In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, the Department of Homeland Security (DHS) U.S. Citizenship and Immigration Services (USCIS) proposes to establish a new DHS system of records titled, “DHS/USCIS-015 Electronic Immigration System-2 Account and Case Management System of Records.”

DHS/USCIS is creating a new electronic environment known as the Electronic Immigration System (USCIS ELIS). USCIS ELIS allows individuals requesting a USCIS benefit to register online and submit certain benefit requests through the online system. This system will improve customer service; increase efficiency for processing benefits; better identify potential national security concerns, criminality, and fraud; and create improved access controls and better auditing capabilities.

DHS and USCIS are promulgating the regulation “Immigration Benefits Business Transformation, Increment I” (August 29, 2011, 76 FR 53764) to make it possible for USCIS to transition to an electronic environment. This regulation will assist USCIS in the transformation of its operations by removing references and processes that inhibit the use of electronic systems or constrain USCIS's ability to respond to changing workloads, priorities, or statutory requirements.

Applicants and petitioners (Applicants); co-applicants, beneficiaries, derivatives, dependents, or other persons on whose behalf a benefit request is made or whose immigration status may be derived because of a relationship to the Applicant (Co-Applicants); and their attorneys and representatives accredited by the Board of Immigration Appeals (Representatives) may create individualized online accounts. These online accounts help Applicants and their Representatives file for benefits, track the status of open benefit requests, schedule appointments, change their addresses and contact information, and receive notices and notifications regarding their cases. Through USCIS ELIS, individuals may submit additional information and/or evidence electronically. Once an individual provides biographic information in one benefit request, USCIS ELIS uses that information to pre-populate any future benefit requests filed by the same individual. This eases the burden on an individual so he or she does not have to repeatedly type in the same information and decreases the opportunity for error.

DHS is claiming exemptions from certain requirements of the Privacy Act for DHS/USCIS-015 Electronic Immigration System-2 Account and Case Management System of Records. Some information in Electronic Immigration System-2 Account and Case Management (USCIS ELIS Account and Case Management) relates to official DHS national security, law enforcement, and immigration activities. The exemptions are required to preclude subjects from compromising an ongoing law enforcement, national security or fraud investigation; to avoid disclosure of investigative techniques; to protect the identities and physical safety of confidential informants and law enforcement personnel; and to ensure DHS's ability to obtain information from third parties and other sources.

This system is exempted from the following provisions of the Privacy Act pursuant to 5 U.S.C. 552a(k)(2): 5 U.S.C. 552a(c)(3); (d); (e)(1), (e)(4)(G), (e)(4)(H), (e)(4)(I); and (f). Additionally, many of the functions in this system require retrieving records from law enforcement systems. Where a record received from another system has been exempted in that source system under 5 U.S.C. 552a(j)(2), DHS will claim the same exemptions for those records that are claimed for the original primary systems of records from which they originated and claims any additional exemptions in accordance with this rule.

The exemptions proposed here are standard for agencies where the information may contain investigatory materials compiled for law enforcement purposes. These exemptions are exercised by executive Federal agencies. In appropriate circumstances, where compliance would not appear to interfere with or adversely affect the overall law enforcement process, the applicable exemptions may be waived on a case-by-case basis.

A notice of system of records for DHS/USCIS-015 Electronic Immigration System-2 Account and Case Management System of Records is also published in this issue of the Federal Register .

The Privacy Act allows government agencies to exempt certain records from the access and amendment provisions. If an agency claims an exemption, however, it must issue a Notice of Proposed Rulemaking to make clear to the public the reasons why a particular exemption is claimed.

For the reasons stated in the preamble, DHS proposes to amend Chapter I of Title 6, Code of Federal Regulations, as follows:

Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of this proposed rule. The Department of Homeland Security (DHS) also invites comments that relate to the economic, environmental, or federalism effects that might result from this proposed rule. Comments that will provide the most assistance to DHS in developing these procedures will reference a specific portion of the proposed rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change.

