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  • News: DHS Publishes Notice of Proposed Rulemaking On EB-5 Immigrant Investor Regional Center Program

    [Federal Register Volume 82, Number 7 (Wednesday, January 11, 2017)]
    [Proposed Rules]
    [Pages 3211-3216]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 2017-00441]

    ========================================================================
    Proposed Rules
    Federal Register
    ________________________________________________________________________

    This section of the FEDERAL REGISTER contains notices to the public of
    the proposed issuance of rules and regulations. The purpose of these
    notices is to give interested persons an opportunity to participate in
    the rule making prior to the adoption of the final rules.

    ========================================================================

    DEPARTMENT OF HOMELAND SECURITY

    8 CFR Parts 204 and 216

    [CIS No. 2595-16; DHS Docket No. USCIS-2016-0008]
    RIN 1615-AC11

    EB-5 Immigrant Investor Regional Center Program

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

    ACTION: Advance notice of proposed rulemaking.

    -----------------------------------------------------------------------

    SUMMARY: The Department of Homeland Security (DHS) is considering
    making regulatory changes to the EB-5 Immigrant Investor Regional
    Center Program. Based on decades of experience operating the program,
    DHS has determined that program changes are needed to better reflect
    business realities for regional centers and EB-5 immigrant investors,
    to increase predictability and transparency in the adjudication process
    for stakeholders, to improve operational efficiency for the agency, and
    to enhance program integrity. This Advance Notice of Proposed
    Rulemaking (ANPRM) is organized to include requests for comment
    immediately following discussions of the relevant issues.

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

    ADDRESSES: You may submit comments, identified by DHS Docket No. USCIS-
    2016-0008, by any one of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov.
    Follow the instructions for submitting comments.
    Mail: You may send comments directly to U.S. Citizenship
    and Immigration Services (USCIS) by mail to Samantha Deshommes, Chief,
    Regulatory Coordination Division, Office of Policy and Strategy, U.S.
    Citizenship and Immigration Services, Department of Homeland Security,
    20 Massachusetts Ave. NW., Washington, DC 20529. To ensure proper
    handling, please reference DHS Docket No. USCIS-2016-0008 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 Ave. NW., Washington, DC 20529; Telephone 202-272-8377.
    To ensure proper handling, please reference DHS Docket No. USCIS-2016-
    2008 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 St. NE., 3rd Floor, Washington, DC 20529; Telephone
    202-357-9214.

    SUPPLEMENTARY INFORMATION:

    Table of Contents

    I. Public Participation
    II. Background
    A. The EB-5 Program
    B. The Regional Center Program
    III. Requests for Information
    A. Process for Initial Designation and Exemplar Approval
    B. Safeguards for Monitoring and Oversight
    C. Continued Participation
    D. Termination

    List of Acronyms and Abbreviations Used

    ANPRM Advance Notice of Proposed Rulemaking
    DHS Department of Homeland Security
    JCE Job-Creating Entity
    LPR Lawful Permanent Resident
    NCE New Commercial Enterprise
    NOID Notice of Intent To Deny
    NPRM Notice of Proposed Rulemaking
    RFE Request for Evidence
    USCIS United States Citizenship and Immigration Services

