and the TEA investment
amount, in terms of dollars, would remain roughly the same (changing
from $500,000 to $450,000). Thus, at least for the first 5 years after
the change proposed in this section, investors who choose to invest in
TEAs will be able to invest at approximately the same savings in terms
of real dollars as they do under the current regulations.
Finally, in addition to proposing to raise the minimum investment
amount for TEAs, DHS proposes to adjust this amount every five years
consistent with other parts of this proposed rule. See proposed 8 CFR
204.6(f)(2). Specifically, DHS proposes to keep the investment
threshold for TEAs at 75 percent of the standard investment threshold.
Id. As with the standard investment threshold, adjustments to the TEA
investment threshold would be in effect for a 5-year period beginning
on October 1 of the year of the adjustment. Id.
DHS welcomes public comment on all aspects of this proposal,
including the proposed minimum investment amount for TEAs as well as
the proposal for adjusting the amount every five years. DHS also
welcomes comment on the specific percentage reduction for TEA
investments relative to the standard investment threshold, including
alternative suggestions on the percentage to be considered.

E. TEA Designation Process

As discussed in the previous section, Congress created the two-tier
investment system in order to incentivize investments in targeted
employment areas, defined in the statute as ``a rural area or an area
which has experienced high unemployment (of at least 150 percent of the
national average rate).'' 8 U.S.C. 1153(b)(5)(B)(ii). In subsequent
regulations published in 1991, the former INS allowed investors to
demonstrate that their investment was in a high unemployment area in
one of two ways: (1) By providing evidence that the metropolitan
statistical area, the specific county within a metropolitan statistical
area, or the county in which a city or town with a population of 20,000
or more is located, in which the new commercial enterprise is
principally doing business has experienced an average unemployment rate
of at least 150 percent of the national average rate; or (2) by
submitting a letter from an authorized body of the government of the
state in which the new commercial enterprise is located which certifies
that the geographic or political subdivision of the metropolitan
statistical area or of the city or town with a population of 20,000 or
more in which the enterprise is principally doing business has been
designated a high unemployment area. 8 CFR 204.6(j)(6)(ii). When the
INS promulgated this provision, it permitted states to designate
smaller TEAs--areas within an MSA or within a city or town with a
population of 20,000 or more--because the agency believed that due to
the nature of the data involved, states should have an opportunity to
participate in TEA determinations.\37\
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\37\ 56 FR 60897 (Oct. 26, 1990) (``With respect to geographic
and political subdivisions of this size, however, the Service
believes that the enterprise of assembling and evaluating the data
necessary to select targeted areas, and particularly the enterprise
of defining the boundaries of such areas, should not be conducted
exclusively at the Federal level without providing some opportunity
for participation from state or local government.'').
---------------------------------------------------------------------------

Reliance on states' TEA designations has resulted in the
application of inconsistent rules by different states. Some of these
rules understandably may be motivated primarily by the desire to
promote economic development in the relevant state, rather than by the
desire to fulfill congressional intent with respect to the EB-5
program.\38\ As mentioned previously, at least 97 percent of all EB-5
petitions filed in 2015 involved investments at the lower investment
threshold for projects in TEAs. In addition, the deference to state
determinations provided by current regulations has resulted in the
acceptance of some TEAs that consist of areas of relative economic
prosperity linked to areas with lower employment, and some TEAs that
have been criticized as ``gerrymandered.'' \39\
---------------------------------------------------------------------------

\38\ Is the Investor Visa Program an Underperforming Asset?:
Hearing Before the H. Comm. on the Judiciary, 114th Cong. 62 (2016)
(statement of Matt Gordon, Chief Exec. Officer, E3 Inv. Group)
((``Generally, States quickly learned to be as permissive as
possible in an attempt to attract ever greater amounts of EB-5
capital.''); see also The Distortion of EB-5 Targeted Employment
Areas: Time to End the Abuse: Hearing Before the S. Comm. on the
Judiciary, 114th Cong. 12 (2016) (statement of Gary Friedland,
Scholar-in-Residence, N.Y. Univ., Stern School of Bus.) (``USCIS'
continued delegation to the states of the TEA authority without
guidelines results in the application of inconsistent rules by the
various states. More important, each state has the obvious self-
interest to promote economic development within its own borders.
Delegation presents an opportunity for the states to establish
lenient rules to enable project locations to qualify as a TEA.
Compounding the problem, often the state agency that is charged with
making the TEA determination is the same agency that promotes local
economic development. As a consequence, virtually every EB-5 project
location qualifies as a TEA.'').
\39\ See, e.g., Eliot Brown, Swanky New York Condo Project
Exploits Aid Program, Wall St. Journal, Oct. 13, 2015, http://www.wsj.com/articles/posh-tower-proposed-for-struggling-new-york-neighborhood-central-park-south-1444728781.
---------------------------------------------------------------------------

For these reasons, DHS proposes to eliminate state designation of
high unemployment areas. This change would help ensure consistency
across TEA designations. DHS would itself determine which areas qualify
as TEAs, by applying standards proposed in this rule to the evidence
presented by investors and regional centers. DHS alternatively
considered continuing to allow states to make TEA designations while
providing a clearer basis for DHS to scrutinize and overturn such
designations. DHS, however, currently prefers to avoid such an approach
because of the administrative burden it presents. DHS believes it would
be more difficult to evaluate the individualized determinations of the
various states than to implement and administer a nationwide standard
on its own.
The proposed new standards for designating TEAs are as follows.
First, the term ``targeted employment area'' would be defined,
consistent with statutory authority, to mean an area which, at the time
of investment, is a rural area or is designated as an area

[[Page 4748]]

which has experienced unemployment of at least 150 percent of the
national average rate. See proposed 8 CFR 204.6(e). DHS is also
proposing to amend the definition of a ``rural area'' to mean any area
other than an area within a metropolitan statistical area (as
designated by the Office of Management and Budget (OMB)) or within the
outer boundary of any city or town having a population of 20,000 or
more based on the most recent decennial census of the United States.
See proposed 8 CFR 204.6(e). This definition clarifies, consistent with
statute, that qualification as a rural area is based on data from the
most recent decennial census of the United States.
DHS is also proposing new guidelines for the designation of a TEA.
As in the current system, investors may continue to provide evidence
that the new commercial enterprise is principally doing business in (1)
an MSA, (2) a specific county within an MSA, or (3) a county with a
city or town with a population of 20,000 or more, that has experienced
an average unemployment rate of at least 150 percent of the national
average rate. See proposed 8 CFR 204.6(j)(6)(ii)(A). To this list, DHS
proposes to add cities and towns with a population of 20,000 or more.
Id. Because cities and towns fall between counties and MSAs on the one
hand, and geographic or political subdivisions within counties and MSAs
on the other, DHS believes it is appropriate to include them as an area
that could independently qualify as a TEA if the average unemployment
rate for the city or town is at least 150 percent of the national
average.
In addition to including cities and towns, DHS proposes new rules
for determining when a geographic or political subdivision could
qualify as a TEA--determinations that states currently make on a case-
by-case basis. DHS proposes that a TEA may consist of a census tract or
contiguous census tracts in which the new commercial enterprise is
principally doing business \40\ (the ``project tract(s)'') if the
weighted average of the unemployment rate \41\ for the tract or tracts
is at least 150 percent above the national average. See proposed 8 CFR
204.6(i). Moreover, if the project tract(s) do not independently
qualify under this analysis, a TEA may also be designated if the
project tract(s) and any or all additional tracts that are directly
adjacent to the project tract(s) comprise an area in which the weighted
average of the unemployment rate for all of the included tracts is at
least 150 percent of the national average. Id. DHS proposes that
petitioners submit a description of the boundaries of the geographic or
political subdivision and the unemployment statistics in the area for
which designation is sought as set forth in proposed 8 CFR 204.6(i),
and the method or methods by which the unemployment statistics were
obtained. See proposed 8 CFR 204.6(j)(6)(ii)(B).
---------------------------------------------------------------------------

\40\ According to USCIS policy in effect at the time of issuance
of this proposed rulemaking:
A new commercial enterprise is principally doing business in the
location where it regularly, systematically, and continuously
provides goods or services that support job creation. If the new
commercial enterprise provides such goods or services in more than
one location, it will be principally doing business in the location
most significantly related to the job creation.
Factors considered in determining where a new commercial
enterprise is principally doing business include, but are not
limited to, the location of:
Any jobs directly created by the new commercial
enterprise;
Any expenditure of capital related to the creation of
jobs;
The new commercial enterprise's day-to-day operation;
and
The new commercial enterprise's assets used in the
creation of jobs.
USCIS Policy Manual, 6 USCIS-PM G (Nov. 30, 2016).
\41\ In order to determine if a project qualifies for TEA
designation USCIS would first determine the weighted unemployment
rate for each census tract in the TEA area. To determine the
weighted unemployment rate of a census tract, USCIS would divide the
labor force (civilians ages 16 and older who are employed or
employed, plus active duty military) of each census tract by the
labor force of the entire TEA area. USCIS would then multiply this
figure by the unemployment rate of that specific census tract. The
resulting figure is the weighted unemployment rate for each
individual census tract. The total weighted unemployment rate is the
sum of the weighted unemployment rates for each census tract in the
TEA area. If the total weighted unemployment rate is 150% above the
national unemployment rate then the project would qualify for TEA
designation.
---------------------------------------------------------------------------

The figure below illustrates how to apply the proposed
limitations.\42\ The areas on the map outlined with a thin solid line
represent census tracts. The tract outlined in a solid bold line near
the center, just south of the waterway, represents the project tract in
which the new commercial enterprise (represented by the pointer) is
principally doing business. The broader area outlined in a dashed bold
line contains all of the tracts that are adjacent to the project tract.
Under the proposed limits, the tract outlined in a solid bold line may
independently qualify as a TEA. If it does not, an area consisting of
that tract and any or all of the additional tracts outlined in the
dashed bold line could qualify as a TEA. Qualification is determined by
looking to the weighted average unemployment rate of the entire area
proposed.
---------------------------------------------------------------------------

\42\ For ease of reference, a color-coded version of this figure
is available in the docket for this rulemaking.
[GRAPHIC] [TIFF OMITTED] TP13JA17.002

[[Page 4749]]

The proposed new TEA designation rules would rely on the census
tract as the building block for the geographic or political subdivision
for multiple reasons. First, census tracts offer uniformity. Although
census tracts vary in size, they are generally drawn to define a
residential population of between 1,200 and 8,000 people, with an
optimum size of 4,000 people per census tract according to the U.S.
Census Bureau.\43\ No census tract can extend beyond county lines,
meaning the largest census tract would, at most, cover a single
county.\44\ Second, data at the census tract level is more readily
publicly available, and is updated annually based on data collected
through the Census Bureau's ``American Community Survey'' (ACS).\45\
Third, census tract numbering is generally stable and would only change
at the time of the next available census (generally every 10 years).
Fourth, as local planning agencies can request changes to census tract
configurations, the use of census tracts still provides localities with
some input into the overall process. However, DHS believes this input
is sufficiently limited to avoid concerns regarding political influence
on TEA designations, because census tracts typically only change when
populations change to the point that a tract is split or two tracts are
merged.\46\ DHS also surveyed agencies in several locations to obtain
information regarding how they have approached the TEA designation
process, namely: the states of Illinois, New York, and California, and
the city of Dallas, Texas. Every state or local agency consulted by DHS
relied on census tract level unemployment data in the TEA designation
process.\47\
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\43\ U.S. Census Bureau, Census Tracts, available at https://www.census.gov/geo/reference/webatlas/tracts.html.
\44\ U.S. Census Bureau, Geographic Terms and Concepts--Census
Tract, available at https://www.census.gov/geo/reference/gtc/gtc_ct.html (Note: Tribal census tracts are unique and can cross
state and county boundaries).
\45\ U.S. Census Bureau, Am. Cmty. Survey, available at http://factfinder.census.gov/faces/nav/jsf/pages/programs.xhtml?program=acs.
\46\ U.S. Census Bureau, Geography: Census Tracts, available at
https://www.census.gov/geo/reference/webatlas/tracts.html.
\47\ We note that only one state, California, set parameters on
the use of census tracts, limiting the tracts to 12 contiguous
tracts encompassing the investment project location.
---------------------------------------------------------------------------

In addition to utilizing the census tract as the most appropriate
and reliable building block for EB-5 program purposes, DHS believes it
is appropriate for a TEA to consist of both the project tract(s) and
the census tracts adjacent to the project tracts as such an area--
including the tracts immediately surrounding the project tract(s)--is
likely to experience the employment-creation impact of the investment.
DHS considered extending the cluster to census tracts beyond those
directly adjacent to the project tract(s), but determined that doing so
in some cases would include areas that are too far from the site of the
proposed project.\48\
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\48\ See Stuart S. Rosenthal and William C. Strange, Evidence on
the Nature and Sources of Agglomeration Economies, Aug. 24, 2003,
available at http://siteresources.worldbank.org/I...lAndStuart.pdf (``More recently still,
Rosenthal and Strange (2003) provide a micro-level analysis of the
geographic scope of agglomeration economies. The environment of an
establishment is measured by constructing rings around the centroid
of the establishment's zip code. Rings of 1 mile, 5 miles, 10 miles,
and 15 miles are included. For each of the six industries studied .
. . new arrivals are more likely to be attracted to zip codes as
employment in the own industry within one mile increases. Employment
in the own industry just five miles away, however, has a much
smaller effect, as does employment further out in the ten and
fifteen mile rings.''); see also John C. Ham, Charles Swenson,
Ay[scedil]e [Idot]mrohoro[gbreve]lu, and Heonjae Song, Government
Programs Can Improve Local Labor Markets: Evidence from State
Enterprise Zones, Federal Empowerment Zones and Federal Enterprise
Communities, 95 J. Pub. Econ. 779, 779-97 (2011) (``Federal and
state governments spend well over a billion dollars a year on
programs that encourage employment development in disadvantaged
labor markets through the use of subsidies and tax credits . . . .
We find that all three programs have positive, statistically
significant, impacts on local labor markets in terms of the
unemployment rate, the poverty rate, the fraction with wage and
salary income, and employment.'').
---------------------------------------------------------------------------

DHS considered other options presented by stakeholders \49\ and
during congressional hearings \50\ to determine the parameters for a
TEA. One option DHS considered was limiting the geographic or political
subdivision to the project tract(s). This option would be easy to put
in practice for both stakeholders and the agency, but was considered
too restrictive in that it would exclude immediately adjacent areas
that would be impacted by the investment. Another option DHS considered
was limiting the geographic or political subdivision to an area
containing up to, but no more than, 12 contiguous census tracts, an
option currently used by the state of California in its TEA designation
process.\51\ However, DHS is not confident that this option is
necessarily appropriate for nationwide application, as the limitation
to 12 census tracts may be justifiable for reasons specific to
California but may not be apt on a national scale.
---------------------------------------------------------------------------