Instructions: All submissions should include the agency name and DHS Docket No. DHS-2009-0029. U.S. Citizenship and Immigration Services (USCIS) will post all comments received without change to http://www.regulations.gov, including any personal information provided.

Docket: For access to the docket to read background documents or comments received, go to http://www.regulations.gov.

The employment creation immigrant classification is one of five employment-related bases for obtaining permanent residence in the United States. See Immigration and Nationality Act (INA) section 203(b)(1)-(5), 8 U.S.C. 1153(b)(1)-(5). DHS and the affected community commonly refer to this category as the “EB-5” immigrant classification because it is the fifth employment-related basis listed in the INA. The EB-5 immigrant classification allows qualifying aliens, and any accompanying or following to join spouses and children, to obtain lawful permanent resident (LPR) status if the qualifying aliens have invested, or are actively in the process of investing, $1 million in a new commercial enterprise. See INA sections 203(b)(5)(A) and (C), 8 U.S.C. 1153(b)(5)(A) and (C). To qualify, the alien's investment must benefit the U.S. economy and create full-time jobs for 10 or more qualifying employees. INA section 203(b)(5)(A)(ii), 8 U.S.C. 1153(B)(5)(A)(ii). If the investment is in a Rural Area (RA) or an area that has experienced high unemployment ( i.e., a Targeted Employment Area (TEA)), the required capital investment amount is $500,000 rather than $1 million. INA section 203(b)(5)(C)(ii), 8 U.S.C. 1153(b)(5)(C)(ii); 8 CFR 204.6(f)(2). In addition, under a pilot program established by statute, qualifying aliens may meet the job creation requirement through the creation of 10 direct or indirect jobs. See Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1993, section 610(c), Public Law 102-395, 106 Stat. 1828 (1992), 8 U.S.C. 1153 note. To get the benefit of the indirect job creation requirement, an alien must make a qualifying investment within a regional center (defined in 8 CFR 204.6(e)) approved by USCIS for participation in the pilot program. This pilot program is set to expire on September 30, 2012. See Department of Homeland Security Appropriations Act, 2010, section 548, Public Law 111-83, 123 Stat. 2142, 2177 (2009), 8 U.S.C. 1153 note.

Obtaining lawful permanent residence under the EB-5 immigrant classification is a multi-step process. First, the alien must file and obtain approval of an Immigrant Petition by Alien Entrepreneur, Form I-526 (or successor form). See 8 CFR 204.6(a). Second, the alien must obtain conditional permanent resident status on the basis of the approved Form I-526 petition. If the alien resides in the United States, he or she may apply to become a lawful permanent resident by submitting an Application to Register Permanent Residence or Adjust Status, Form I-485 (or successor form). See 8 CFR 245.1(a). If the alien resides outside of the United States or is ineligible for lawful permanent residence through the filing of a Form I-485, then he or she must obtain a Department of State (DOS) issued immigrant visa to gain admission to the United States as a permanent resident on a conditional basis. See INA section 211(a)(1), 8 U.S.C. 1181(a)(1). Once an alien has obtained conditional resident status, the alien is called an “alien entrepreneur.” INA section 216A(f)(1), 8 U.S.C. 1186b(f)(1).

The last procedural step is triggered 90 days before the second anniversary of the alien entrepreneur's conditional resident status. INA section 216A(d)(2), 8 U.S.C. 1186b(d)(2). During this 90-day period, the alien entrepreneur must submit to USCIS a Petition by Entrepreneur to Remove Conditions, Form I-829 (or successor form). See 8 CFR 216.6(a)(1). Failure to timely submit Form I-829, or to obtain a removal of conditions through the approval of a Form I-829, results in termination of conditional resident status and placement of the alien and any accompanying dependents in removal proceedings. See 8 CFR 216.6(a)(5). Determinations by USCIS on Form I-829 are not appealable; however, an immigration judge may review the determinations in removal proceedings. See INA section 216A(c)(3)(D), 8 U.S.C. 1186b(c)(3)(D). The Board of Immigration Appeals (BIA) hears appeals from immigration judge decisions. See 8 CFR 1003.1(b).