    I. Public Participation

    This ANPRM provides an opportunity for DHS to hear and consider the
    views of the public on potential changes to improve and modify the EB-5
    Regional Center Program. 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, as well as corporate and securities law. DHS welcomes comments on
    any and all aspects of this ANPRM. Your comments can help shape the
    outcome of this possible rulemaking.
    DHS is issuing this ANPRM to seek comment from all interested
    stakeholders on several topics, including: (1) The process for
    initially designating entities as regional centers, (2) a potential
    requirement for regional centers to utilize an exemplar filing process,
    (3) ``continued participation'' requirements for maintaining regional
    center designation, and (4) the process for terminating regional center
    designation. While DHS has gathered some information related to these
    topics, DHS is seeking additional information that can help the
    Department make operational and security updates to the Regional Center
    Program while minimizing the impact of such changes on regional center
    operations and EB-5 investors.
    When submitting comments, please indicate the specific section of
    this document to which each comment applies, indicate the specific
    question number to which each comment applies, and provide reasons for
    each suggestion or recommendation. Feedback that simply states that a
    stakeholder strongly prefers a particular outcome, unaccompanied by
    careful reasoning and actionable data, is much less useful to DHS.
    DHS is particularly interested in data that would inform a
    quantitative and qualitative assessment of the costs and benefits of
    the potential changes described in this ANPRM. DHS is also interested
    in comments from the public that provide more information how to
    identify the small entity status of EB-5 stakeholder entities, such as
    regional centers and new commercial enterprises. DHS specifically
    requests information on revenue or employment data sources on regional
    centers and new commercial enterprises.
    Instructions: All submissions for this advance notice of proposed
    rulemaking must include the DHS Docket No. USCIS-2016-0008. Please note
    that DHS has published a notice of proposed rulemaking entitled ``EB-5
    Immigrant Investor Program Modernization,'' DHS Docket No. USCIS-2016-
    0006, separate

    [[Page 3212]]

    from this ANPRM. The NPRM and ANPRM include distinct proposals, so
    please ensure that you submit your comments to the correct docket.
    Comments must be submitted in English, or an English translation
    must be provided. Written comments may be submitted electronically or
    by mail, as explained previously in the ADDRESSES section of this
    ANPRM. To avoid duplication, please use only one of these methods to
    submit written comments. 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 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 and enter this
    ANPRM's docket number in the search bar.

    II. 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 national may
    invest $500,000 if the investment is in a ``targeted employment area,''
    defined to include certain rural areas and areas of high unemployment.
    Id. The INA allots 9,940 immigrant visas each fiscal year for foreign
    nationals seeking to enter the United States under the EB-5
    classification. 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 targeted employment
    areas. See INA section 203(b)(5)(B), 8 U.S.C. 1153(b)(5)(B).

    B. The Regional Center Program

    Enacted in 1992, section 610 of the Departments of Commerce,
    Justice, State, and State, 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 in new commercial enterprises through
    DHS-designated regional centers.\1\ 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).
    ---------------------------------------------------------------------------

    \1\ 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.
    ---------------------------------------------------------------------------

    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.\2\
    ---------------------------------------------------------------------------

    \2\ 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.
    ---------------------------------------------------------------------------

    The former Immigration and Naturalization Service last promulgated
    comprehensive regulations implementing the EB-5 Regional Center Program
    in 1993. 58 FR 44606. Although Congress has revised the program
    multiple times since, see Public Law 106-396, 114 Stat. 1637; Public
    Law 107-273, 116 Stat. 1758 (2002 statutory amendments), the
    regulations have not been updated to conform to the statutory changes.
    Neither have the regulations been amended to make improvements to the
    program based on the Department's experience implementing the program
    for the last 25 years.

    III. Requests for Information

    DHS is considering changes to the Regional Center Program regarding
    the requirements for initial designation and continued participation, a
    potential requirement for regional centers to utilize an exemplar
    process, and the grounds for terminating regional center designation.

    A. Process for Initial Designation and Exemplar Approval

    DHS is considering ways to improve the process associated with the
    initial designation of regional centers and the approval of
    ``exemplar'' projects. Currently, an entity applying for initial
    designation as a regional center may choose whether to present a
    hypothetical project, an actual project, or an exemplar project with
    their Application For Regional Center Under the Immigrant Investor
    Program (Form I-924 application). A request for review of a
    hypothetical project should be supported by general proposals and
    general predictions showing that the proposed regional center will more
    likely than not promote economic growth and job creation.
    Organizational and transactional supporting documents are not required
    for a hypothetical project. Previous determinations based on
    hypothetical projects will not receive deference in the adjudication of
    subsequent filings.
    If the entity includes an actual or exemplar project proposal with
    its Form I-924 application, USCIS determines, as part of the Form I-924
    adjudication, whether USCIS will accord deference to its approval of
    that project when USCIS later reviews investor petitions associated
    with the same regional center