\49\ On April 25, 2016, DHS held an EB-5 Listening Session, in
which it solicited and received feedback from stakeholders on
several issues, including the TEA process. Stakeholders expressed
concerns about a lack of consistency in state TEA designations (``I
think we all know that every single state in this union has a
different way of doing targeted employment areas''), the
inefficiency of state TEA designation (``I think that the current
process is very inefficient . . . the states are reviewing . . .
federal data and the states don't provide any benefit.''), and the
natural incentive for states to approve TEAs (``The other thing is
that . . . there's an incentive to lower the hurdle for their
state.''). DHS further solicited feedback on the same issues through
its Idea Community Web site, an online portal available to the
general public. See USCIS Idea Community, https://www.uscis.gov/outreach/uscis-idea-community; Remarks, EB-5 Immigrant Investor
Program Stakeholder Engagement (July 28, 2016), available at https://www.uscis.gov/sites/default/...zieRemarks.pdf. DHS received
various suggestions for changing the TEA process, including the
consideration of commuting patterns and greater scrutiny of the
state designation process by DHS.
\50\ See The Distortion of EB-5 Targeted Employment Areas: Time
to End the Abuse: Hearing Before the S. Comm. on the Judiciary,
114th Cong. (2016) (statement of Gary Friedland, Scholar-in-
Residence, N.Y. Univ., Stern School of Bus.).
\51\ See Cal. Governor's Office of Bus. and Econ. Dev., EB-5
Investor Visa Program, available at http://business.ca.gov/International/EB5Program.aspx.
---------------------------------------------------------------------------

DHS also considered options based on a ``commuter pattern''
analysis, which focuses on defining a TEA as encompassing the area in
which workers may live and be commuting from, rather than just where
the investment is made and where the new commercial enterprise is
principally doing business. The ``commuter pattern'' proposal was
deemed too operationally burdensome to implement as it posed challenges
in establishing standards to determine the relevant commuting area that
would fairly account for variances across the country.\52\ In addition,
DHS could not identify a commuting-pattern standard that would
appropriately limit the geographic scope of a TEA designation

[[Page 4750]]

consistent with the statute and the policy goals of this proposed
regulation.
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\52\ DHS reviewed a proposed commuter pattern analysis
incorporating the data table, Federal Highway Administration, CTPP
2006-2010 Census Tract Flows, available at (http://www.fhwa.dot.gov/planning/cen...0_tract_flows/)
(last updated Mar. 25, 2014). DHS found the required steps to
properly manipulate the Census Transportation Planning Product
(CTPP) database might prove overly burdensome for petitioners with
insufficient economic and statistical analysis backgrounds. Further,
upon contacting the agency responsible to manage the CTPP data
table, DHS was informed that the 2006-2010 CTPP data is unlikely to
be updated prior to FY2018 to incorporate proposed changes to the
data table. U.S. Census is currently reviewing the CTPP proposed
changes. As an alternate methodology for TEA commuter pattern
analysis, DHS reviewed data from the U.S. Census tool, On the Map,
http://onthemap.ces.census.gov/, which is tied to the U.S. Census
Bureau's American Community Survey. Although the interface appeared
to be more user-friendly overall, using this data would be
operationally burdensome, potentially requiring hours of review to
obtain the appropriate unemployment rates for the commuting area.
---------------------------------------------------------------------------

DHS believes the proposed guidelines limiting TEAs to MSAs,
counties, cities, or project tracts (including any and all adjacent
tracts) would remove the possibility of gerrymandering and better
ensure that the reduced investment threshold is reserved for areas
experiencing significantly higher levels of unemployment. DHS seeks
public comment on all aspects of this proposal, including on the
feasibility and appropriateness of each of the potential alternatives
to the census tract model discussed above, as well as any other
alternatives that commenters wish to propose. With respect to all such
alternatives, DHS would particularly benefit from comments that set
forth a clear and easily administrable methodology.

F. Technical Changes

DHS is also proposing a number of other technical changes. These
changes would variously: (1) Clarify the filing process for derivatives
who are filing the Petition by Entrepreneur to Remove Conditions on
Permanent Resident Status (Form I-829) separately from the immigrant
investor; (2) enhance flexibility in determining the interview location
related to the Form I-829 adjudication; and (3) update the regulation
to conform to the current process for issuing permanent resident cards
after the removal of conditions on status. DHS is also proposing
miscellaneous other changes. The proposed changes are described in more
detail below.
(1) Separate Filings for Derivatives
The proposed rule would clarify the process by which an immigrant
investor's spouse and children file separate Form I-829 petitions when
they are not included in the Form I-829 filed by the immigrant
investor. Generally, an immigrant investor's derivatives should be
included in the principal immigrant investor's Form I-829 petition. See
8 CFR 216.6(a)(1). However, there are situations in which derivatives
may not be included on the principal immigrant investor's Form I-829
petition, such as when the immigrant investor dies during the
conditional residence period, or when the immigrant investor decides
not to continue his or her conditional permanent resident status. In
such circumstances, if the immigrant investor would have otherwise been
eligible to have his or her conditions on status removed, then the
derivatives would remain eligible to remove the conditions on their
status even if the immigrant investor cannot or will not file a Form I-
829 petition.\53\
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\53\ See INA section 204(l), 8 U.S.C. 1154(l) (providing that
upon the death of the principal beneficiary, surviving relative
petitions and ``related applications'' must be adjudicated
notwithstanding the death of the principal beneficiary).
---------------------------------------------------------------------------

The current regulation does not clearly define the process by which
derivatives may file a Form I-829 petition when they are not included
on the principal's petition, including whether each derivative in such
cases should file his or her own separate Form I-829 petition or
whether the derivatives should jointly file on the same petition. The
proposed regulations specify that where the dependent family members
cannot be included in the Form I-829 petition filed by the principal
investor because that principal is deceased, all dependents of the
deceased investor may be included on a single Form I-829 petition. See
proposed 8 CFR 216.6(a)(1)(ii). DHS also clarifies, however, that
consistent with current practice, each derivative must file a separate
Form I-829 petition in all other situations in which the investor's
spouse and children are not included in the investor's Form I-829
petition. See id.
(2) Interviews
Section 216A(c)(1)(B) of the INA, 8 U.S.C. 1186b(c)(1)(B),
generally requires Form I-829 petitioners to be interviewed prior to
final adjudication of the petition, although DHS may waive the
interview requirement in its discretion, see INA section 216A(d)(3), 8
U.S.C. 1186b(d)(3). The statute also provides that the interview may be
held at a location that ``is convenient to the parties involved.'' See
INA section 216A(d)(3), 8 U.S.C. 1186b(d)(3). Under current
regulations, however, interviews are generally scheduled in the
location of the new commercial enterprise, even though there is no
statutory or regulatory requirement that the immigrant investor reside
in the same location as the new commercial enterprise. Specifically,
the current regulation requires the interview to be conducted by an
immigration examiner or other officer so designated by the director of
the USCIS District Office ``that has jurisdiction over the location of
the alien entrepreneur's commercial enterprise.'' 8 CFR 216.6(b)(2).
Under this rule, DHS is proposing to give stakeholders greater
flexibility in the interview location by clarifying the agency's
discretion under the INA to determine the appropriate location for Form
I-829 petition interviews. Specifically, the proposed amendment would
allow USCIS to schedule an interview at the USCIS office holding
jurisdiction over either the immigrant investor's commercial
enterprise, the immigrant investor's residence in the United States, or
the location where the Form I-829 petition is adjudicated. See proposed
8 CFR 216.6(b)(2). DHS believes this change will both benefit the
agency by making the interview process more effective and benefit
immigrant investors by reducing the need to travel long distances to
participate in Form I-829 petition interviews.
(3) Process for Issuing Permanent Resident Cards
DHS also proposes to amend regulations governing the process by
which immigrant investors obtain their new permanent resident cards
after the approval of their Form I-829 petitions. After an immigrant
investor's Form I-829 petition is approved, the immigrant investor and
each included derivative is entitled to a Permanent Resident Card (Form
I-551). The provision of this card documents that the conditions on the
immigrant investor's LPR status have been removed. Current regulations
include an outdated description of the process for obtaining such
permanent resident cards. Specifically, the current regulation requires
the immigrant investor and his or her derivatives to report to a
district office for processing of their permanent resident cards after
approval of the Form I-829 petition. 8 CFR 216.6(d)(1). This process is
no longer necessary in light of intervening improvements in DHS's
biometric data collection program.\54\ DHS now captures the required
biometric data during the pendency of the Form I-829 petition, at the
time the immigrant investor and his or her derivatives appear at an
Application Support Center for fingerprinting, as required for the Form
I-829 background and security checks. DHS then mails the permanent
resident card directly to the immigrant investor by U.S. Postal Service
registered mail after the Form I-829 petition is approved. There is
therefore no need for each immigrant investor or any derivatives to
report to a district office for processing of their permanent resident
cards after petition approval.
---------------------------------------------------------------------------

\54\ DHS already has authority to collect this information under
8 CFR part 103.
---------------------------------------------------------------------------

DHS is thus proposing to remove the mandatory reporting requirement
from the regulatory text, and to replace that requirement with the
discretionary authority to require an immigrant investor to report to a
district office to provide biometric data when needed to

[[Page 4751]]

complete card production. See proposed 8 CFR 216.6(d)(1). This
discretionary authority is intended to address circumstances in which
an in-person meeting is necessary, such as when the biometrics captured
during the Form I-829 background process may not be suitable for
issuing a permanent resident card.
(4) Miscellaneous Other Changes
DHS is also proposing a number of other technical changes to the
EB-5 regulations. First, DHS is proposing to update a reference to the
former United States Customs Service, so that it will now refer to U.S.
Customs and Border Protection. See proposed 8 CFR 204.6(j)(2)(iii). On
March 1, 2003, the Homeland Security Act of 2002 created U.S. Customs
and Border Protection, which is now responsible for activities
previously handled by the U.S. Customs Service, including the issuance
of commercial entry documents. See 6 U.S.C. 211.
Second, DHS is proposing to conform DHS regulations to the 21st
Century Department of Justice Appropriations Authorization Act, Public
Law 107-273, which eliminated the requirement that immigrant
entrepreneurs establish a new commercial enterprise from both section
203(b)(5) and section 216A of the INA. Accordingly, USCIS proposes to
remove references to this requirement in 8 CFR 204.6 and 216.6.
Third, DHS is proposing to further conform DHS regulations to
Public Law 107-273 by removing the references to ``management'' at 8
CFR 204.6(j)(5) and 8 CFR 204.6(j)(5)(iii). Section 203(b)(5)(A) of the
INA requires that EB-5 petitioners be seeking ``to enter the United
States for the purpose of engaging in a new commercial enterprise.''
INA section 203(b)(5)(A), 8 U.S.C. 1153(b)(5)(A). To give effect to
this provision, existing regulations require investors to be ``engaged
in the management of the new commercial enterprise,'' which can be
accomplished in one of two ways: ``through the exercise of day-to-day
managerial control'' or ``through policy formulation.'' 8 CFR
204.6(j)(5). DHS has determined that the reference to ``management''
should be removed, as actual management of the new commercial
enterprise is not strictly required by section 203(b)(5)(A) of the INA.
The statutory text does not use the term, and strictly requiring the
exercise of managerial control may be inconsistent with Public Law 107-
273, which amended section 203(b)(5) to expressly permit new commercial
enterprises to take the form of limited partnerships (as had been
previously permitted by existing regulation). Removal of the reference
to ``management'' from 8 CFR 204.6(j)(5) would have no practical
effect, as the provision already allows and would continue to allow
investors to demonstrate eligibility either through management or
through policy formulation. The reference to ``management'' would also
be removed from 8 CFR 204.6(j)(5)(iii) because that provision pertains
to evidence that is largely unrelated to management.
Fourth, DHS is proposing to remove the phrase ``as opposed to
maintaining a purely passive role in regard to the investment'' from 8
CFR 204.6(j)(5). DHS deems this phrase unnecessary as both the existing
regulations at 8 CFR 204.6(j)(5)(iii) and the proposed version of that
subsection specify the circumstances in which investments may be
essentially passive in nature.
Fifth, DHS is proposing to allow investors in any type of entity to
demonstrate that they are sufficiently engaged in a new commercial
enterprise through policymaking activities by virtue of being an equity
holder in the new commercial enterprise with rights, powers and duties
normally granted to such equity holders. See proposed 8 CFR
204.6(j)(5)(iii). DHS recognizes that the amendment made by Public Law
107-273 to allow limited partnerships to serve as new commercial
enterprises was intended to require flexibility in the administration
of the EB-5 program with respect to the use of different entity types.
Accordingly, to provide clarity and flexibility for all currently
existing entity types, including limited liability companies, as well
as to accommodate future entity types without creating an unnecessary
distortion in the choice of entities used within the EB-5 program, DHS
is proposing to revise the regulations to cover all types of entities
and to consider equity holders in any type of entity to be considered
sufficiently engaged if they are provided with the rights, duties, and
powers normally provided to those types of equity holders. See id.
Sixth, DHS is proposing to amend 8 CFR 204.6(k) to remove the
requirement on USCIS to specify in the decision on the EB-5 immigrant
petition whether the new commercial enterprise is principally doing
business in a TEA. See proposed 8 CFR 204.6(k). This requirement
provides no operational benefit to USCIS, as the agency relies on other
means to track which approved petitions were based on investments in
TEAs. The requirement also provides no benefit to investors; an
approved petition based on an investment in a TEA necessarily means
that the petitioner has met the burden of satisfying that eligibility
requirement, and if a petition is denied due to failure to satisfy the
requirement, the decision and analysis will be explicitly stated in the
denial. This revision would also replace a reference to the Associate
Commissioner for Examinations with a reference to the Administrative
Appeals Office, which is now the appropriate appellate authority in
denied cases. See id.
Finally, DHS is proposing revisions to otherwise unaffected
portions of section 204.6 and 216.6 to replace the term
``entrepreneur'' with the term ``investor.'' This will provide clarity
and consistency in the program's terminology, including by mirroring
terminology in USCIS policy. DHS also proposes to remove the ``Form I-
526'' and ``Form I-829'' references in 8 CFR 204.6(a), and 8 CFR
216.6(a) and (b), respectively. Throughout the proposed regulations,
DHS has removed references to specific form names and numbers to ensure
the regulations remain relevant and informative, regardless of
potential future form name or number changes. Additionally, the
proposed revision to 8 CFR 216.6(a)(5) would replace the word
``deportation'' with ``removal'' proceedings to conform to terminology
used in the INA.

V. Statutory and Regulatory Requirements

A. Unfunded Mandates Reform Act of 1995

The Unfunded Mandates Reform Act of 1995 is intended, among other
things, to curb the practice of imposing unfunded Federal mandates on
State, local, and tribal governments. Title II of the Act requires each
Federal agency to prepare a written statement assessing the effects of
any Federal mandate in a proposed or final agency rule that may result
in a $100 million or more expenditure (adjusted annually for inflation)
in any one year by State, local, and tribal governments, in the
aggregate, or by the private sector. The value equivalent of $100
million in 1995 adjusted for inflation to 2015 levels by the Consumer
Price Index for All Urban Consumers is $155 million.
This proposed rule does not include any unfunded Federal mandates.
The requirements of Title II of the Act, therefore, do not apply, and
DHS has not prepared a statement under the Act.