In 1998, the Immigration and Naturalization Service (INS), the predecessor agency to USCIS, issued four precedent decisions addressing the eligibility requirements for EB-5 petitions. 1 The publication of these precedent decisions resulted in litigation over their applicability to cases at various stages of adjudication. 2 Some of this litigation continues today.

In 2002, Congress enacted special legislation to provide a small group of aliens whose EB-5-related petitions or applications were pending at the time of the precedent decisions with an opportunity to perfect their original investments or make additional business investments in the United States and create the requisite jobs so that they can remain in the United States as lawful permanent residents. See 21st Century Department of Justice Appropriations Authorization Act, Public Law 107-273, div. C, tit. I, §§ 11031-11034, 116 Stat. 1758 (2002) (8 U.S.C. 1186b note) (Pub. L. 107-273). This special legislation only applies to “eligible aliens” for whom the INS approved a Form I-526 between January 1, 1995 and August 31, 1998, and who pursuant to such approval either: (1) Obtained permanent resident status on a conditional basis and filed a timely Form I-829 before November 2, 2002; or (2) filed an application for adjustment of status or an application for an immigrant visa before November 2, 2002. Public Law 107-273 does not apply to any other aliens who are admitted or have been admitted to the United States pursuant to the EB-5 visa program.

Public Law 107-273 requires publication of implementing regulations. Until implementing regulations are effective, USCIS may not take adverse action against “eligible aliens.” See Public Law 107-273 at section 11033. Accordingly, DHS is proposing implementing regulations, but only as applied to the adjudicatory and prosecutory functions of USCIS and U.S. Immigration and Customs Enforcement (ICE).

Public Law 107-273 contains very detailed requirements for the review and adjudication of pending applications and petitions for eligible aliens. Section 11031 describes the procedures applicable to eligible aliens who obtained lawful permanent resident status on a conditional basis but who have not had their conditions removed. Section 11032 describes the procedures applicable to eligible aliens whose applications for permanent residence on a conditional basis had not been approved at the time of enactment of Public Law 107-273.

For eligible aliens with pending I-829 petitions, section 11031 of Public Law 107-273 requires the Secretary of Homeland Security (Secretary) to make an initial determination whether the Form I-829 as filed by the eligible alien is approvable. If the petition is approvable, the conditions on the alien's permanent residence will be removed. If the petition is determined to be deficient following the initial determination, the eligible alien and the accompanying spouse and children of the alien will be granted a second two-year period of conditional residence unless the adverse determination is based on a finding of material misrepresentation. During this period of conditional residence, the eligible alien has an opportunity to remedy the deficiencies in his or her petition and make additional investments in the commercial enterprise listed on the pending Form I-829 and/or in other commercial enterprises to comply with the capital investment and job creation requirements of the EB-5 program. At the end of this two-year period, the eligible alien must file a new Form I-829 petition with the Secretary of Homeland Security seeking to remove the conditions from his or her permanent residence. If the eligible alien's second petition is approvable, the conditional basis of the alien's permanent residence and that of the alien's accompanying spouse and children will be removed. If an eligible alien's second petition is determined to be deficient, the eligible alien's permanent resident status and that of the alien's accompanying spouse and children will be terminated. If, at any stage of the process, it is determined that an eligible alien has made a material misrepresentation on any of the petitions, the alien's status and that of the alien's accompanying spouse or children may be terminated. Finally, section 11031 provides for administrative and judicial review of each of the statutory determinations.