    [[Page 3213]]

    and based on the same project. A request for review of an actual
    project requires a comprehensive and credible business plan that, among
    other things, provides a description of the business and verifiable
    detail on how jobs will be created. Organizational and transactional
    supporting documents for the new commercial enterprise are not required
    for an actual project. Deference generally will be accorded to prior
    approval of the business plan and economic analysis in subsequent
    filings related to an approved actual project.
    A request for review of an exemplar project is comprised of a
    sample Form I-526 petition filed with a proposed actual project
    containing copies of the new commercial enterprise's organizational and
    transactional documents. USCIS currently reviews exemplars to determine
    if they are in compliance with established EB-5 eligibility
    requirements. If the exemplar project is approved, the determination
    generally is accorded deference in subsequent related Form I-526 and
    Form I-829 filings.\3\
    ---------------------------------------------------------------------------

    \3\ Deference may also be accorded to the approval of a regional
    center investor's Form I-526 or Form I-829 petition in the
    adjudication of related Form I-526 and Form I-829 petitions based
    upon an investment in the same investment project with the same
    project documents. Investors may submit evidence of association with
    an exemplar project before or while the regional center's exemplar
    is pending with USCIS, or after the exemplar is approved.
    ---------------------------------------------------------------------------

    DHS believes that the existing process presents two problems.
    First, the adjudication of initial applications for regional center
    designation become much more complex when entities seeking such
    designation ``bundle'' their initial applications with actual or
    exemplar projects. Under the current process, regional centers often
    include a host of documents related to actual or exemplar projects with
    their Form I-924 applications, including project proposals and related
    organization and transactional documents, such as private placement
    memoranda, subscription agreements, operating and partnership
    agreements, and other information. USCIS must review all such documents
    submitted with Form I-924 applications, even though the information
    contained in such documents is frequently unrelated to adjudication of
    the regional center designation (i.e., determining whether to designate
    the applying entities as regional centers).
    Second, by allowing regional centers to choose whether to submit an
    exemplar project at all, USCIS effectively lets those entities
    determine the level of workload for the agency related to each EB-5
    project. When a regional center submits an exemplar proposal, USCIS
    must only assess the project once at an initial stage. Any issues
    related to project approval are considered and resolved at this initial
    stage, thus making individual immigrant investor petitions submitted
    pursuant to that project simpler to adjudicate. In contrast, when a
    regional center does not use the exemplar process, USCIS is presented
    with the project proposal multiple times, including with each
    individual immigrant investor petition submitted pursuant to that
    project. At this stage, issues related to project approval often
    require USCIS to issue a Request for Evidence (RFE) or a Notice of
    Intent to Deny (NOID) to each individual petitioner who is investing in
    that project. This presents a significant burden on the agency and each
    individual petitioner, and significantly delays the adjudication of
    their petitions.
    To address these issues, DHS is seeking comment on whether it
    should bifurcate the Form I-924 application process into two steps, as
    follows: DHS would first require submission of a more general
    application for initial designation, and then, subsequent to
    designation, would require submission of a more specific application
    for approval of an exemplar project. DHS is considering a different
    form and fee for each of the two steps. DHS believes these changes
    would significantly reduce the issuance of RFEs and NOIDs and improve
    processing times for both applications for regional center designation
    and immigrant investor petitions. Individual immigrant investors would
    also bear a lower paperwork burden and would benefit from improved
    predictability in adjudications. DHS describes each potential change in
    turn below.
    1. General Application for Initial Designation
    As noted above, DHS seeks comment on its proposal to require
    entities seeking regional center designation to submit a more general
    application for such designation (i.e., without including documentation
    related to actual or exemplar projects). DHS expects that the
    information required to be submitted in such an application would
    generally conform to the requirements contained in the regional center
    statute, as amended. Under this process, an applicant for regional
    center designation would only need to include a general proposal based
    on general predictions concerning the kinds of commercial enterprises
    that will receive capital from immigrant investors, the jobs that will
    be created directly or indirectly as a result of such capital
    investments, and the other positive effects such capital investments
    will have on economic growth. Further information about investments and
    regional center projects would generally not be required or reviewed as
    part of this initial filing. After USCIS designates the entity as a
    regional center, the regional center would be able to request review of
    investment offering documents and project documents, including the
    types of documents that typically accompany an ``exemplar'' project
    filing under current practice.
    DHS believes this change would provide several benefits to
    stakeholders and USCIS. First, DHS believes the change would reduce
    confusion by simplifying the application for regional center
    designation and providing increased guidance on the limited types of
    information expected by the agency for adjudicating such applications.
    Second, the change would likely improve adjudication times related to
    such applications, as USCIS adjudicators would no longer need to review
    documentation that is unrelated to determining whether the applicant
    has satisfied the basic requirements for initial designation. Third,
    the change should reduce the frustration currently experienced by
    entities that meet the evidentiary requirements for initial designation
    but fail to meet the evidentiary requirements necessary to meet
    applicable deference guidelines for their projects and investment
    offerings. DHS understands that the inability of entities to file other
    requests when seeking initial designation as a regional center could
    effectively delay the ability of entities to receive decisions on those
    requests. DHS, however, believes these impacts may be outweighed by the
    clarity provided to stakeholders and the operational efficiencies
    gained by the proposal.
    2. Mandatory Exemplar Process
    As noted above, DHS also seeks comment on its proposal to implement
    an exemplar filing requirement for all designated regional centers. DHS
    is considering (1) requiring regional centers to file exemplar project
    requests, both to support individual EB-5 immigrant petitions and to
    maintain regional center designation and (2) requiring the approval of
    such a request before any investor may submit his or her EB-5 immigrant
    petition associated with a project covered by such request. As
    envisioned by DHS, USCIS would use the approved exemplar as evidence
    when adjudicating individual immigrant petitions related to the
    exemplar project.