B. Small Business Regulatory Enforcement Fairness Act of 1996

This rule is not a major rule as defined by section 804 of the
Small

[[Page 4752]]

Business Regulatory Enforcement Fairness Act of 1996. This proposed
rule will not result in an annual effect on the economy of $100 million
or more, a major increase in costs or prices, or significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of United States companies to compete
with foreign-based companies in domestic and export markets. However,
as some small businesses may be impacted under this regulation, DHS has
prepared an IRFA under the Regulatory Flexibility Act.

C. Executive Orders 12866 and 13563

Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This proposed rule has been designated a ``significant
regulatory action'' under section 3(f) of Executive Order 12866.
Accordingly, the rule has been reviewed by OMB.
(1) Summary
This rule proposes changes to certain aspects of the EB-5 program
that are in need of reform, and would also update the regulations to
reflect statutory changes and codify existing policies. This proposed
rule would make three major changes along with other technical and
miscellaneous changes to the current regulations. First, DHS proposes
to allow EB-5 immigrant petitioners, with limited exception, to use the
priority date of an approved EB-5 immigrant petition for any
subsequently filed EB-5 immigrant petition for which the petitioner
qualifies. Second, DHS proposes to increase the standard minimum
investment amount to $1.8 million to account for inflation since the
program's inception, and builds in a mechanism to adjust the investment
amount based on the unadjusted CPI-U every 5 years. Similarly, DHS
proposes to increase the TEA minimum investment amount to $1.35
million, or 75 percent of the standard amount, and to periodically
adjust the TEA minimum investment amount so that it remains 75 percent
of the standard amount. Third, DHS proposes to eliminate state
designation of high unemployment areas and proposes new standards for
the designation of TEAs.
DHS is also proposing several technical changes. These changes
include clarifying the filing process for derivatives who are filing
Form I-829 petitions separately from the principal immigrant investor,
providing flexibility in determining the location of interviews for
Form I-829 petitions, and updating outdated regulations on how an
immigrant investor obtains a new permanent resident card after approval
of the Form I-829 petition. Additionally, this proposed rule would make
miscellaneous changes including updating references to the U.S. Customs
and Border Protection, removing references to requirements that foreign
entrepreneurs establish a new commercial enterprise (NCE) in 8 CFR
204.6 and 216.6, removing references to ``management'' at 8 CFR
204.6(j)(5) and 8 CFR 204.6(j)(5)(iii), removing the phrase ``as
opposed to maintain a purely passive role in regard to the investment''
from 8 CFR 204.6(j)(5), allowing any type of entity to serve as a new
commercial enterprise, amending 8 CFR 204.6(k) to specify how USCIS
will issue decisions, and revising 8 CFR 204.6 and 216.6 to use the
term ``investor'' instead of ``entrepreneur'' and ``removal'' instead
of ``deportation.''
Several of the provisions are expected to generate costs and
benefits, although DHS does not have the necessary data to monetize
these costs and benefits, with the exception of total costs of
approximately $91,000 \55\ expected for dependents who would file Form
I-829 petitions separately from principal investors. The proposed rule
would likely result in long term expected benefits in the form of job
stimulation due to increased EB-5 investment overall. The Table below
is the same as Table 1 found in the ``Costs and Benefits'' portion of
the Executive Summary above and provides a synopsis of each of the
provisions in this proposed rule and its estimated impacts. In addition
to the impacts outlined in the table, DHS believes that there would be
some familiarization costs associated with reading and assessing the
proposed rule. Based on several assumptions, DHS estimates these costs
to be about $501,154 annually.
---------------------------------------------------------------------------

\55\ The cost estimate is rounded from $90,762.

Table 2--Summary of Changes and Impact of the Proposed Provisions
------------------------------------------------------------------------
Current policy Proposed change Impact
------------------------------------------------------------------------
Current DHS regulations do not DHS proposes to Benefits:
permit investors to use the allow an EB-5 Makes
priority date of an approved EB- immigrant visa allocation
5 immigrant petition for a petitioner to use more predictable
subsequently filed EB-5 the priority date for investors
immigrant petition. of an approved EB- with less
5 immigrant possibility for
petition for a large
subsequently fluctuations in
filed EB-5 visa availability
immigrant dates due to
petition for regional center
which the termination.
petitioner Provides
qualifies. greater certainty
and stability
regarding the
timing of
eligibility for
investors
pursuing
permanent
residence in the
U.S. and thus
lessens the
burden of
unexpected
changes in the
underlying
investment.
Provides
more flexibility
to investors to
contribute into
more viable
investments,
potentially
reducing fraud
and improving
potential for job
creation.
Costs:
Not
estimated.

[[Page 4753]]


The standard minimum investment DHS proposes to Benefits:
amount has been $1 million account for Increases
since 1990 and has not kept inflation in the in investment
pace with inflation. investment amount amounts are
Further, the statute authorizes since the necessary to keep
a reduction in the minimum inception of the pace with
investment amount when such program. DHS inflation and
investment is made in a TEA by proposes to raise real value of
up to 50 percent of the the minimum investments;
standard minimum investment investment amount Raising
amount. Since 1991, DHS to $1.8 million. the investment
regulations have set the TEA DHS also proposes amounts increases
investment threshold at 50 to include a the amount
percent the minimum investment mechanism to invested by each
amount. automatically investor and
Similarly, DHS has not proposed adjust the potentially
to increase the minimum minimum increases the
investment amount for investment amount total amount
investments made in a high based on the invested under
employment area beyond the unadjusted CPI-U this program.
standard amount. every 5 years. For
DHS proposes to regional centers,
decrease the the higher
reduction for TEA investment
investment amounts per
thresholds, and investor would
set the TEA mean that fewer
minimum investors would
investment at 75 have to be
percent of the recruited to pool
standard amount. the requisite
Assuming the amount of capital
standard for the project,
investment amount so that searching
is $1.8 million, and matching of
investment in a investors to
TEA would projects could be
initially less costly.
increase to $1.35 Costs:
million. Some
DHS is not investors may be
proposing to unable or
change the unwilling to
equivalency invest at the
between the higher proposed
standard minimum levels of
investment amount investment.
and those made in There may
high employment be fewer jobs
areas. As such, created if fewer
DHS proposes that investors invest
the minimum at the proposed
investment higher investment
amounts in high amounts.
employment areas For
would be $1.8 regional centers,
million, and the higher
follow the same amounts could
mechanism for reduce the number
future of investors in
inflationary the global pool
adjustments. and result in
fewer investors
and thus make
search and
matching of
investors to
projects more
costly.
Potential
reduced numbers
of EB-5 investors
could prevent
projects from
moving forward
due to lack of
requisite
capital.
An
increase in the
investment amount
could make
foreign investor
visa programs
offered by other
countries more
attractive.
A TEA is defined by statute as a DHS proposes to Benefits:
rural area or an area which has eliminate state Rules out
experienced high unemployment designation of TEA
(of at least 150 percent of the high unemployment configurations
national average rate). areas. DHS also that rely on a
Currently, investors proposes to amend large number of
demonstrate that their the manner in census tracts
investments are in a high which investors indirectly linked
unemployment area in two ways: can demonstrate to the actual
(1) providing evidence that the that their project tract by
MSA, the specific county within investments are numerous degrees
the MSA, or the county in which in a high of separation.
a city or town with a unemployment Potential
population of 20,000 or more is area. to better
located, in which the new (1) In addition to stimulate job
commercial enterprise is MSAs, specific growth in areas
principally doing business, has counties within where
experienced an average MSAs, and unemployment
unemployment rate of at least counties in which rates are the
150 percent of the national a city or town highest.
average rate or. with a population Costs:
(2) submitting a letter from an of 20,000 or more The
authorized body of the is located, DHS proposed TEA
government of the state in proposes to add provision could
which the new commercial cities and towns cause some
enterprise is located, which with a population projects and
certifies that the geographic of 20,000 or more investments to
or political subdivision of the to the types of not qualify. DHS
metropolitan statistical area areas that can be presents the
or of the city or town with a designated as a potential number
population of 20,000 or more in high unemployment of projects and
which the enterprise is area. investments that
principally doing business has (2) DHS is could be affected
been designated a high proposing that a in Table 5.
unemployment area. TEA may consist
of a census tract
or contiguous
census tracts in
which the new
commercial
enterprise is
principally doing
business if the
weighted average
of the
unemployment rate
for the tract or
tracts is at
least 150 percent
of the national
average.
(3) DHS is also
proposing that a
TEA may consist
of an area
comprised of the
census tract(s)
in which the new
commercial
enterprise is
principally doing
business,
including any and
all adjacent
tracts, if the
weighted average
of the
unemployment rate
for all included
tracts is at
least 150 percent
of the national
average.

[[Page 4754]]


Current technical issues: DHS is proposing Conditions of
The current regulation the following Filing:
does not clearly define the technical Benefits:
process by which derivatives changes: Adds
may file a Form I-829 petition Clarify clarity and
when they are not included on the filing eliminates
the principal's petition. process for confusion for the
Interviews for Form I- derivatives who process of
829 petitions are generally are filing a Form derivatives who
scheduled at the location of I-829 petition file separately
the new commercial enterprise. separately from from the
The current regulations the immigrant principal
require an immigrant investor investor. immigrant
and his or her derivatives to Provide investor.
report to a district office for flexibility in Costs:
processing of their permanent determining the Total
resident cards. interview cost to
location related applicants filing
to the Form I-829 separately would
petition. be $90,762
Amend the annually.
regulation by Conditions of
which the Interview:
immigrant Benefits:
investor obtains
the new permanent Interviews may be
resident card scheduled at the
after the USCIS office
approval of his having
or her Form I-829 jurisdiction over
petition because either the
DHS captures immigrant
biometric data at investor's
the time the commercial
immigrant enterprise, the
investor and immigrant
derivatives investor's
appear at an ASC residence, or the
for location where
fingerprinting. the Form I-829
petition is being
adjudicated, thus
making the
interview program
more effective
and reducing
burdens on the
immigrant
investor;
Some
applicants may
have cost savings
from lower travel
costs.
Costs:
Not
estimated.
Investors
obtaining a
permanent
resident card:
Benefits:
Cost and
time savings for
applicants for
biometrics data.
Costs:
Not
estimated.
Current miscellaneous items: DHS is proposing These provisions
8 CFR 204.6(j)(2)(iii) the following are technical
refers to the former U.S. miscellaneous changes and will
Customs Service. changes: have no impact on
Public Law 107-273 DHS is investors or the
eliminated the requirement that updating government.
alien entrepreneurs establish a references at 8 Therefore, the
new commercial enterprise from CFR benefits and
both INA Sec. 203(b)(5) and 204.6(j)(2)(iii) costs for these
INA Sec. 216A. from U.S. Customs changes were not
8 CFR 204.6(j)(5) and 8 Service to U.S. estimated.
CFR 204.6(j)(5)(iii) reference Customs and
``management'';. Border Protection.
Removing
references to
requirements that
alien
entrepreneurs
establish a new
commercial
enterprise in 8
CFR 204.6 and
216.6.
Current regulation at 8 Removing
CFR 204.6(j)(5) has the phrase references to
``as opposed to maintain a ``management'' at
purely passive role in regard 8 CFR 204.6(j)(5)
to the investment''; and 8 CFR
Public Law 107-273 204.6(j)(5)(iii);
allows limited partnerships to Removing
serve as new commercial the phrase ``as
enterprises; opposed to
Current regulation maintain a purely
references the former Associate passive role in
Commissioner for Examinations regard to the
8 CFR 204.6(k) requires investment'' from
USCIS to specify in its Form I- 8 CFR
526 decision whether the new 204.6(j)(5);.
commercial enterprise is Clarifies
principally doing business in a that any type of
targeted employment area entity can serve
Sections 204.6 and as a new
216.6 use the term commercial
``entrepreneur'' and enterprise;.
``deportation.'' These sections Replacing
also refer to Forms I-526 and I- the reference to
829 the former
Associate
Commission for
Examinations with
a reference to
the USCIS AAO.
Amending
8 CFR 204.6(k) to
specify how USCIS
will issue a
decision.
Revising
sections 204.6
and 216.6 to use
the term
``investor''
instead of
``entrepreneur''
and to use the
term ``removal''
instead of
``deportation.''.
Miscellaneous Cost: Applicants would Familiarization
Familiarization cost of need to read and costs to review
the rule review the rule the rule are
to become estimated at
familiar with the $501,154
proposed annually.
provisions.
------------------------------------------------------------------------

(2) Background and Purpose of the Proposed Rule
The preceding sections of the preamble review key historical
aspects and goals of the program, and specific justifications for the
particular provisions proposed in the rule. This section supplements
and provides additional points of analysis that are pertinent to this
regulatory impact assessment.
A person wishing to immigrate to the United States under the EB-5
program must file an Immigrant Petition by Alien Entrepreneur (Form I-
526). Each individual immigrant investor files a Form I-526 petition
containing information about their investment.\56\ The investment must
be made into either an NCE within a designated regional center in
accordance with the Regional Center Program or a standalone NCE outside
of the Regional Center

[[Page 4755]]

Program (``non-regional center'' investment). The NCE may create jobs
directly (required for non-regional center investments), or serve as a
source of funding for separate job creating entities (JCEs) (allowable
for regional center investments).
---------------------------------------------------------------------------

\56\ To be eligible at the time of the Form I-526 petition's
filing, investors must demonstrate either that they have already
invested their funds into the NCE or that they are actively in the
process of investing. Some investors choose to demonstrate
commitment of funds by placing their capital contribution in an
escrow account in a U.S. financial intermediary, to be released
irrevocably to the NCE upon a certain trigger date or event, such as
approval of the Form I-526 petition.
---------------------------------------------------------------------------

With respect to regional center investors, once a regional center
has been designated, affiliated investors can submit Form I-526
petitions in the concurrent year and in future years, provided the
regional center maintains its designation. Each year, the stock of
approved regional centers represents the previous year's approved
total, plus new regional centers approved during the current year,
minus a relatively small number of regional centers that are terminated
in the concurrent year.\57\
---------------------------------------------------------------------------

\57\ Between May 2008 and May 2016, 51 regional centers have
been terminated, averaging about 6 per year. USCIS, Immigrant
Investor Regional Centers, http://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/immigrant-investor-regional-centers.
---------------------------------------------------------------------------

DHS analysis of Form I-526 filing data for FY 2013-2015 indicates
that on average, 10,547 Form I-526 petitions were filed annually.
Regional centers accounted for 9,623 such petitions annually, or 91
percent of all submitted Form I-526 petitions, while non-regional
centers accounted for an average of 924 Form I-526 petitions annually,
or 9 percent.
EB-5 filings grew rapidly starting in 2008, when the U.S. financial
crisis reduced available U.S.-based commercial lending funds and
alternative funding sources, such as the EB-5 program, were sought.
Based on the type of projects that Form I-526 petitions describe, it
appears that EB-5 capital has been used as a source of financing for a
variety of projects, including a large number of commercial real estate
development projects to develop hotels, assisted living facilities, and
office buildings.
In general, DHS databases do not track the total number of
investment projects associated with each individual EB-5 investment,
but rather track the NCE associated with each individual investment.
Any given NCE could fund multiple projects. DHS analysis of filing data
reveals that for FY 2013-2015, on average per year, 1,246 unique NCEs
were referenced in the Form I-526 petitions submitted. On average, 726
of these NCEs (58 percent of the overall number of unique NCEs) were
found in petitions associated with regional centers. And on average,
520 of these NCEs, or 42 percent of the overall number of NCEs, were
found in non-regional center-associated petitions. This suggests that
on average, unique NCEs are more common in non-regional center filings,
as 91 percent of filings are associated with regional centers.\58\
---------------------------------------------------------------------------