Section 11032 of Public Law 107-273 provides for the approval of an eligible alien's application for adjustment of status or an immigrant visa and the grant of a two-year period of conditional residence. At the completion of the two-year period of conditional residence, eligible aliens must file Form I-829 to remove the conditions from their permanent residence and that of their accompanying spouse and children. Although the procedures used to adjudicate the petitions filed by eligible aliens under section 11032 of Public Law 107-273 are governed by INA section 216A, substantial compliance with the capital investment and job creation requirements need not be related to the commercial enterprise described in their Forms I-526. Rather, eligible aliens may submit evidence related to capital investment and job creation in any commercial enterprise in the United States. If an eligible alien is determined to have complied with the capital investment and job creation requirements of the EB-5 program, the conditional basis of the alien's permanent residence and that of the alien's accompanying spouse and children will be removed. If it is determined that an eligible alien has made a material misrepresentation or has failed to satisfy the capital investment and/or job creation requirements of the EB-5 program, the alien's status and that of his or her accompanying spouse and children will be terminated, subject to review in removal proceedings.

The remainder of the Supplementary Information describes sections 11031 and 11032 of Public Law 107-273 in more detail and explains the corresponding proposed amendments to DHS regulations.

As summarized above, a conditional resident must fall within the statutory definition of “eligible alien” under sections 11031(b)(1) and (2) of Public Law 107-273 to receive the determinations on a previously denied or currently pending Form I-829 required by section 11031(c) of Public Law 107-273. The determinations required by section 11031(c) of Public Law 107-273 (hereinafter “section 11031(c) determinations”) are comprised of an initial determination and a second determination. Public Law 107-273 at section 11031(c). An “eligible alien” is an alien who obtained LPR status on a conditional basis as a result of filing a Form I-526 petition pursuant to section 203(b)(5) of the INA, 8 U.S.C. 1153(b)(5), that was approved after January 1, 1995 and before August 31, 1998. See Public Law 107-273 at sections 11031(b)(1)(A)&(B). Such alien must also have timely filed a Form I-829 pursuant to section 216A of the INA prior to November 2, 2002, the date of enactment of Public Law 107-273. See Public Law 107-273 at section 11031(b)(1)(C). A “timely-filed” Form I-829 is one that an alien filed during the 90-day period before the second anniversary of the alien's lawful admission for permanent residence. See INA section 216A(d)(2)(A), 8 U.S.C. 1186b(d)(2)(A); 8 CFR 216.6(a)(1).

In the event that an otherwise eligible alien's timely filed Form I-829 was denied prior to November 2, 2002, the alien still may be deemed to be eligible if he or she filed a motion to reopen not later than January 1, 2003. Public Law 107-273 at section 11031(b)(2)(A). If such an eligible alien is no longer physically present in the United States, the Secretary of Homeland Security, if necessary, may parole the alien into the United States to obtain the section 11031(c) determinations. Public Law 107-273 at section 11031(b)(2)(B). The Secretary of Homeland Security, however, may not parole any alien into the United States who is inadmissible or deportable on any grounds, or if the alien's Form I-829 was denied due to a material misrepresentation of any of the facts and information described in INA section 216A(d)(1), 8 U.S.C. 1186b(d)(1), and alleged in the Form I-829 petition with respect to a commercial enterprise. Public Law 107-273 at section 11031(b)(2)(B)(i)-(ii). Under these circumstances, USCIS does not consider such alien “eligible” for the section 11031(c) determinations. In making the material misrepresentation determination, the applicable “facts and information” include, but are not limited to:

(A) Whether the alien established the commercial enterprise(s) under consideration; and

(B) Whether the alien invested or was actively in the process of investing the requisite capital.

(C) The alien sustained the actions described in (A) and (B) throughout the period of the alien's residence in the United States. See INA section 216A(d)(1), 8 U.S.C. 1186b(d)(1) (as in effect prior to the enactment of Public Law 107-273 on Nov. 2, 2002).