    [[Page 3214]]

    Under the exemplar filing requirement, regional centers would be
    required to submit all documentation necessary to establish that
    investments in the project would satisfy the eligibility criteria
    related to investment and job creation, in addition to evidence
    demonstrating the regional center's continued compliance with Regional
    Center Program rules. Currently, exemplars typically include a
    comprehensive business plan, economic impact analysis, offering
    documents and organizational documents. Because DHS wants to ensure
    investments sponsored by the regional center are fully compliant with
    program requirements to maintain regional center designation, DHS is
    considering requiring that additional documentation be provided with
    exemplar filings, including (1) any documents related to the investment
    offering that have been filed with the U.S. Securities and Exchange
    Commission; and (2) any investment and offering documents that the
    regional center intends to provide to investors, as well as any
    agreements between the investor and the regional center.
    DHS also seeks comment on the appropriate validity period for the
    approval of an exemplar project to ensure the regional center is
    actively promoting economic growth. DHS is considering limiting each
    exemplar's validity period to a specific period of time, e.g., 2 to 3
    years after the exemplar's approval or latest amendment or associated
    immigrant investor petition. DHS has determined that regional center
    projects that for 2 to 3 years have not been amended and have not
    obtained EB-5 investments are generally not active. DHS is seeking
    public comments on potential exemplar approval validity periods,
    including the amount of time needed for regional centers to recruit
    investors, the amount of time needed for investors to file EB-5
    immigrant petitions, and the amount of time needed for projects to
    satisfy job creation requirements.
    Finally, DHS seeks public comment on possible modifications to the
    existing policy governing the impact of a ``material change'' on an
    approved exemplar. Current policy requires DHS to deny petitions where,
    after the petition has been filed, there are significant changes to the
    exemplar project, including significant changes to the job-creating
    entity or entities receiving associated EB-5 investment. Under this
    policy, DHS has also denied petitions, on a case-by-case basis, where
    in the time between approval of the exemplar and adjudication of the
    petition, there were significant changes to project timelines and
    changes to job creation methodologies.\4\ Regional centers and other
    stakeholders may feel that modifications to this policy may be
    necessary or wise if DHS were to implement a mandatory exemplar
    process. Public comment on this issue would help DHS determine whether
    and how to revise USCIS's current approach to addressing material
    changes in the EB-5 context to account for a potential mandatory
    exemplar process.
    ---------------------------------------------------------------------------