\58\ EB-5 program office NCE data records indicate that the
disparity in the regional center share of investments compared to
NCEs--91 percent compared to 58 percent, respectively--exists
because regional center projects include 15 investors on average,
while non-regional center investments include only 2 investors on
average.
---------------------------------------------------------------------------

DHS obtained and analyzed a random sample of Form I-526 petitions
that were submitted in FY 2016. The files in the sample were pending
adjudicative review at the EB-5 program office in May 2016.\59\ As the
results obtained from analysis of this random sample are utilized in
forthcoming sections of this regulatory analysis, it will be referred
to as the ``2016 NCE sample'' for brevity. A key takeaway from the
review of the sample is that a majority of all NCEs (80 percent)
blended program capital with other sources. For regional center NCEs
sourced with blended capital, the EB-5 portion comprised 40 percent of
the total capital outlay, while for non-regional center NCEs sourced
with blended capital, the EB-5 portion comprised 50 percent of the
total capital outlay.
---------------------------------------------------------------------------

\59\ The figures for yearly volumes of Form I-526 filings are
publicly available under DHS performance data: USCIS, Number of I-
526 Immigrant Petitions by Alien Entrepreneurs by Fiscal Year,
Quarter, and Case Status 2008-2016, available at https://www.uscis.gov/sites/default/...y2016_qtr3.pdf. The NCE data were obtained
from file tracking data supplied by the EB-5 program office. Because
the NCE file submissions contain detailed business plan and investor
information, the NCE data are not captured in formal DHS databases
that are provided publicly, but rather in internal program office
and adjudication records.
---------------------------------------------------------------------------

(3) Baseline Program Forecasts
DHS produced a baseline forecast of the total number of Form I-526
receipts, beginning in the first year the rule would take effect and
extending for 10 years for the period FY 2017-2026.\60\ This Form I-526
forecast includes the historical trend of Form I-526 receipts from FY
2005 to FY 2015, the filing projections from the USCIS Volume
Projections Committee (VPC), and input from the EB-5 program office.
The VPC projects that the high rate of growth in EB-5 investment
filings, which averaged 39 percent annually since FY 2008, will slow to
about 3.3 percent over the next 3 years and will subsequently level
off.\61\ The program grew exponentially starting in 2008 with the
economic downturn. At that time, commercial lending was extremely
difficult to obtain. Over time as the U.S. economy has improved,
commercial lending is now more viable, resulting in fewer overall
petitions. In addition, over the past two fiscal years, USCIS has
experienced significant spikes in filings in anticipation of Congress
either allowing the regional center program to sunset or implementing
new legislative reforms that would make it difficult for some regional
centers to immediately comply. These spikes have occurred around the
program's anticipated sunset (September 2015, December 2015, and
September 2016). USCIS believes that the filings will level off once
the program is extended for longer than one year at a time. DHS used
this information to inform a forecasting model based on a logistic
function that captures the past increase in receipts from a low
baseline, the exponential growth that the program experienced from FY
2008-2015, the anticipated growth rate for the next 3 years, and then
the projected levelling off of future growth. The technical details are
provided in the accompanying footnote, and as can be seen in the graph,
the DHS estimation technique closely fits past filings and captures the
expected trends alluded to above.\62\
---------------------------------------------------------------------------

\60\ DHS did not attempt a similar forecast for Form I-924
receipts, because DHS does not have a sound basis for predicting how
the proposed rule would affect such receipts.
\61\ The VPC estimates that the final total number of Form I-526
filings for FY 2016 will be about 12,000. While this projection is
below the FY 2015 total filings, the VPC expects growth to increase
again in FY 2017 by 3.3 percent. FY 2015 was an anomaly for Form I-
526 petitions and experienced an influx of petitions that DHS does
not expect in the future.
\62\ DHS utilized a logistic function of the format, (C/
([lambda] + [beta]e-rt)) where input t is the time year code
(starting with zero), e is the base of the natural logarithm, and C,
[lambda], [beta], and [rho] are parameters such that C/[lambda]
asymptotically approaches the maximum level of the predicted
variable, the Form I-526 receipts. The parameters [beta] and [rho]
jointly impact the inflection and elongation of the sigmoidal curve.
Because the data includes non-sample information, DHS did not
attempt an estimation procedure focused on minimizing the sum of
squared errors (such as least squares regression) or other fitting
technique, and instead utilized a direct trial-and-error approach
for calibration. For the final forecast run, the specific
calibration was C = 17,000, [lambda] = 1.05, [beta] = 180, and [rho]
= .66. The maximum expected level of receipts (equal to 17,000/1.05
which is approximately 16,200) was determined via input from EB-5
program management.
---------------------------------------------------------------------------

Figure 1 graphs the volume of past Form I-526 filings from 2005 to
2015, compared with DHS's estimation of the filings for that period,
and the forecasts thereafter.

[[Page 4756]]

[GRAPHIC] [TIFF OMITTED] TP13JA17.003

The forecast values are listed in Table 3, below:

Table 3--DHS Forecasts for Investor Form I-526 Receipts and NCEs
------------------------------------------------------------------------
FY Investors NCEs
------------------------------------------------------------------------
2017.................................... 15,241 1,314
2018.................................... 15,685 1,353
2019.................................... 15,925 1,373
2020.................................... 16,052 1,384
2021.................................... 16,119 1,390
2022.................................... 16,153 1,393
2023.................................... 16,171 1,395
2024.................................... 16,181 1,395
2025.................................... 16,185 1,396
2026.................................... 16,188 1,396
10-year total........................... 159,900 13,789
Annual Average.......................... 15,990 1,379
------------------------------------------------------------------------

The last column of Table 3 provides estimates of the total number
of NCEs. An assumption of the NCE forecasts is that there is no change
in the relationship between the number of NCEs and the number of Form
I-526 filings over time.\63\ The impact of the proposed provisions on
the forecasts will be described in the relevant sections of this
analysis.
---------------------------------------------------------------------------

\63\ In other words, the assumption is that the current number
of investors per NCE holds in the future. For the NCE projections,
the 2016 value is set at the 2013-2015 average of 1,246. For each
year thereafter, the figure is based on the growth rate of predicted
Form I-526 receipts.
---------------------------------------------------------------------------

(4) Economic Impacts of the Major Rule Provisions
a. Retention of Priority Date
This rule proposes to generally allow an EB-5 immigrant petitioner
to use the priority date of an approved EB-5 immigrant petition for any
subsequently filed EB-5 immigrant petition for which the petitioner
qualifies. Provided that petitioners have not yet obtained lawful
permanent residence pursuant to their approved petition and that such
petition has not been revoked on certain grounds, petitioners would be
able to retain their priority date and therefore retain their place in
the visa queue. DHS is proposing to allow priority date retention to:
(1) Address situations in which petitioners may become ineligible
through circumstances beyond their control (e.g., the termination of a
regional center) as they wait for their EB-5 visa priority date to
become current; and (2) provide investors with greater flexibility to
deal with changes to business conditions. For example, investors
involved with an underperforming or failing investment project would be
able to move their investment funds to a new, more promising investment
project without losing their place in the visa queue.
There would be an operational benefit to the investor cohort
because priority date retention would make visa allocation more
predictable with less possibility for massive fluctuations due to
regional center termination that could, in the case of some large
regional

[[Page 4757]]

centers, negatively affect investors who are in the line at a given
time. This change would provide greater certainty and stability for
investors in their pursuit of permanent residence in the United States,
helping lessen the burden of situations unforeseen by the investor
related to their investment. In addition, by allowing priority date
retention, investors obtain more ability to move their investment funds
out of potentially risky projects, thereby potentially reducing fraud
and improving the potential for job creation in the United States. DHS
cannot quantify or monetize the net benefits of the priority date
retention provision or assess how many past or future investors might
be impacted. DHS welcomes public comment on the costs and benefits of
the priority date retention provision.
b. Investment Amount Increase
DHS proposes to raise the standard minimum investment amount from
the current $1 million to $1.8 million to account for the rate of
inflation since the program's inception in 1990. DHS also proposes to
raise the reduced investment amount, for TEA projects, to $1.35
million, which is 75 percent of the general investment amount.\64\ DHS
further proposes to adjust the minimum investment amounts every 5 years
so that the standard minimum investment amount keeps pace with the rate
of inflation and the TEA minimum investment amount remains 75 percent
of the standard minimum investment amount. These increases are
necessary because the investment amounts have not kept pace with
inflation, thereby eroding the real value of the investments.
---------------------------------------------------------------------------

\64\ The adjustment to the standard minimum investment amount is
based on the CPI-U, which, as compared to a base date of 1982-1984,
was 130.7 in 1990 and 237.017 in 2015. The actual increase in prices
for the period was approximately 81.34 percent, obtained as ((CPI-
U2015/CPI-U1990)-1)). The $1.8 million
proposed investment amount is rounded. See generally Bureau of Labor
Statistics, Inflation & Prices, available at http://www.bls.gov/data/#prices.
---------------------------------------------------------------------------

Because the proposed discounted amount for investments in TEAs is
higher than the current minimum amount for investments in non-TEAs, DHS
believes it is reasonable to assume that some investors may be unable
or unwilling to invest at either of the higher proposed levels of
investment. However, DHS has no way to assess the potential reduction
in investments either in terms of past activity or forecasted activity,
and cannot therefore estimate any impacts concerning job creation,
losses or other downstream economic impacts driven by the proposed
investment amount increases. DHS evaluates the source of investor funds
for legitimacy but not for information on investor income, wealth, or
investment preferences. DHS cannot therefore estimate how many past
investors would have been unable or unwilling to have invested at the
proposed amounts, and hence cannot make extrapolations to potential
future investors and projects. DHS requests public input on the impact
of the newly proposed amount on potential investors' willingness to
participate in the program. DHS also welcomes any input, including
identification of relevant data sources, that might provide insight on
the number of total jobs that these potential investors may create.\65\
---------------------------------------------------------------------------

\65\ DHS has arranged with the Department of Commerce to assess
the EB-5 program to determine the number of jobs created, but the
report has not yet been released. Remarks, EB-5 Immigrant Investor
Program Stakeholder Engagement (July 28, 2016), available at https://www.uscis.gov/sites/default/files/USCIS/Outreach/Notes%20from%20Previous%20Engagements/PED_EB5NatStakeholderEng072816_ColucciRemarks.pdf.
---------------------------------------------------------------------------

In addition to the effect on investors, it is reasonable to assume
that the proposed changes to the investment amounts would also affect
regional centers. If the higher amounts reduce the number of investors
in the global pool, competition for fewer investors may make it more
costly for regional centers to identify and match with investors. The
net effect on regional centers would depend on the elasticities
associated with these activities and is not something DHS can forecast
with accuracy. DHS requests information from the public on how the
proposed changes may impact regional center costs.
DHS also believes that for both regional center and non-regional
center investments, the projects and the businesses involved could be
impacted. A reduced number of EB-5 investors could preclude some
projects from going forward due to outright lack of requisite capital.
Other projects would likely see an increase in the share of non-EB-5
capital, such as capital sourced to domestic or other foreign sources.
As alluded to above in Section Two of the analysis, analysis of the
2016 NCE sample reveals the 80 percent of NCEs involving EB-5 capital
blend this type of capital with other sources of capital. DHS believes
that the costs of capital and return to capital could be different
depending on the source of the capital. As a result, a change in the
composition of capital could change the overall profitability for one
or more of the parties involved; however, if the project on the whole
promises net profitability, it is likely to proceed. The specific
impact on each party for each project would vary on a case by case
basis, and would be dependent on, among other things, the particular
financial structures and agreements between the regional center,
investors, NCE, and project developer. It would also be determined by
local and regional investment supply and demand, lending conditions,
and general business and economic factors. DHS welcomes any comments
the public may provide on how the proposed rules may impact regional
center and non-regional center investments, projects and businesses.
DHS also considers that an increase in the investment amount could
make other countries' foreign investor visa programs more attractive
and therefore there could be some substitution into such programs. The
decision to invest in another country's program would depend in part on
the investment and country-specific risk preferences of each investor.
While DHS has no means of ascertaining such preferences, it is possible
that some substitution into non-U.S. investor visa programs could occur
as a result of the higher required investment amounts. However,
according to DHS research, substitution into another countries'
immigrant investor program would likely be more costly for investors
than investing in the EB-5 program even with increases in the EB-5
investment amounts. As stated earlier in this preamble, the United
Kingdom's immigrant investor programs range in minimum investment
amounts of approximately $2.5 million to $6.3 million, Australia's
immigrant investor programs range in minimum investments amounts from
approximately $1.1 million to $11.2 million, Canada's immigrant
investor programs range from approximately $1.5 million and require a
net worth of $7.6 million, and New Zealand's immigrant investor
programs range from minimum investment amounts of approximately $1.8
million to $7.2 million. All of these values are approximations, in
U.S. dollars, and are not an exhaustive list. DHS notes that most of
these minimum investment amounts are considerably higher than the
proposed increased investment amounts in the EB-5 program. DHS requests
comments from the public regarding foreign investor visa programs from
other countries and how they may compare to the U.S. EB-5 program, and
the likelihood that investors will shift their investments to other
countries' programs as a result of the changes proposed here.
There are numerous ancillary services and activities linked to both
regional center and direct investments, such as, but not limited to,
business consulting

[[Page 4758]]

and advising, finance, legal services, and immigration services.
However, DHS is not certain how these services would be affected by the
proposed rule. Similarly, DHS does not have information on how the
revenues collected from these types of activities contribute to the
overall revenue of the regional centers or direct investments. DHS
requests information from the public on the several layers of business
and financial activities that focus on matching foreign investor funds
to development projects, and on the potential effects of this proposed
rule on such activities.
In summary, DHS believes that the proposed increase in the minimum
investment amount would bring the nominal investment amounts in line
with real values and increase the investment amounts in areas where it
is needed most. However, DHS recognizes that some of the investment
increase benefits could be offset if some investors are deterred from
investing at the higher amounts. DHS does not have the data or
information necessary to attempt to estimate such mitigating effects.
It is reasonable to conclude that the higher investment amounts could
deter some investors from EB-5 activity and therefore negatively impact
regional center revenue in some cases, although the magnitudes and net
effects of these impacts cannot be estimated. However, it is also
possible that the higher investment amounts could attract additional
capital overall and stimulate projects to get off the ground that
otherwise might not. Due to the complexity of EB-5 financial
arrangements and unpredictability of market conditions, DHS cannot
forecast with confidence how many projects could be affected by the
increased investment amounts through a change in the number of
individuals investing through the EB-5 program. However, it is possible
that some projects could be forgone and that others would proceed with
a higher composition of non-EB-5 capital, with resultant changes in
profitability and rates of return to the parties involved. An overall
decrease in investments and projects would potentially reduce some job
creation and result in other downstream effects.
c. Periodic Adjustments to the Investment Amounts
In addition to initially raising the investment thresholds to
account for inflation, DHS proposes to adjust the standard investment
threshold every 5 years to account for future inflation, and to adjust
the reduced investment threshold for TEAs to keep pace with the
standard amount. DHS projected the effects of this methodology using a
relatively low, recent, inflation index (1.4 percent) and a more
moderate inflation index (3.2 percent). DHS made two separate
projections based on two different indexes because DHS cannot predict
with certainty what the future inflation index will be. The 1.4 percent
estimate is based on the average rate of inflation for the period 2009-
2015, which economists generally consider to be relatively low compared
to earlier periods. The 3.2 percent estimate used for the higher-end
projection is based on the 3.2 percent inflation rate in 2011, which
was the highest annual inflation rate observed from the 2009 to 2015
period. DHS believes it is appropriate to characterize the 3.2 percent
rate as a ``moderate'' inflation baseline, because although it is
higher than the average annual rate since 2008, it is not considered by
economists to be high as compared to other historical periods.\66\
---------------------------------------------------------------------------

\66\ Allan Meltzer, A Slow Recovery with Low Inflation, Hoover
Inst., Econ. Working Paper No. 13,110 (2013), available at http://www.hoover.org/sites/default/...inflation.pdf; see also Michael T. Kiley,
Low Inflation in the United States: A Summary of Recent Research,
FEDS Notes, Board of Governors of the Federal Reserve System (Nov.
23, 2015), available at http://www.federalreserve.gov/econre...20151123.html; Mary C. Daly and Bart Hobijn,
Downward Nominal Wage Rigidities Bend the Phillips Curve, Fed.
Reserve Bank S.F., Working Paper No. 2013-08 (2014), available at
http://www.frbsf.org/economic-research/files/wp2013-08.pdf.
---------------------------------------------------------------------------

Table 4 lists the general minimum investment amounts and reduced
investment amounts after 5 and 10 years if the amounts are raised
initially as proposed in this rule. The figures are in millions of U.S.
dollars and are rounded to the nearest fifty-thousandth.