A motion to reopen filed pursuant to Public Law 107-273 by otherwise eligible aliens who are in deportation or removal proceedings by reason of the denial of the I-829 petition also constitutes a motion to reopen proceedings. See Public Law 107-273 at section 11031(b)(2)(C). The scope of deportation or removal proceedings reopened under Public Law 107-273 is limited to whether:

• Any order of deportation or removal should be vacated, and

• The alien should be granted the status of an alien lawfully admitted for permanent residence unconditionally or on a conditional basis, by reason of the section 11031(c) determinations made by the Secretary of Homeland Security.

See Public Law 107-273 at section 1131(b)(2)(C).

The statutory provisions of Public Law 107-273 are detailed; therefore, this proposed rule does not restate them. This proposed rule focuses primarily on limitations on eligibility and eligibility of aliens with denied petitions.

Under this rulemaking, in accordance with section 11031(b)(2)(C) of Public Law 107-273, aliens who are in deportation or removal proceedings and who are deportable or removable on grounds other than the denied Form I-829 would be ineligible for special determinations on their Form I-829 applications under Public Law 107-273. Proposed 8 CFR 216.7(a)(2)(i). Such aliens are statutorily barred from obtaining benefits under this law pursuant to section 11031(b)(2)(C) of Public Law 107-273.

Since the enactment of Public Law 107-273, DHS has received and acknowledged requests from several aliens eligible to receive section 11031(c) determinations to withdraw their Forms I-829. In other instances, some aliens have executed Abandonment of Lawful Permanent Residence Status, Form I-407 (or successor form). Either the withdrawal of the Form I-829 or the execution of the Form I-407 constitutes the voluntary abandonment of the alien's conditional lawful residence status. In addition, some aliens may have since acquired lawful permanent residence or another immigration status on a different basis. Public Law 107-273 does not address these scenarios. This rule proposes to exclude such aliens from “eligibility” for section 11031(c) determinations. Proposed 8 CFR 216.7(a)(2)(ii) and (iii). The actions of such aliens demonstrate that these aliens are no longer interested in pursuing LPR status based on the EB-5 immigrant classification under the provisions of Public Law 107-273. In order to be eligible to obtain status by another means, an eligible alien would have had to abandon status as an alien admitted for permanent residence on a conditional basis or have had such status terminated by USCIS. See INA section 245(f), 8 U.S.C. 1255(f); 8 CFR 245.1(c)(5); see also Matter of Stockwell, 20 I&N Dec. 309, 311-12 (BIA 1991) (bar to adjustment of status applicable to marriage-based conditional residents inapplicable if conditional resident status has been terminated).

For these reasons, DHS deems otherwise eligible aliens who have withdrawn their Forms I-829, executed Form I-407, or adjusted to LPR status on other grounds to have abandoned any claim to benefits under Public Law 107-273. DHS is proposing in this rule to exclude these aliens from the definition of eligible alien.

Aliens who timely filed a Form I-829 petition that was denied on the merits prior to November 2, 2002, may still be deemed an “eligible alien.” See Public Law 107-273 at section 11031(b)(2)(A) (referencing INA section 216A(c)(3)(C), 8 U.S.C. 1186b(c)(3)(C) (discussing adverse determinations on petitions to remove conditions)). DHS proposes to define a denied petition as the decision by an INS director to deny the petition on the merits, and not denials resulting from review of a director's decision in deportation or removal proceedings. See proposed 8 CFR 216.7(a)(1). This interpretation is supported by section 11031(b)(2)(C) of Public Law 107-273, which governs treatment of eligible aliens in deportation or removal proceedings. That provision refers to a denied petition as one that was made prior to the initiation of deportation or removal proceedings, which necessarily means a denial made by INS. See Public Law 107-273 at section 11031(b)(2)(C).

Note that an alien whose Form I-829 was denied on procedural grounds does not qualify as an “eligible alien.” See Public Law 107-273 section 11031(b)(2)(A) (limiting qualifying denied petitions that are reopened to those denied on the merits). Procedural grounds for denying Form I-829 include failure to file Form I-829 timely and the failure of the alien to appear for an interview. See 8 CFR 216.6(a)(5) and (b)(3). If an alien's failure to timely file Form I-829 has been excused by INS or USCIS based on his or her showing that the failure was for good cause and due to extenuating circumstances or an alien's failure to appear for an interview has been excused by INS or USCIS based on his or her showing of good cause, then the limitations on eligibility will not apply. Once excused, the alien resumes status as a conditional resident with a pending Form I-829, and is an “eligible alien” under Public Law 107-273.