    \4\ See USCIS Policy Manual, 6 USCIS-PM G (Nov. 30, 2016).
    ---------------------------------------------------------------------------

    DHS is considering these process changes as a means of addressing
    the increasing processing times associated with EB-5 immigrant
    petitions. DHS believes that by addressing potential issues with EB-5
    projects in the exemplar process, the Department would significantly
    streamline the adjudication process for immigrant petitions filed by
    associated investors, including by significantly reducing the need to
    issue RFEs and NOIDs to those investors. Individual immigrant investors
    would also bear a lower paperwork burden and would benefit from
    improved predictability in adjudications. Moreover, an exemplar
    requirement may also lead to substantial government cost savings by
    reducing the paperwork, staffing, and physical space required to
    process EB-5 immigrant petitions. DHS understands that a mandatory
    exemplar process could negatively impact regional centers and investors
    by delaying investor filings and, as a practical matter given the
    prevailing structure of many regional center investment offerings, by
    delaying funding to regional center projects. DHS believes, however,
    that the operational efficiencies, reduced processing times, increased
    stakeholder predictability, and reduced paperwork burden resulting from
    the exemplar process described above would provide sufficient benefits
    to overcome these impacts.
    3. Specific Questions for Public Input
    DHS welcomes public comment on all aspects of the potential changes
    described above, but would particularly benefit from commenters
    addressing one or more of the following questions:
    1. How can USCIS improve the initial designation process?
    2. How would requiring an entity to obtain initial designation as a
    regional center prior to, and separate from, filing for approval of an
    exemplar project impact entities seeking regional center designation
    and investors seeking to associate with designated regional centers?
    3. Would a bifurcated initial application process achieve the
    benefits discussed above--i.e., reduced overall paperwork burdens and
    improved processing times? Please provide specific data on how such
    changes would affect time or other burdens in initial documentation
    preparation.
    4. What additional costs or benefits, if any, would occur as a
    result of adopting the suggested approach?
    5. Would adopting the suggested approach impact small entities? If
    so, how? Please provide data to support your response. Please identify
    any alternative policy proposals or other recommendations that would
    accomplish some or all of the goals identified above, while mitigating
    impacts on small entities.
    6. Would it benefit potential immigrant investors to know whether
    or not an entity has been designated as a regional center, if the
    initial designation decision notice is solely for designation and does
    not include any decisions on exemplar projects?
    7. Would a streamlined exemplar filing process impact any regional
    center or investor costs?
    8. Should exemplar approval be required prior to a regional center-
    associated investor submitting an EB-5 immigrant petition? Please
    support the response by providing information regarding the costs and
    benefits of alternatives (e.g., by permitting concurrent filing with
    EB-5 immigrant petitions).
    9. What additional costs and benefits would regional centers or
    investors incur as a result of a required exemplar approval prior to
    submitting EB-5 immigrant petitions?
    10. What documentation should be required to accompany an exemplar
    application?
    11. In what circumstances should a regional center be required to
    file to amend a previously approved exemplar?
    12. For what duration should an exemplar approval be valid, and
    why?
    13. Under what circumstances should USCIS seek to terminate a
    previously approved exemplar?
    14. What effect, if any, should termination or expiration of an
    approved exemplar have on an investor whose immigrant visa petition has
    not yet been adjudicated?
    15. What concerns, if any, would be raised by the elimination of
    the ``actual'' project deference process, wherein regional centers seek
    approval of the business plan and economic impact analysis associated
    with an investment offering, but not the investment offering documents?

