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  • News: DHS Publishes Proposed Rule on EB-5 Immigrant Investor Program Modernization

    [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

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

    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]]

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

    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.

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

    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.
    ---------------------------------------------------------------------------

    \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.
    ---------------------------------------------------------------------------

    (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.
    ---------------------------------------------------------------------------

    \3\ See Bureau of Labor Statistics, CPI-U Inflation Calculator,
    http://data.bls.gov/cgi-bin/cpicalc.pl.
    ---------------------------------------------------------------------------

    (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.
    ---------------------------------------------------------------------------

    \4\ An area has ``high unemployment'' if it has an average
    unemployment rate of at least 150 percent of the national average
    rate.
    ---------------------------------------------------------------------------

    (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

    [[Page 4740]]

    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.
    ---------------------------------------------------------------------------

    \5\ The cost estimate is rounded from $90,762.
    ---------------------------------------------------------------------------

    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
    ------------------------------------------------------------------------
    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.

    [[Page 4741]]


    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).
    ---------------------------------------------------------------------------

    \6\ An immigrant investor, his or her spouse, and children (if
    any) will each use a separate visa number.
    ---------------------------------------------------------------------------

    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\
    ---------------------------------------------------------------------------

    \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).
    ---------------------------------------------------------------------------

    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\
    ---------------------------------------------------------------------------

    \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\
    ---------------------------------------------------------------------------

    \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.
    ---------------------------------------------------------------------------

    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\
    ---------------------------------------------------------------------------

    \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\
    ---------------------------------------------------------------------------

    \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\
    ---------------------------------------------------------------------------

    \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.
    ---------------------------------------------------------------------------

    \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\
    ---------------------------------------------------------------------------

    \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\
    ---------------------------------------------------------------------------

    \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.
    ---------------------------------------------------------------------------

    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.
    ---------------------------------------------------------------------------

    \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.
    ---------------------------------------------------------------------------

    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.
    ---------------------------------------------------------------------------

    \75\ DHS already has authority to collect this information under
    8 CFR part 103.
    ---------------------------------------------------------------------------

    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\
    ---------------------------------------------------------------------------

    \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.
    ---------------------------------------------------------------------------

    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.
    ---------------------------------------------------------------------------

    \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.
    ---------------------------------------------------------------------------

    \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).
    ---------------------------------------------------------------------------

    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.

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

    [[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.
    ---------------------------------------------------------------------------

    \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.
    ---------------------------------------------------------------------------

    \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

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