Table 4--Projected Investment Amounts at 5-Year Revisions
[Figures are in millions of $]
----------------------------------------------------------------------------------------------------------------
Projected investment Projected investment
Revision amount based on average amount based on
Proposed provision: initial increase (year) inflation scenario, 1.4 moderate inflation
percent scenario, 3.2 percent
----------------------------------------------------------------------------------------------------------------
Standard Investment Amount = $1.8 Million in 2017 5 year 1.90 2.04
10 Year 2.04 2.40
Minimum Investment Amount = $1.35 Million in 2017 5 year 1.43 1.53
10 Year 1.53 1.80
----------------------------------------------------------------------------------------------------------------

DHS attempted to assess the costs of these proposed changes. As
described above, the potential cost of the higher amounts may result in
a reduction in the number of investors and projects and a lower share
of EB-5 capital for some projects, which could result in capital
losses, fewer jobs created, and other reductions in economic activity.
DHS is not able to predict how many investors and projects will be
impacted, nor can we predict the impact to the capital available for
projects. DHS requests any data sources the public may provide, as well
as comments on anticipated outcomes.
d. Targeted Employment Areas
Under the current regulations, a state may designate an area in
which the enterprise is principally doing business as a high-
unemployment TEA if that area is a geographic or political subdivision
of a metropolitan statistical area (MSA) or of a city or town with a
population of 20,000 or more. DHS generally defers to the state
determination of the appropriate boundaries of a geographic or
political subdivision that constitutes the TEA, but there is currently
no limit to the number of census tracts that a state can aggregate as
part of a high-unemployment TEA designation. TEA configurations that
DHS has evaluated from state designations have included the census
tract or tracts where the NCE is principally doing business (``project
tract(s)''), one or more directly adjacent tracts, and others that are
further removed, resulting in configurations resembling a chain-shape
or other contorted shape. This proposed rule

[[Page 4759]]

would remove states from the TEA designation process; instead,
investors would be required to provide sufficient evidence to DHS in
order to qualify for the reduced investment threshold. DHS would
generally limit the number of census tracts that could be combined for
this purpose.\67\ Specifically, DHS is proposing that a TEA may also
consist of an area comprised of the census tract(s) in which the new
commercial enterprise is principally doing business, including any and
all adjacent tracts, if the weighted average of the unemployment rate
for all included tracts is at least 150 percent of the national
average.
---------------------------------------------------------------------------

\67\ According to USCIS policy in effect at the time of issuance
of this proposed rulemaking:
A new commercial enterprise is principally doing business in the
location where it regularly, systematically, and continuously
provides goods or services that support job creation. If the new
commercial enterprise provides such goods or services in more than
one location, it will be principally doing business in the location
most significantly related to the job creation.
Factors considered in determining where a new commercial
enterprise is principally doing business include, but are not
limited to, the location of:
Any jobs directly created by the new commercial
enterprise;
Any expenditure of capital related to the creation of
jobs;
The new commercial enterprise's day-to-day operation;
and
The new commercial enterprise's assets used in the
creation of jobs.
USCIS Policy Manual, 6 USCIS-PM G (Nov. 30, 2016).
---------------------------------------------------------------------------

In order to assess the potential impact of this aspect of the
proposed rule, DHS performed further analysis on the 2016 NCE sample.
First, DHS determined, based on the sample, that 99 percent of regional
center investments and 64 percent of non-regional center investments
are made into TEAs. Because the 2016 sample significantly over-
represents non-regional center investments and over-represents non-
regional center NCEs by a smaller, but still noticeable, margin, DHS
also determined the percentage of investments overall that were applied
to TEAs. DHS found that 97 percent of investments and 85 percent of
NCEs were applied to TEAs.\68\ About 10 percent of investments that
were made into TEAs were made into rural TEAs. This 10% was the same
for regional center and non-regional center investments.
---------------------------------------------------------------------------

\68\ DHS used a weighted average calculation to determine these
percentages because the 2016 NCE sample over-represents non-regional
center investments--non-regional center investments accounted for
exactly half the 2016 NCE sample but less than a tenth (9 percent)
of submitted investments. This bias is not a feature of the sampling
methodology but rather an inherent feature of the population,
because non-regional center investments comprise 42 percent of NCEs.
The 2016 NCE sample over-represents non-regional center NCEs as
well, but not by as much as investments. The sample share of non-
regional center NCEs is 50 percent, while the true share in the NCE
population is 42 percent. Hence, the overrepresentation is about 8
percentage points but DHS feels this is significant enough that the
NCE aggregate shares should be weighted as well. The weighted
average for TEA investments is the sum of the regional center share
of investments (.91) multiplied by the TEA share found in the sample
(.99), and the non-regional share of investments (.09) multiplied by
the TEA share in the sample (.64). The resulting weighting equation
is .91 + .06 = .97. The weighted average for TEA NCEs is the sum of
the regional center share of NCEs (.58) multiplied by the TEA share
found in the sample (.99), and the non-regional share of NCEs (.42)
multiplied by the TEA share in the sample (.64). The resulting
weighting equation is .58 + .27 = .85.
---------------------------------------------------------------------------

DHS then parsed the TEA filings comprising the 2016 NCE sample into
specific cohorts. The first cohort is the number of non-rural high-
unemployment TEA filings that did not rely on state designations to
qualify. The TEAs in this cohort did not require state designations
because the project was located in a specific geographical unit that
met the unemployment threshold.\69\ They would be unaffected by the
changes proposed in this rule. The next two cohorts are the filings
that relied on one or two census tracts, respectively. These too would
be unaffected by this rule. The fourth cohort is the filings that
relied on three or more census tracts. The proposed rule would
potentially affect some of the designations in this cohort. Because of
this, DHS attempted to subject these tracts to further analysis, as
described further below.
---------------------------------------------------------------------------

\69\ For the TEA geographies that met the high unemployment
threshold in the sample analyzed, 90 percent utilized MSAs and the
remaining 10 percent utilized counties.
---------------------------------------------------------------------------

DHS determined the relative size of each cohort by determining the
total number of filings per cohort, and then weighting these
percentages to reflect the appropriate regional center and non-regional
center proportions, first for investments, and then for NCEs. The
relative size of each cohort, as a share of the total number of
investments in TEAs and the total number of NCEs in TEAs, are listed in
Table 5 below. Note that the amounts are based on the average of
filings for FY 2013-2015; potential changes in future filing patterns
are discussed below. The share figures are in percentages and are
provided first on the basis of all investments and NCEs and next on the
basis of high-unemployment TEA investments and NCEs (the last two
columns of the table). DHS could have also presented the shares on a
per total-TEA basis, but since almost all investments (97 percent) were
made into TEAs, little additional insight would be gained by providing
figures on such a basis.

Table 5--TEA Metrics
----------------------------------------------------------------------------------------------------------------
TEA Cohort Investments NCEs Share of high-
--------------------------------------------------------------------------------------- unemployment TEA
filings
Share Share -------------------------
Amount (percent) Amount (percent) Investments NCEs
(percent) (percent)
----------------------------------------------------------------------------------------------------------------
High-unemployment TEA............. 9,159 87 929 75 N/A N/A
Qualify without state 735 7 135 11 9 18
certification....................
Qualify with one Census Tract..... 1,883 18 177 14 20 18
Qualify with two Census Tracts.... 667 6 50 4 7 4
Cohort not affected by the rule 4,672 44 679 55 36 41
because it would meet the
provision........................
Qualify with three or more tracts 5,875 56 567 45 64 59
(maximum that could be affected).
----------------------------------------------------------------------------------------------------------------

[[Page 4760]]

DHS draws a number of conclusions from the metrics described above.
Foremost, a large share of investments (87 percent) were made in, and
three-quarters of related NCEs were located in, high-unemployment TEAs.
Second, a small share of investments (7 percent) qualified as high
unemployment TEAs without state certification,\70\ meaning that the MSA
or county in which the related project was located qualified
independently for such designation. About 18 percent of the investments
qualified based on a single-census-tract designation, and a small share
(6 percent) qualified based on a two-tract designation. Third, more
than half of investments (56 percent) and just under half of related
NCEs (45 percent) relied on three or more census-tract configurations.
---------------------------------------------------------------------------

\70\ State certification is currently required for high
unemployment areas encompassing geographic or political subdivisions
smaller than an MSA or county. See 8 CFR 204.(6)(i) and
204.6(j)(6)(ii).
---------------------------------------------------------------------------

DHS calculated additional metrics to assess the impact of the rule.
To obtain the cohort that would be unaffected by the rule, DHS added
together the five subcategories representing non-TEA, rural TEA, those
that qualified without state attestation, single tract configurations,
and two-tract configurations. This cohort is reported in the second to
last row of Table 5. Next, DHS obtained the number of investments and
related NCEs that could potentially be affected by the rule. This
cohort is reported in the last row of Table 5. These figures represent
our maximum. In reality, some portion of the maximum cohort for
projects and NCEs would have continued to qualify for TEA designation
under the changes proposed by this rule. However, currently DHS does
not have reliable, statistically valid information from which DHS can
estimate what share would likely be impacted by the rule.
DHS obtained Census Bureau data on adjacent tracts that were
utilized in studies unrelated to the current rulemaking provision.\71\
From the population of 74,001 tracts provided in the Census dataset,
DHS randomly sampled 390 tracts, which is slightly more than the 383
needed for 95 percent confidence and a 5 percent margin of error. The
average number of adjacent tracts was 6.4 and the median was 6, with a
maximum of 11, a minimum of 3, and a range of 8. Since ``partial''
tracts are not viable under the EB-5 program, the average was rounded
to the nearest whole number and 1 tract was added to account for the
primary tract for which the adjacencies were counted, to yield an
average of 7 total tracts. This suggests that it may not be unusual for
a TEA designation of three or more tracts to satisfy the adjacency
requirements of this proposed rule.
---------------------------------------------------------------------------

\71\ As of 2016, the Census Bureau records show 73,057 Tracts in
the United States, including the District of Columbia but not
counting U.S. Territories. U.S. Census Bureau, 2010 Census Tallies
of Census Tracts, Block Groups and Blocks, available at https://www.Census.gov/geo/maps-data...ractblock.html. The data
utilized in this analysis is currently available publicly from Brown
University's (Providence, RI) American Communities Project Web site
at http://www.s4.brown.edu/us2010/Researcher/Pooling.htm.
---------------------------------------------------------------------------

The benefit of this aspect of the proposed rule is that it would
prevent certain TEA configurations that rely on a large number of
census tracts indirectly linked to the actual project tract(s) by
multiple degrees of separation. As a result, some investments may be
re-directed to areas where unemployment rates are truly high, according
to the 150 percent threshold, and therefore may stimulate job creation
where it is most needed.
Finally, DHS also considered an alternative provision, under which
TEA designations would be subject to a twelve-tract limit. This limit
is used by the State of California in its TEA certifications. DHS
considered this limit as an alternative approach because it is the only
case in which a state limits the number of census tracts to a specific
number. Analysis of the NCE sample revealed that for tract
configurations with two or more tracts, the average number of tracts
aggregated was 16, but the median was 7. The figures are slightly
higher at 17 and 8, respectively, when the cohort is isolated to three
or more multiple tract configurations. The difference in the mean and
median indicate that the distribution is right-skewed, characterized by
a small number of very large-tract number compilations, evidenced by a
sample range of 198 tracts. DHS notes that there is sufficient
variation in the data to preclude state locational bias, as 22 states
including the District of Columbia were represented in the 2016 NCE
sample. Ultimately, DHS did not choose this alternative option because
it is not necessarily appropriate for nationwide application, as the
limitation to 12 census tracts may be justifiable for reasons specific
to California but may not be apt on a national scale.
DHS stresses that the maximum cohorts presented in Table 5
overstate the number and shares of future investments and NCEs that
would be impacted by the TEA reform provision because some of the
configurations that relied on multiple tracts (3 or more) would be able
to meet the requirements of the proposed rule. Furthermore, the number
of impacted investments and NCEs is also likely to be lower because
regional centers may be able to replace forgone projects in places that
would not meet the high unemployment criteria under the proposed rule
with other projects that would in fact qualify. For example, a regional
center seeking to locate a project on one city block that would no
longer qualify as a TEA may opt to locate the project on another block
that could qualify as a TEA under the new rule. In that sense, the
proposed rule may provide additional incentive for investments in rural
areas, because such investments would be unaffected by this rule, or in
areas that are more closely associated with high unemployment. In other
words, if a regional center is considering a project in a specific
location that would no longer qualify as a TEA, the regional center can
opt to move the project to a TEA or seek another project that would
fall within a TEA. DHS believes that some regional centers will not be
able to make such a substitution and that there may be costs in the
forms of forgone investments and projects, and accompanying reductions
in job creation and other economic activity.
DHS requests any data sources or comments from the public on the
estimated costs for the number of investments and projects impacted by
this aspect of the proposed rule. DHS has described some of the
possible negative consequences of a reduced number of investors. A
decrease in investments and projects would potentially reduce some job
creation and have other downstream effects.
Finally, DHS notes that because state designations will no longer
be accepted, it is reasonable to expect cost savings germane to the
labor time and opportunity costs of state government institutions
previously involved in TEA designations. It is reasonable to expect
that these cost savings to states would transfer into some additional
costs for DHS in adjudication review time in order to evaluate TEA
submissions. However, DHS cannot accurately predict such added time
burden to the Government at this time.
e. Other Provisions
DHS has analyzed the other provisions and sub-provisions to those
discussed above:
Removal of Conditions Filing. DHS is proposing to revise its
regulations to clarify that, except in limited circumstances,
derivative family members must file their own petitions to remove
conditions from their permanent residence when they are not included in
a petition to remove conditions filed by the principal