    [[Page 3215]]

    16. Would some projects be deterred by a requirement to have an
    approved exemplar? DHS is particularly interested in how the exemplar
    requirement may affect the number of projects that obtain EB-5
    investment and associated parties. Additionally, DHS seeks input on how
    an exemplar requirement might affect costs related to project
    timelines, business plan fees, and regional center administrative fees.
    17. Would an exemplar requirement impact the financial structure of
    regional center investments? For example, would such a requirement
    decrease or increase the EB-5 capital portion of a project's total
    finance? Would it impact the overall financing costs and rates of
    return for investors, regional centers, and developers?
    18. How could USCIS define the term ``material change'' to account
    for the exemplar process, consistent with applicable regulations and
    case law, including regulations requiring petitioners to be eligible
    for the requested benefit at the time of filing and to remain eligible
    until the benefit is granted? \5\ Please discuss how a new material
    change definition would impact pending EB-5 immigrant petitions.
    ---------------------------------------------------------------------------

    \5\ See 8 CFR 103.2(b)(1), 8 CFR 205.2; see also Matter of
    Izummi, 22 I&N Dec. 169 (Assoc. Comm'r 1998), Matter of Tawfik, 20
    I&N Dec. 166 (BIA 1990), Matter of Arias, 19 I&N Dec. 568 (BIA
    1988), Matter of Estime, 19 I&N Dec. 450 (BIA 1987).
    ---------------------------------------------------------------------------

    B. Safeguards for Monitoring and Oversight

    DHS has found that current regulations would benefit from
    additional safeguards to ensure that all regional centers (1) use
    immigrant investor funds to promote economic growth, and (2) protect
    against the misuse of such funds. DHS is therefore considering
    incorporating additional regulatory requirements for initial
    designation as a regional center. For instance, DHS could require
    assurances that the regional center commit to an appropriate level of
    internal monitoring and oversight of investment offerings and business
    activities associated with the regional center or under its
    sponsorship. This would include investment offerings and business
    activities of any associated new commercial enterprises (NCEs) or job-
    creating entities (JCEs). DHS is seeking to help ensure that the
    stakeholder granted a regional center designation will perform
    appropriate oversight and monitoring with respect to capital
    investments, job creation, and business activities under its auspices
    such that the pooled capital investments at its NCEs and JCEs will
    promote economic growth.
    DHS seeks data and information on potential methods for ensuring an
    appropriate level of monitoring and oversight, including through
    regional center attestations, the submission of detailed information
    about the regional center's oversight efforts of its NCEs and JCEs, and
    other compliance and enforcement mechanisms. DHS understands that these
    and similar measures may be burdensome to stakeholders, but believes
    that such requirements could improve the regional center program by
    providing regional centers with the tools to ensure that associated
    NCEs and JCEs comply with program requirements. This would ensure only
    regional centers with effective oversight could operate within the
    program. DHS believes that this would enhance the program's integrity
    and ultimately benefit both regional centers and investors by providing
    greater trust in the entities operating within the program.
    DHS welcomes public comment on the issues described above, but
    would particularly benefit from commenters addressing one or more of
    the following questions:
    1. What would be the most effective and efficient way to add
    monitoring and oversight requirements? Should such requirements be
    incorporated into the initial designation stage, the exemplar stage, or
    throughout the period of the regional center's designation?
    2. What forms of monitoring and oversight of NCEs, JCEs, and
    investor funds are regional centers currently utilizing as part of
    their best practices?
    3. Do other entities associated with regional centers engage in
    monitoring and oversight?
    4. What benefits, if any, would additional monitoring and oversight
    offer to regional centers and to immigrant investors?
    5. What types of documentation would be appropriate for regional
    centers to submit to establish that they will have an adequate
    monitoring and oversight process in place upon designation?
    6. What measures, if any, have regional centers put in place to
    identify conflicts of interest by regional center participants? What
    requirements for identification and disclosure of conflicts of interest
    would be appropriate in the regional center context?
    7. What investment and other economic impacts could be expected
    from the establishment of new monitoring and oversight requirements?
    8. What data and information should USCIS consider affirmatively
    disclosing to increase transparency in the EB-5 program?
    9. What additional costs would stakeholders incur in setting up and
    maintaining a monitoring and oversight process?
    10. Would an additional filing fee or additional costs to regional
    centers in preparing documentation for separate filings be too
    burdensome to support or justify the suggested initial filing
    framework?
    11. Would any of the potential changes described above either deter
    or incentivize participation in the program, or directly affect the
    viability of certain types of investment projects? If so, how could
    USCIS best measure the likely effects?
    12. Would any of the potential changes described above impact small
    entities? If so, how? Please provide data to support your response.
    Please identify any alternative policy proposals or other
    recommendations that would accomplish some or all of the goals
    identified above, while mitigating impacts on small entities.

    C. Continued Participation

    DHS is considering ways to clarify the requirements for regional
    centers to maintain their designation. Under the current regulatory
    framework, regional centers must provide USCIS with updated information
    to demonstrate they are continuing to meet program requirements--i.e.,
    promoting economic growth, improved regional productivity, job
    creation, or increased domestic capital investment in the approved
    geographic area. Such information must be submitted to USCIS on an
    annual basis or as otherwise requested by USCIS, generally by filing
    the Annual Certification of Regional Center (Form I-924A). See 8 CFR
    204.6(m)(6). USCIS will issue a notice of intent to terminate the
    participation of a regional center in the EB-5 program if a regional
    center fails to submit the required information or upon a determination
    that the regional center no longer meets program requirements. Id.
    The requirement that regional centers continue to serve the purpose
    of promoting economic growth is subject to varying interpretations, and
    regional centers have expressed uncertainty regarding the requirements
    for continued participation. In addition, DHS has found that a number
    of regional centers have maintained their designation without actually
    engaging in work related to the EB-5 program, which has led to growing
    concerns of potential fraud.
    DHS is therefore considering certain changes to the regulations
    governing

    [[Page 3216]]

    continued regional center designations, including changes that would
    require existing and newly designated regional centers to demonstrate
    that they continue to meet applicable statutory and regulatory
    requirements. Specifically, DHS is considering the following
    requirements for continued participation:
    Requiring evidence of active participation in the regional
    center program. Such evidence could include having an approved and
    currently valid exemplar; having pending exemplar applications that
    were filed within a specific time frame; or the existence of pending
    Form I-526 or I-829 petitions that are associated with the regional
    center and that were filed within a specific time frame.
    Requiring periodic demonstrations that the regional center
    has active monitoring and oversight activities as described in the
    previous section.
    Requiring prompt notification to DHS of significant
    changes to the regional center through the timely filing of amendments
    to the regional center designation. The effect of such a requirement
    would turn on how DHS interprets the term ``significant'' in this
    context. For instance, DHS currently considers the following change to
    the regional center to be significant: \6\
    ---------------------------------------------------------------------------

    \6\ See 81 FR 73292; Form I-924 is available at http://www.uscis.gov/I-924.
    ---------------------------------------------------------------------------

    Changes to the regional center's name;
    Changes to the regional center's ownership;
    Changes to the regional center's organizational structure;
    Changes to the regional center's administration that
    affect its oversight and reporting responsibilities;
    Changes to add or remove regional center principals; and/
    or
    Changes to the geographic scope of the regional center.