[[Page 4761]]

investor. Generally, an immigrant investor's derivatives are included
in the principal immigrant investor's Form I-829 petition. However,
there have been cases where the derivatives are not included in the
principal's petition but instead file one or more separate Form I-829
petitions. The proposed regulation clarifies that, except in the case
of a deceased principal, derivatives not included in the principal's
Form I-829 petition cannot use one petition for all the derivatives
combined but must each separately file his or her own Form I-829
petition. Based on EB-5 program office review of historical filings for
this group, on average over a 3-year period about 24 cases per year
involved such circumstances. Biometrics are currently required for the
joint Form I-829 petition submissions, so the provision requiring
separate filings would not impose any additional biometric, travel, or
associated opportunity costs. The only costs expected from the rule
would be the separate filing fee and associated opportunity cost. The
filing fee for a Form I-829 petition is $3,750. DHS estimates that the
form takes 3 hours to complete. DHS recognizes that many dependent
spouses and children do not currently participate in the U.S. labor
market, and as a result, are not represented in national average wage
calculations. In order to provide a reasonable proxy of time valuation,
DHS has to assume some value of time above zero and therefore uses an
hourly cost burdened minimum wage rate of $10.59 to estimate the
opportunity cost of time for dependent spouses. The value of $10.59 per
hour represents the Federal minimum wage with an upward adjustment for
benefits.\72\ Each applicant would face a time cost burden of $32,
which when added to the filing fee, is $3,782. Extrapolating the past
number of average annual filings of 24 going forward, total applicant
costs would total $90,762 annually.\73\
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\72\ Minimum Wage, U.S. DOL, http://www.dol.gov/dol/topic/wages/minimumwage.htm (indicating the Federal Minimum Wage is $7.25 per
hour). The calculation for total employer costs for employee
compensation for dependent spouses and children of principals with
an approved Form I-140: $7.25 per hour x 1.46 = $10.59 per hour.
\73\ Calculation: the burdened wage of $10.59 per hour
multiplied by 3 hours. The individual fee and total cost figures are
rounded from actuals of $3,781.76 and $90,762.12, respectively.
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Removal of Conditions Interview. In addition to the separate filing
requirement discussed above, DHS is proposing to improve the
adjudication process relevant to the investor's Form I-829 interview
process by providing flexibility in interview scheduling and location.
Section 216A(c)(1)(B) of the INA, 8 U.S.C. 1186b(c)(1)(B), generally
requires Form I-829 petitioners to be interviewed prior to final
adjudication of the petition, although DHS may waive the interview
requirement at its discretion. See INA section 216A(d)(3), 8 U.S.C.
1186b(d)(3). Under this rule, DHS is proposing to give USCIS greater
flexibility to require Form I-829 interviews and determine the
appropriate location for such an interview. Additionally, current DHS
regulations allow for Form I-829 petitioners to be interviewed prior to
final adjudication of a Form I-829 petition, but require the interview
to be conducted at the USCIS District Office holding jurisdiction over
the immigrant investor's new commercial enterprise. However, there is
no requirement that the immigrant investor reside in the same location
as the new commercial enterprise, and DHS has determined through some
very preliminary surveys conducted by the EB-5 program office that many
immigrant investors are located a considerable distance from the new
commercial enterprise. Therefore, DHS proposes to clarify that USCIS
has authority to schedule an interview at the USCIS office holding
jurisdiction over either the immigrant investor's commercial
enterprise, the immigrant investor's residence, or the location in
which the Form I-829 petition is being adjudicated. DHS cannot
currently determine how many petitioners would potentially be affected
by these changes. From fiscal years 2011 to 2015, DHS received an
average of 1,911 Form I-829 petitions. While not all of these
petitioners would require an interview or face hardship to travel for
an interview, some of this maximum population may be impacted.\74\ Some
petitioners would benefit by traveling shorter distances for interviews
and thus see a cost savings in travel costs and opportunity costs of
time for travel and interview time. DHS welcomes any comments by the
public that may provide further data sources on the potential costs and
benefits associated with this proposed change.
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\74\ USCIS, Number of I-829 Petitions by Entrepreneurs to Remove
Conditions by Fiscal Year, Quarter, and Case Status 2008-2016,
available at https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/Immigration%20Forms%20Data/Employment-based/I829_performancedata_fy2016_qtr3.pdf.
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Process for Issuing Permanent Resident Cards. DHS also proposes to
amend regulations governing the process by which immigrant investors
obtain their new permanent resident cards after the approval of their
Form I-829 petitions. Current regulations require the immigrant
investor and his or her derivatives to report to a district office for
processing of their permanent resident cards after approval of the Form
I-829 petition. This process is no longer necessary in light of
intervening improvements in DHS's biometric data collection
program.\75\ DHS now captures the required biometric data while the
Form I-829 petition is pending, at the time the immigrant investor and
his or her derivatives appear at an Application Support Center for
fingerprinting, as required for the Form I-829 background and security
checks. DHS then mails the permanent resident card directly to the
immigrant investor by U.S. Postal Service registered mail after the
Form I-829 petition is approved. Accordingly, there is generally no
need for the immigrant investor and his or her derivatives to appear at
a district office after approval of the Form I-829 petition.
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\75\ DHS already has authority to collect this information under
8 CFR part 103.
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DHS does not estimate any additional costs for this proposed
provision. This proposed provision will likely benefit immigrant
investors and any derivatives, including by providing savings in cost,
travel, and time, since this regulation will no longer require them to
report to a district office for processing of their permanent resident
cards. DHS also benefits by removing a process that is no longer
necessary.
Miscellaneous other changes. DHS is also proposing a number of
other technical changes to the EB-5 regulations. First, DHS is
proposing to update a reference to the former United States Customs
Service, so that it will now refer to U.S. Customs and Border
Protection. Second, DHS is proposing to conform DHS regulations to
Public Law 107-273, which eliminated the requirement that immigrant
entrepreneurs establish a new commercial enterprise from both section
203(b)(5) and section 216A of the INA. Accordingly, USCIS proposes to
remove references to this requirement in 8 CFR 204.6 and 216.6. Third,
DHS is proposing to further conform DHS regulations to Public Law 107-
273 by removing the references to ``management'' at 8 CFR 204.6(j)(5)
and 8 CFR 204.6(j)(5)(iii). Fourth, DHS is proposing to remove the
phrase ``as opposed to maintaining a purely passive role in regard to
the investment'' from 8 CFR 204.6(j)(5). Fifth, DHS is proposing to
allow any type of entity to serve as a new commercial enterprise.
Sixth, DHS is proposing to amend 8 CFR 204.6(k) to remove the
requirement on USCIS to specify in the decision on the EB-5 immigrant
petition whether the new commercial enterprise is

[[Page 4762]]

principally doing business in a TEA. Finally, DHS is proposing
revisions to otherwise unaffected sections of section 204.6 and 216.6
to replace the term ``entrepreneur'' with the term ``investor.'' These
provisions are technical changes and will have no impact on investors
or the government. Therefore, the benefits and costs for these changes
were not estimated.
Miscellaneous Costs
Familiarization costs: DHS assumes that there will be
familiarization costs associated with this rule. To estimate these
costs, DHS relied on several assumptions. First, DHS believes that each
approved regional center would need to review the rule. Other than
regional centers, the NCEs would also need to be familiar with the
proposed rule. Based on the 790 regional centers referenced herein as
having approved Forms I-924 and 520 non-regional center NCEs, a total
of at least 1,310 identified entities would likely need to review the
rule. DHS believes that lawyers would likely review the rule and that
it would take about 4 hours to review and inform any additional parties
of the changes in this proposed rule. Based on the BLS ``Occupational
Employment Statistics (OES)'' dataset, the 2015 mean hourly wage for a
lawyer was $65.51.\76\ DHS burdens this rate by a multiple of 1.46,
consistent with other rulemakings, to account for other compensation
and benefits, to arrive at an hourly cost of $95.64. The total cost of
familiarization is $501,154 annually based on the current number of
approved regional centers and non-regional center NCEs in the recent
past.\77\
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\76\ Bureau of Labor Statistics, May 2015 National Occupational
Employment and Wage Estimates United States, https://www.bls.gov/oes/current/oes_nat.htm#23-0000.
\77\ Calculation: 1,310 entities x 4 hours each x burdened
hourly wage of $95.64. Final figure is rounded from 501,153.6.
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D. Executive Order 13132

This proposed rule would not have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Although DHS has historically deferred to
state designations of high unemployment areas, DHS is ultimately
responsible for the adjudication of each petition (including TEA
designations).\78\ This proposed rule would not directly alter the
states' rights or obligations under the EB-5 program, and is fully
consistent with the federal role in administration of immigration
programs. DHS is unaware of any state laws that would be preempted or
otherwise affected by this proposed rule.\79\ Therefore, in accordance
with section 6 of Executive Order 13132, it is determined that this
rule does not have sufficient federalism implications to warrant the
preparation of a federalism summary impact statement. DHS nonetheless
welcomes public comment on possible federalism implications of this
proposed rule.
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\78\ USCIS Policy Manual, 6 USCIS-PM G at 8 (May 30, 2013)
(``However, for all TEA designations, USCIS must still ensure
compliance with the statutory requirement that the proposed area
designated by the state in fact has an unemployment rate of at least
150 percent of the national average rate.'').
\79\ For example, California's Office of Business and Economic
Development notes: ``While the EB-5 visa program is administered by
the U.S. Citizenship and Immigration Services and is therefore
governed by federal laws and regulations, GO-Biz provides customized
TEA certifications for projects that qualify under the $500,000
special TEA requirements.'' EB-5 Investor Visa Program, California
Governor's Office of Business and Economic Development, http://www.business.ca.gov/Programs/International-Affairs-and-Business-Development/EB-5.
---------------------------------------------------------------------------

E. Regulatory Flexibility Act

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as
amended by the Small Business Regulatory Enforcement Fairness Act of
1996, Public Law 104-121, 110 Stat. 847 (March 29, 1996), requires
Federal agencies to consider the potential impact of regulations on
small entities. The term ``small entities'' comprises small businesses,
not-for-profit organizations that are not dominant in their fields, and
governmental jurisdictions with populations of less than 50,000. An
``individual'' is not defined by the RFA as a small entity and costs to
an individual from a rule are not considered for RFA purposes. In
addition, courts have held that the RFA's regulatory flexibility
analysis requirements apply to direct small entity impacts only.\80\
Consequently, any indirect impacts from a rule to a small entity are
not costs for RFA purposes.
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\80\ See, e.g., Mid-Tex Elec. Coop. v. FERC, 773 F.2d 327, 342
(D.C. Cir. 1985) (concluding that an agency may certify a rule under
Section 605(b) of the Regulatory Flexibility Act when the agency
determines the rule will not directly impact small entities).
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However, the changes proposed by DHS to modernize and improve the
EB-5 program may have the potential to affect several types of business
entities involved in EB-5 projects. Therefore, DHS has prepared an
Initial Regulatory Flexibility Analysis (IRFA) under the RFA because
some of the entities involved may be considered small entities.
Initial Regulatory Flexibility Analysis
EB-5 investment structures are complex and can involve numerous
entities involved in project financing and development. The rule
proposes to raise the investment levels to account for inflation and
reform the way in which TEAs are constructed. It is difficult to
determine the small entity status of regional centers because there is
a lack of official data on employment, income, and industry
classification for these entities. Such a determination is also
difficult because regional centers can be structured in a variety of
different ways, and can involve multiple business and financial
activities, some of which play a direct, and some an indirect, role in
linking investor funds to NCEs and job-creating projects or entities.
Although DHS does not know if regional centers are small entities, DHS
believes some regional center NCEs and some non-regional center NCEs
could be small entities. A detailed description of DHS's attempt to
identify such entities is provided below. DHS welcomes public comment
on the potential impact of the proposed changes on small entities.
a. A Description of the Reasons Why the Action by the Agency Is Being
Considered
DHS proposes to update its EB-5 regulations to update aspects of
the EB-5 program in need of reform and to reflect statutory changes and
codify existing policies. Elsewhere in this preamble, DHS provides
further background and explanation for the proposals contained in the
rule.
b. A Succinct Statement of the Objectives of, and Legal Basis for, the
Proposed Rule
DHS objectives and legal authority for this proposed rule are
discussed in Section II of the preamble.
c. A Description and, Where Feasible, an Estimate of the Number of
Small Entities to Which the Proposed Changes Would Apply
DHS believes the changes outlined in the proposed rule could affect
the following types of groups that are involved in EB-5 investments:
Entrepreneurs, regional centers, and new commercial enterprises (NCEs).
Below, DHS identifies which of these groups may qualify as small
entities under the RFA.

[[Page 4763]]

1. Entrepreneurs
An entrepreneur who wishes to immigrate to the United States must
file an Immigrant Petition by Alien Entrepreneur (Form I-526). DHS
analysis of filing data for the Form I-526 reveals that for FY 2013-
2015 an average of 10,547 EB-5 foreign entrepreneurs filed Form I-526
petitions to DHS annually, and DHS forecasts that over the next ten
years the annual average will be about 16,000. Form I-526 petitions are
filed by individuals who voluntarily apply for immigration benefits on
their own behalf and thus do not meet the definition of a small entity.
Therefore, entrepreneurs were not considered further for purposes of
this RFA.
2. Regional Centers
As previously mentioned, the small entity status of regional
centers is very difficult to determine because of the lack of official
data concerning employment, income, and industry classification of the
regional center itself. Regional centers use Form I-924 to obtain
regional center designation and use Form I-924A to demonstrate
continued eligibility for regional center designation annually. The
information provided by regional center applicants as part of the Form
I-924 and I-924A processes does not include adequate data to allow DHS
to reliably identify the small entity status of individual applicants.
Although regional center applicants typically report the North American
Industry Classification (NAICS) codes associated with the sectors they
plan to direct investor funds toward, these codes do not necessarily
apply to the regional centers themselves. In addition, information
provided to DHS concerning regional centers generally does not include
regional center revenues or employment.
DHS nonetheless attempted to identify how many regional centers may
be small entities. DHS obtained a sample of 440 regional centers
operating 5,886 projects. At the time of DHS's analysis, there were 790
approved regional centers.\81\ DHS used subscription and publicly
available data to identify those regional centers that may qualify as
small entities by trying to obtain revenue information or information
on the number of employees and the NAICS codes. Obtaining the revenue
or employee count and NAICS codes would allow DHS to determine if the
regional center was a small entity as recommended by the SBA. For the
vast majority of the entities in the sample, DHS could not conclusively
determine the entity's small entity status. For 15 of the regional
centers in the sample, search queries generated preliminary results,
but DHS could not confirm them as the entities of interest. This is
because regional centers often utilize very broad terms, such as a
combination of the term ``regional center'' and the name of the state,
city, or geographic area in which the regional center is located. Non-
regional center entities, such as local economic development
organizations, as well as consultancies and legal units involved in the
EB-5 program, often utilize very similar or even exact name syntax,
and, as such, the multiple initial results could not be de-conflicted.
For about 5 of the target regional centers, DHS could reasonably verify
the results of the search query. However, such a low response
proportion prevents DHS from drawing statistically valid conclusions.
---------------------------------------------------------------------------

\81\ DHS attempted to conduct a small entity analysis on
regional centers for another DHS rule in January 2016.
---------------------------------------------------------------------------

DHS did not attempt to determine the small entity status of
regional centers based on the bundled capital investment amounts
available to such regional centers. Such bundled investments are not
indicative of whether the regional center is appropriately
characterized as a small entity for purposes of the RFA because there
is no way to know, based solely on the information available, how much
of these bundled investment amounts are used for the investment
projects that the regional center may be affiliated with and how much
may be used as administrative fees paid to the regional center. DHS
assumes that some amount of the administrative fees contribute to a
regional center's revenue, and if DHS were able to obtain information
on administrative fees, along with industry data, DHS might be able to
make a determination on whether the regional center was a small entity.
DHS welcomes any public comment on data sources or information on
regional centers, including their sources of revenue, their employment
data, the industries in which they should be categorized, and other
information relevant to their small entity status.
3. New Commercial Enterprises (NCEs)
Similar to the challenges with identifying regional centers as
small entities, DHS experienced challenges when attempting to identify
NCEs as small entities, whether the NCE is affiliated with a regional
center or not.
First, NCEs can be involved with the job-creating activity in a
variety of ways that create analytical challenges. Regional center NCEs
usually are established to receive EB-5 funding, and then deploy the
funding to a separate JCE. They can also engage in the job creating
activity directly. Both regional center NCEs and non-regional center
NCEs can fund multiple job creating activities. Under USCIS's current
regulations at 8 CFR 204.6(e), an NCE can constitute a parent company
and its wholly-owned subsidiaries and through these wholly-owned
subsidiaries an NCE can also engage in job-creating activities in
multiple industries. The multiplicity of ways in which an NCE can
engage in the job creating activity make it difficult to assign a NAICS
code to any particular entity that constitutes or comprises part of
what is considered the NCE.
Second, DHS does not require regional center applicants or
petitioners to submit on their applications or petitions the type of
revenue and employment data appropriate for analysis, regardless of the
type of NCE or how it is structured.\82\ Although petitioners are
required to submit a number of different types of documents to DHS to
establish eligibility, DHS does not specifically require revenue or
employment data for a specific NCE entity itself. Rather, petitioners
relying on future job creation must provide a business plan for the
job-creating activity (regardless of which entity is engaged in the
activity), and the plan may contain projected revenues, although it is
not required to. The business plan or an accompanying economic analysis
will also project the expected number of jobs created by the EB-5
investment. However, these are projections only. It is not appropriate
to use these projected revenues as a substitute for actual revenues in
this analysis. For these reasons, although DHS recognizes that the
proposed rule could result in some impacts to NCEs that may be small
entities, DHS cannot feasibly or reliably estimate the number of such
small entities that could be impacted. DHS requests comments from the
public that provide more information how to identify the small entity
status of NCEs, what the potential impacts of the rule might be on
small entity NCEs, and whether and to what extent those impacts could
be transferred to small entity regional centers.
---------------------------------------------------------------------------

\82\ DHS notes that regional centers and individual petitioners
provide such information regarding the NCEs with which the regional
centers are associated or in which the petitioners have invested.

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[[Page 4764]]

4. Job-Creating Entities (JCEs)
Due to the complex nature of the EB-5 program and the various
structures involved, DHS assumes that the proposed provisions that
would increase the investment amount or change the TEA designation
criteria could indirectly impact the JCEs. However, DHS requests public
comment on this assumption given the various structures that are
possible under the EB-5 program. Due to data capture limitations, it is
not feasible for DHS to reliably estimate the number of JCEs at this
time. DHS anticipates forthcoming form revisions that may collect
additional data on JCEs that receive EB-5 capital, and expects to be
able to examine this more closely in the future.
d. A Description of the Projected Reporting, Recordkeeping, and Other
Compliance Requirements of the Proposed Rule, Including an Estimate of
the Classes of Small Entities That Will Be Subject to the Requirement
and the Types of Professional Skills
The proposed rule does not directly impose any new or additional
``reporting'' or ``recordkeeping'' requirements on filers of Forms I-
526, I-829 or I-924. The proposed rule does not require any new
professional skills for reporting. However, the proposed rule may
create some additional time burden costs related to reviewing the
proposed provisions, as is discussed above. As noted above, DHS
believes that lawyers would likely review the rule and that it would
take about 4 hours to review and inform any additional parties of the
changes in this proposed rule. Based on the BLS ``Occupational
Employment Statistics (OES)'' dataset, the 2015 mean hourly wage for a
lawyer was $65.51.\83\ DHS burdens this rate by a multiple of 1.46,
consistent with other rulemakings, to account for other compensation
and benefits, to arrive at an hourly cost of $95.64, or $382.56 per
entity.
---------------------------------------------------------------------------

\83\ Bureau of Labor Statistics, May 2015 National Occupational
Employment and Wage Estimates United States, https://www.bls.gov/oes/current/oes_nat.htm#23-0000.
---------------------------------------------------------------------------

While DHS has estimated these costs, and assumes that they may
affect some small entities, for reasons stated previously, data
limitations prevent DHS from determining how many such small entities
may be impacted or the extent of the impact to the small entities.
e. An Identification of All Relevant Federal Rules, to the Extent
Practical, That May Duplicate, Overlap, or Conflict With the Proposed
Rule
DHS is unaware of any duplicative, overlapping, or conflicting
Federal rules, but invites any comment and information regarding any
such rules.
f. Description of Any Significant Alternatives to the Proposed Rule
That Accomplish the Stated Objectives of Applicable Statutes and That
Minimize Any Significant Economic Impact of the Proposed Rule on Small
Entities
This proposed rule would modernize and make necessary updates to
the EB-5 program. While DHS knows that some regional centers may be
considered small entities, DHS does not have enough data to determine
the impact that this proposed rule may have on those entities.
With respect to the proposal to reform the TEA designation process,
DHS considered several alternatives, but found that they did not
feasibly accomplish the stated objective of INA section
203(b)(5)(B)(ii). One alternative DHS considered was limiting the
geographic or political subdivision of TEA configurations to an area
containing up to, but no more than, 12 contiguous census tracts, an
option currently used by the state of California in its TEA designation
process.\84\ However, DHS is not confident that this option is
necessarily appropriate for nationwide application, as the limitation
to 12 census tracts may be justifiable for reasons specific to
California but may not be feasible on a national scale.
---------------------------------------------------------------------------

\84\ See Cal. Governor's Office of Bus. and Econ. Dev., EB-5
Investor Visa Program, available at http://business.ca.gov/International/EB5Program.aspx.
---------------------------------------------------------------------------

Another significant alternative DHS considered that would be
relatively straightforward to implement and understand would be to
limit the geographic or political subdivision of the TEA to the actual
project tract(s). While this option would be easy to put in practice
for both stakeholders and the agency, it was considered too restrictive
in that it would exclude immediately adjacent areas that would be
impacted by the investment.
DHS also considered options based on a ``commuter pattern''
analysis, which focuses on defining a TEA as encompassing the area in
which workers may live and be commuting from, rather than just where
the investment is made and where the new commercial enterprise is
principally doing business. The ``commuter pattern'' proposal was
deemed too operationally burdensome to implement as it posed challenges
in establishing standards to determine the relevant commuting area that
would fairly account for variances across the country.\85\ In addition,
DHS could not identify a commuting-pattern standard that would
appropriately limit the geographic scope of a TEA designation
consistent with the statute and the policy goals of this proposed
regulation.
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\85\ DHS reviewed a proposed commuter pattern analysis
incorporating the data table, Federal Highway Administration, CTPP
2006-2010 Census Tract Flows, available at (http://www.fhwa.dot.gov/planning/cen...0_tract_flows/)
(last updated Mar. 25, 2014). DHS found the required steps to
properly manipulate the Census Transportation Planning Product
(CTPP) database might prove overly burdensome for petitioners with
insufficient economic and statistical analysis backgrounds. Further,
upon contacting the agency responsible to manage the CTPP data
table, DHS was informed that the 2006-2010 CTPP data is unlikely to
be updated prior to FY2018 to incorporate proposed changes to the
data table. U.S. Census is currently reviewing the CTPP proposed
changes. As an alternate methodology for TEA commuter pattern
analysis, DHS reviewed data from the U.S. Census tool, On the Map,
http://onthemap.ces.census.gov/ gov/, which is tied to the U.S. Census
Bureau's American Community Survey. Although the interface appeared
to be more user-friendly overall, using this data would be
operationally burdensome, potentially requiring hours of review to
obtain the appropriate unemployment rates for the commuting area.
---------------------------------------------------------------------------

With respect to the minimum investment amount provision, DHS also
considered an alternative to the proposed increase to the investment
amount for TEAs. Specifically, DHS considered the alternative of
setting the reduced TEA investment amount to $900,000 instead of
$1,350,000, consistent with the existing regulatory framework.\86\ DHS
is proposing a 75 percent reduction rather than a 50 percent reduction
to better balance the Congressional aim of incentivizing investment in
TEAs with the goal of encouraging greater investment in the United
States more generally. History has shown that a 50 percent reduction
coincides with an extremely large imbalance in favor of TEA
investments, at the expense of additional overall investment and
therefore economic benefit that may accrue to the U.S. economy more
generally. Removing the TEA discount entirely, although allowable by
statute, would run the risk of removing the incentive to invest in TEAs
altogether. Setting the reduced minimum investment at 75 percent of the
standard minimum investment amount (i.e., the midpoint between the
maximum discount and no discount)

[[Page 4765]]

likely would produce greater investment levels in absolute terms while
still providing, given the very significant imbalance in favor of TEAs
produced by the 50 percent discount, a meaningful incentive to invest
in TEAs.
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\86\ The current reduced minimum investment amount ($500,000) is
50 percent of the standard minimum investment amount ($1,000,000).
---------------------------------------------------------------------------

DHS is requesting comments on other alternatives that may minimize
the impacts to small entities.

F. Executive Order 12988

This rule meets the applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988.

G. National Environmental Policy Act

DHS Directive (Dir) 023-01 Rev. 01 establishes the procedures that
DHS and its components use to comply with NEPA and the Council on
Environmental Quality (CEQ) regulations for implementing NEPA. 40 CFR
parts 1500-1508. The CEQ regulations allow federal agencies to
establish, with CEQ review and concurrence, categories of actions
(``categorical exclusions'') which experience has shown do not
individually or cumulatively have a significant effect on the human
environment and, therefore, do not require an Environmental Assessment
(EA) or Environmental Impact Statement (EIS). 40 CFR 1507.3(b)(2)(ii)
and 1508.4. Dir. 023-01 Rev. 01 establishes Categorical Exclusions that
DHS has found to have no such effect. Dir. 023-01 Rev. 01 Appendix A
Table 1. For an action to be categorically excluded from further NEPA
review, Dir. 023-01 Rev. 01 requires the action to satisfy each of the
following three conditions: (1) The entire action clearly fits within
one or more of the Categorical Exclusions; (2) the action is not a
piece of a larger action; and (3) no extraordinary circumstances exist
that create the potential for a significant environmental effect. Dir.
023-01 Rev. 01 section V.B(1)-(3).
DHS analyzed this action and does not consider it to significantly
affect the quality of the human environment. This proposed rule would
change a number of eligibility requirements and introduce priority date
retention for certain immigrant investor petitioners. It would also
amend existing regulations to reflect statutory changes and codify
existing EB-5 program policies and procedures. DHS has determined that
this rule does not individually or cumulatively have a significant
effect on the human environment because it fits within Categorical
Exclusion number A3(d) in Dir. 023-01 Rev. 01, Appendix A, Table 1, for
rules that interpret or amend an existing regulation without changing
its environmental effect.
This rule is not part of a larger action and presents no
extraordinary circumstances creating the potential for significant
environmental effects. This rule is categorically excluded from further
NEPA review.

H. Paperwork Reduction Act

Under the Paperwork Reduction Act (PRA) of 1995, all Departments
are required to submit to OMB, for review and approval, any reporting
requirements inherent in a rule. See Public Law 104-13, 109 Stat. 163
(May 22, 1995). USCIS is revising one information collection and
requesting public comments on the proposed change as follows: Immigrant
Petitioner by Alien Entrepreneur (Form I-526) to collect additional
information about the new commercial enterprise into which the
petitioner is investing to determine the eligibility of qualified
individuals to enter the United States to engage in commercial
enterprises. DHS is requesting comments on the proposed information
collection changes included in this rulemaking. Comments on this
revised information collection should address one or more of the
following four points:
(1) Evaluate whether the collection of information is necessary for
the proper performance of the functions of the agency, including
whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of
the collection of information, including the validity of the
methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of information on those
who are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology, such as permitting electronic
submission of responses.
Overview of Information Collection--Form I-526
a. Type of information collection: Revision to a currently approved
information collection.
b. Abstract: USCIS uses this information collection to determine if
an alien can enter the U.S. to engage in commercial enterprise.
c. Title of Form/Collection: Immigrant Petitioner by Alien
Entrepreneur.
d. Agency form number, if any, and the applicable component of the
DHS sponsoring the collection: Form I-526; USCIS.
e. Affected public who will be asked or required to respond:
Individuals.
f. An estimate of the total number of respondents: 15,990
respondents.
g. Hours per response: 1 hour and 50 minutes.
h. Total Annual Reporting Burden: 29,261 burden hours.

List of Subjects

8 CFR Part 204

Administrative practice and procedure, Adoption and foster care,
Immigration, Reporting and recordkeeping requirements.

8 CFR Part 216

Administrative practice and procedure, Aliens.

Proposed Regulatory Amendments

Accordingly, DHS proposes to amend chapter I of title 8 of the Code
of Federal Regulations as follows:

PART 204--IMMIGRANT PETITIONS

0
1. The authority citation for part 204 continues to read as follows:

Authority: 8 U.S.C. 1101, 1103, 1151, 1153, 1154, 1182, 1184,
1186a, 1255, 1324a, 1641; 8 CFR part 2.