    DHS is considering whether or not other changes may be deemed
    significant, such as material changes to an approved exemplar filing.
    DHS welcomes public comment on all aspects of the potential changes
    described above, but would particularly benefit from commenters
    addressing one or more of the following questions:
    1. How would regional centers or immigrant investors benefit, if at
    all, from an explicit requirement that the regional center actively
    participate in the Regional Center Program?
    2. What activities demonstrate active participation in the Regional
    Center Program? What evidence should regional centers be required to
    provide to demonstrate active participation?
    3. If DHS conditions a finding of active participation on evidence
    that the regional center is associated with an approved and valid
    exemplar, a pending exemplar application, or a pending Form I-526 or I-
    829 petition associated with the regional center, how long should the
    regional center be able to retain its designation in the absence of
    such approved or pending exemplar or pending petition? Why is such a
    timeframe appropriate?
    4. How would a continual monitoring and oversight requirement
    impact currently designated regional centers?
    5. How would a monitoring and oversight requirement impact small
    entities? Please provide data to support your response. Please identify
    any alternative policy proposals or other recommendations that would
    accomplish some or all of the goals identified above, while mitigating
    impacts on small entities.
    6. In what circumstances should a regional center be required to
    amend a regional center designation during an out-of-cycle filing?
    7. What additional changes to the regional center amendment process
    would assist stakeholders in complying with the process?
    8. Should DHS reconsider the current filing structure for notifying
    USCIS of the suggested changes--i.e., filing an amended Form I-924
    petition with a fee? If so, what would be appropriate alternatives, and
    why?

    D. Termination

    Currently, USCIS can issue a Notice of Intent to Terminate and
    subsequently terminate a regional center designation if the regional
    center fails to submit required information annually, or if USCIS
    determines that the regional center no longer serves the purpose of
    promoting economic growth. See 8 CFR 204.6(m)(6). DHS is considering
    providing additional regulatory guidance to help stakeholders better
    understand the actions that can lead to termination of a regional
    center designation. Providing more detail about the types of activity
    (or inactivity) that may result in termination of the regional center
    would help regional centers better understand their obligations. This
    guidance would assist USCIS in more efficiently terminating non-
    compliant regional centers and ultimately help strengthen program
    integrity by providing a consistent framework for adjudication of these
    decisions. Finally, this guidance would help ensure that regional
    centers are legitimately pooling capital investment and promoting
    economic growth consistent with the purpose of the Regional Center
    Program.
    Some of the activities that DHS is considering explicitly listing
    as activities that would result in termination of the regional center
    include:
    Failure to meet the continued participation requirements;
    Obtaining designation by fraud or misrepresentation;
    Using unlawfully sourced funds to run regional center
    operations; or
    Misusing investor funds, including, but not limited to,
    use in any unlawful activity (e.g., Ponzi schemes).
    DHS is seeking stakeholder input on actions that would cause USCIS
    to initiate termination actions against a regional center. DHS welcomes
    public comment on all aspects of the termination considerations, but
    would particularly benefit from commenters addressing one or more of
    the following questions:
    1. What should DHS do to more effectively regulate the regional
    centers participating in this program?
    2. Should the failure to maintain approved exemplar filings result
    in termination?
    3. What activities should be considered a failure to promote
    economic growth and result in termination of the regional center?
    4. What impact, positive or negative, would changes to clarify the
    termination grounds and process have on regional centers and/or
    investors? What impact would the changes have on small entities? Please
    provide data to support your response. Please identify any alternative
    policy proposals or other recommendations that would accomplish some or
    all of the goals identified above, while mitigating impacts on small
    entities.
    5. What other factors impacting the regional center and/or
    investors should DHS consider when terminating a regional center?

    Jeh Charles Johnson,
    Secretary.
    [FR Doc. 2017-00441 Filed 1-10-17; 8:45 am]
    BILLING CODE 9111-97-P

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