0
2. Section 204.6 is amended by:
0
a. Revising the title of the section, paragraphs (a), (c), and (d); and
0
b. Amending paragraph (e) by:
0
i. Removing the terms ``Immigrant Investor Pilot'' and ``Pilot'' and
adding in their place the term ``Regional Center'' in the definitions
for Employee and Full-time employment;
0
ii. Removing the term ``entrepreneur'' and adding ``investor'' in the
definitions for Capital, Invest, Qualifying employee, and Troubled
business;
0
iii. Revising the definitions for Rural area and Targeted employment
area;
Adding a new definition for Regional Center Program;
0
iv. Replacing ``Form I-526'' with ``EB-5 immigrant petition'';
0
c. Revising paragraphs (f)(1), (f)(2), and (f)(3);
0
d. Amending paragraph (g)(1) by removing the term ``entrepreneur'' and
adding in its place the term ``investor'' and revising paragraph
(g)(2).
0
e. Revising paragraph (i);
0
f. Revising the paragraph (j)(2)(iii), (5) introductory text and
(5)(iii), (6)(i), and (6)(ii)(B);
0
g. Revising paragraph (k);
The revisions and addition read as follows:

Sec. 204.6 Petitions for employment creation immigrants.

(a) General. An EB-5 immigrant petition to classify an alien under

[[Page 4766]]

section 203(b)(5) of the Act must be properly filed in accordance with
the form instructions, with the appropriate fee(s), initial evidence,
and any other supporting documentation.
* * * * *
(c) Eligibility to file and continued eligibility. An alien may
file a petition for classification as an investor on his or her own
behalf.
(d) Priority date. The priority date of an approved EB-5 immigrant
petition will apply to any subsequently filed petition for
classification under section 203(b)(5) of the Act for which the alien
qualifies. A denied petition will not establish a priority date. A
priority date is not transferable to another alien. The priority date
of an approved petition shall not be conferred to a subsequently filed
petition if the alien was lawfully admitted to the United States for
conditional residence under section 203(b)(5) of the Act based upon
that approved petition or if at any time USCIS revokes the approval of
the petition based on:
(1) Fraud, or a willful misrepresentation of a material fact by the
petitioner; or
(2) A determination by USCIS that the petition approval was based
on a material error.
(e) * * *
Regional Center Program means the program established by Public Law
102-395, Section 610, as amended.
Rural area means any area other than an area within a metropolitan
statistical area (as designated by the Office of Management and Budget)
or within the outer boundary of any city or town having a population of
20,000 or more based on the most recent decennial census of the United
States.
Targeted employment area means an area that, at the time of
investment, is a rural area or is designated as an area that has
experienced unemployment of at least 150 percent of the national
average rate.
(f) * * *
(1) General. Unless otherwise specified, for EB-5 immigrant
petitions filed on or after [INSERT EFFECTIVE DATE OF FINAL RULE], the
amount of capital necessary to make a qualifying investment in the
United States is one million eight hundred thousand United States
dollars ($1,800,000). Beginning on October 1, [INSERT YEAR FIVE YEARS
AFTER EFFECTIVE DATE OF FINAL RULE], and every five years thereafter,
this amount will automatically adjust for petitions filed on or after
each adjustment's effective date, based on the cumulative annual
percentage change in the unadjusted All Items Consumer Price Index for
All Urban Consumers (CPI-U) for the U.S. City Average reported by the
Bureau of Labor Statistics for the previous five years. The qualifying
investment amount will be rounded down to the nearest hundred thousand.
DHS may update this figure by publication of a technical amendment in
the Federal Register.
(2) Targeted employment area. Unless otherwise specified, for EB-5
immigrant petitions filed on or after [INSERT EFFECTIVE DATE OF FINAL
RULE], the amount of capital necessary to make a qualifying investment
in a targeted employment area in the United States is one million three
hundred and fifty thousand United States dollars ($1,350,000).
Beginning on October 1, [INSERT DATE YEAR FIVE YEARS AFTER EFFECTIVE
DATE OF FINAL RULE], and every five years thereafter, this amount will
automatically adjust for petitions filed on or after each adjustment's
effective date, to be equal to 75 percent of the standard minimum
investment amount described in paragraph (f)(1) of this section. DHS
may update this figure by publication of a technical amendment in the
Federal Register.
(3) High employment area. Unless otherwise specified, for EB-5
immigrant petitions filed on or after [INSERT EFFECTIVE DATE OF FINAL
RULE], the amount of capital necessary to make a qualifying investment
in a high employment area in the United States is one million eight
hundred thousand United States dollars ($1,800,000). Beginning on
October 1, [INSERT DATE YEAR FIVE YEARS AFTER EFFECTIVE DATE OF FINAL
RULE], and every five years thereafter, this amount will automatically
adjust for petitions filed on or after each adjustment's effective
date, based on the cumulative annual percentage change in the
unadjusted All Items Consumer Price Index for All Urban Consumers (CPI-
U) for the U.S. City Average reported by the Bureau of Labor Statistics
for the previous five years. The qualifying investment amount will be
rounded down to the nearest hundred thousand. DHS may update this
figure by publication of a technical amendment in the Federal Register.
(g) * * *
(1) * * *
(2) Employment creation allocation. The total number of full-time
positions created for qualifying employees shall be allocated solely to
those alien investors who have used the establishment of the new
commercial enterprise as the basis for a petition. No allocation must
be made among persons not seeking classification under section
203(b)(5) of the Act or among non-natural persons, either foreign or
domestic. USCIS will recognize any reasonable agreement made among the
alien investors in regard to the identification and allocation of such
qualifying positions.
* * * * *
(i) Special designation of a high unemployment area. USCIS may
designate a particular geographic or political subdivision as an area
of high unemployment (at least 150 percent of the national average
rate). Such geographic or political subdivision must be composed of the
census tract or contiguous census tracts in which the new commercial
enterprise is principally doing business, and may also include any or
all census tracts contiguous to such census tract(s). The weighted
average of the unemployment rate for the subdivision, based on the
labor force employment measure for each census tract, must be at least
150 percent of the national average unemployment rate.
* * * * *
(j) * * *
(2) * * *
(iii) Evidence of property transferred from abroad for use in the
United States enterprise, including U.S. Customs and Border Protection
commercial entry documents, bills of lading, and transit insurance
policies containing ownership information and sufficient information to
identify the property and to indicate the fair market value of such
property;
* * * * *
(5) To show that the petitioner is or will be engaged in the new
commercial enterprise, either through the exercise of day-to-day
managerial control or through policy formulation, the petition must be
accompanied by:
* * * * *
(iii) Evidence that the petitioner is engaged in policy making
activities. For purposes of this section, a petitioner will be
considered sufficiently engaged in policy making activities if the
petitioner is an equity holder in the new commercial enterprise and the
organizational documents of the new commercial enterprise provide the
petitioner with certain rights, powers, and duties normally granted to
equity holders of the new commercial enterprise's type of entity in the
jurisdiction in which the new commercial enterprise is organized.
* * * * *
(6) * * *
(i) In the case of a rural area, evidence that the new commercial
enterprise is

[[Page 4767]]

principally doing business within a civil jurisdiction not located
within any standard metropolitan statistical area as designated by the
Office of Management and Budget, nor within any city or town having a
population of 20,000 or more as based on the most recent decennial
census of the United States; or
(ii) In the case of a high unemployment area:
(A) Evidence that the metropolitan statistical area, the specific
county within a metropolitan statistical area, the county in which a
city or town with a population of 20,000 or more is located, or the
city or town with a population of 20,000 or more, in which the new
commercial enterprise is principally doing business has experienced an
average unemployment rate of at least 150 percent of the national
average rate; or
(B) A description of the boundaries of the geographic or political
subdivision and the unemployment statistics in the area for which
designation is sought as set forth in 8 CFR 204.6(i), and the reliable
method or methods by which the unemployment statistics were obtained.
(k) Decision. The petitioner will be notified of the decision, and,
if the petition is denied, of the reasons for the denial. The
petitioner has the right to appeal the denial to the Administrative
Appeals Office in accordance with the provisions of part 103 of this
chapter.
* * * * *

PART 216--CONDITIONAL BASIS OF LAWFUL PERMANENT RESIDENCE STATUS

0
3. The authority citation for part 216 continues to read as follows:

Authority: 8 U.S.C. 1101, 1103, 1154; 1184, 1186a, 1186b, and 8
CFR part 2.

0
4. Amend Sec. 216.6 by
0
a. Revising paragraph (a)(1) introductory text;
0
b. Removing ``Form I-829, Petition by Entrepreneur to Remove
Conditions'' from paragraph (a)(1)(i);
0
c. Removing and reserving paragraph (a)(4)(i);
0
d. Replacing ``entrepreneur'' with ``investor'' in paragraph
(a)(4)(iv);
0
e. Revising paragraphs (a)(5) and (6);
0
f. Revising paragraph (b);
0
g. Removing and reserving paragraph (c)(1)(i) and revising paragraphs
(c)(2); and
0
h. Revising paragraph (d).
The revisions to read as follows:

Sec. 216.6 Petition by investor to remove conditional basis of lawful
permanent resident status.

(a) * * *
(1) General procedures. (i) A petition to remove the conditional
basis of the permanent resident status of an investor accorded
conditional permanent residence pursuant to section 203(b)(5) of the
Act must be filed by the investor with the appropriate fee. The
investor must file within the 90-day period preceding the second
anniversary of the date on which the investor acquired conditional
permanent residence. Before the petition may be considered as properly
filed, it must be accompanied by the fee required under 8 CFR
103.7(b)(1), and by documentation as described in paragraph (a)(4) of
this section, and it must be properly signed by the investor. Upon
receipt of a properly filed petition, the investor's conditional
permanent resident status shall be extended automatically, if
necessary, until such time as USCIS has adjudicated the petition.
(ii) The investor's spouse and children may be included in the
investor's petition to remove conditions. Where the investor's spouse
and children are not included in the investor's petition to remove
conditions, the spouse and each child must each file his or her own
petition to remove the conditions on their permanent resident status,
unless the investor is deceased. If the investor is deceased, the
spouse and children may file separate petitions or may be included in
one petition. A child who reached the age of 21 or who married during
the period of conditional permanent residence, or a former spouse who
became divorced from the investor during the period of conditional
permanent residence, may be included in the investor's petition or must
each file a separate petition.
* * * * *
(5) Termination of status for failure to file petition. Failure to
properly file the petition to remove conditions within the 90-day
period immediately preceding the second anniversary of the date on
which the investor obtained lawful permanent residence on a conditional
basis shall result in the automatic termination of the investor's
permanent resident status and the initiation of removal proceedings.
USCIS shall send a written notice of termination and a notice to appear
to an investor who fails to timely file a petition for removal of
conditions. No appeal shall lie from this decision; however, the
investor may request a review of the determination during removal
proceedings. In proceedings, the burden of proof shall rest with the
investor to show by a preponderance of the evidence that he or she
complied with the requirement to file the petition within the
designated period. USCIS may deem the petition to have been filed prior
to the second anniversary of the investor's obtaining conditional
permanent resident status and accept and consider a late petition if
the investor demonstrates to USCIS' satisfaction that failure to file a
timely petition was for good cause and due to extenuating
circumstances. If the late petition is filed prior to jurisdiction
vesting with the immigration judge in proceedings and USCIS excuses the
late filing and approves the petition, USCIS shall restore the
investor's permanent resident status, remove the conditional basis of
such status, and cancel any outstanding notice to appear in accordance
with 8 CFR 239.2. If the petition is not filed until after jurisdiction
vests with the immigration judge, the immigration judge may terminate
the matter upon joint motion by the investor and DHS.
(6) Death of investor and effect on spouse and children. If an
investor dies during the prescribed 2-year period of conditional
permanent residence, the spouse and children of the investor will be
eligible for removal of conditions if it can be demonstrated that the
conditions set forth in paragraph (a)(4) of this section have been met.
(b) Petition review. (1) Authority to waive interview. USCIS shall
review the petition to remove conditions and the supporting documents
to determine whether to waive the interview required by the Act. If
satisfied that the requirements set forth in paragraph (c)(1) of this
section have been met, USCIS may waive the interview and approve the
petition. If not so satisfied, then USCIS may require that an interview
of the investor be conducted.
(2) Location of interview. Unless waived, an interview relating to
the petition to remove conditions for investors shall be conducted by a
USCIS immigration officer at the office that has jurisdiction over
either the location of the investor's commercial enterprise in the
United States, the investor's residence in the United States, or the
location of the adjudication of the petition, at the agency's
discretion.
(3) Termination of status for failure to appear for interview. If
the investor fails to appear for an interview in connection with the
petition when requested by USCIS, the investor's permanent resident
status will be automatically terminated as of the second anniversary of
the date on which the investor obtained permanent residence. The
investor will be provided with written notification of the termination
and the reasons therefore, and a notice to appear shall be issued
placing the investor in removal proceedings. The investor may

[[Page 4768]]

seek review of the decision to terminate his or her status in such
proceedings, but the burden shall be on the investor to establish by a
preponderance of the evidence that he or she complied with the
interview requirements. If the investor has failed to appear for a
scheduled interview, he or she may submit a written request to USCIS
asking that the interview be rescheduled or that the interview be
waived. That request should explain his or her failure to appear for
the scheduled interview, and if a request for waiver of the interview,
the reasons such waiver should be granted. If USCIS determines that
there is good cause for granting the request, the interview may be
rescheduled or waived, as appropriate. If USCIS waives the interview,
USCIS shall restore the investor's conditional permanent resident
status, cancel any outstanding notice to appear in accordance with 8
CFR 239.2, and proceed to adjudicate the investor's petition. If USCIS
reschedules that investor's interview, he or she shall restore the
investor's conditional permanent resident status, and cancel any
outstanding notice to appear cause in accordance with 8 CFR 239.2.
(c) * * *
(2) If derogatory information is determined regarding any of these
issues or it becomes known to the government that the investor obtained
his or her investment funds through other than legal means, USCIS shall
offer the investor the opportunity to rebut such information. If the
investor fails to overcome such derogatory information or evidence that
the investment funds were obtained through other than legal means,
USCIS may deny the petition, terminate the investor's permanent
resident status, and issue a notice to appear. If derogatory
information not relating to any of these issues is determined during
the course of the interview, such information shall be forwarded to the
investigations unit for appropriate action. If no unresolved derogatory
information is determined relating to these issues, the petition shall
be approved and the conditional basis of the investor's permanent
resident status removed, regardless of any action taken or contemplated
regarding other possible grounds for removal.
(d) Decision. (1) Approval. If, after initial review or after the
interview, USCIS approves the petition, USCIS will remove the
conditional basis of the investor's permanent resident status as of the
second anniversary of the date on which the investor acquired
conditional permanent residence. USCIS shall provide written notice of
the decision to the investor. USCIS may request the investor and
derivative family members to appear for biometrics at a USCIS facility
for processing for a new Permanent Resident Card.
(2) Denial. If, after initial review or after the interview, USCIS
denies the petition, USCIS will provide written notice to the investor
of the decision and the reason(s) therefore, and shall issue a notice
to appear. The investor's lawful permanent resident status and that of
his or her spouse and any children shall be terminated as of the date
of USCIS' written decision. The investor shall also be instructed to
surrender any Permanent Resident Card previously issued by USCIS. No
appeal shall lie from this decision; however, the investor may seek
review of the decision in removal proceedings. In proceedings, the
burden shall rest with USCIS to establish by a preponderance of the
evidence that the facts and information in the investor's petition for
removal of conditions are not true and that the petition was properly
denied.

Jeh Charles Johnson,
Secretary.
[FR Doc. 2017-00447 Filed 1-12-17; 8:45 am]
BILLING CODE 9111-97-P