Section 11031(b)(2)(A) of Public Law 107-273 required aliens with denied petitions to file a motion to reopen by January 1, 2003 to obtain the benefits offered by the statute. DHS has identified 31 such motions to reopen. DHS has granted such motions and the petitions are now considered to be pending. This rule does not further address motions to reopen since the statutory time period for filing such motions has expired.

Of the 31 motions to reopen that DHS received, none appear to have been filed by aliens who were not physically present in the United States. Moreover, in its review of all Public Law 107-273 petitions, DHS has not found that physical presence of the alien is necessary in order for USCIS to make its initial determinations. Therefore, this rule does not propose provisions governing the parole of overseas aliens with denied Forms I-829.

DHS considers a motion to reopen a denied Form I-829 pursuant to section 11031(b)(2)(A) of Public Law 107-273 to be the same as a motion to reopen deportation or removal proceedings. Public Law 107-273 at section 11031(b)(2)(C). Immigration courts have terminated or administratively closed deportation or removal proceedings in these cases to give USCIS the opportunity to make its section 11031(c) determinations After USCIS makes these determinations, section 11031(b)(2)(C) of Public Law 107-273 requires that the Attorney General must make the decision to grant LPR status conditionally or unconditionally in proceedings. Therefore, after USCIS makes the initial 11031(c) determination, DHS must file a motion to re-calendar the proceedings. Proposed 8 CFR 216.7(a)(3). The immigration judge will take further action on the alien's status in deportation or removal proceedings, including, as appropriate:

• Removal of the conditions and termination of proceedings,

• Extension of conditional resident status pursuant to section 11031(c)(1)(F)(ii), and

• Administrative closure so that jurisdiction shifts back to DHS for the second 11031(c) determination.

Public Law 107-273 requires the Secretary of Homeland Security to make an “initial determination” on the pending Forms I-829 of eligible aliens. The Secretary also must make a “second determination” for certain eligible aliens who file new petitions to remove conditions 2 years later. See Public Law 107-273 at sections 11031(a) and 11031(c).

Under section 11031(c)(1)(A) of Public Law 107-273, the Secretary of Homeland Security must make an initial determination on each eligible alien's Form I-829 regarding three issues. First, the Secretary must determine whether the Form I-829 contains any material misrepresentation in the facts and information described in INA section 216A(d)(1), 8 U.S.C. 1186b(d)(1), and alleged in the Form I-829 with respect to a commercial enterprise. The facts and information described in INA section 216A(d)(1), 8 U.S.C. 1186b(d)(1), pertain to the establishment of an investment in the commercial enterprise for the duration of the conditional resident period. This determination regarding material misrepresentation must be made without regard to whether such enterprise is a limited partnership, or whether the alien entered the enterprise after its formation.

Second, the Secretary must determine whether the commercial enterprise created full-time jobs for 10 or more qualifying employees. The jobs have to exist or existed on any of the following dates:

• The date on which the Form I-829 was filed;

• Six months after that date; or

• The date on which DHS makes the determination.

The creation of 10 or more direct or indirect jobs will satisfy this requirement if the alien has made the required investment within an approved regional center. See Public Law 107-273 at section 11031(c)(1)(B). If the new commercial enterprise is a troubled business, then the law provides that the Secretary of Homeland Security instead must determine whether, on any of the three dates described above, the number of employees of the business is no fewer than the number of employees that existed before the alien made his or her capital investment in the business. Id. at section 11031(c)(1)(C).

Third, the Secretary must determine whether the eligible alien is in substantial compliance with the capital investment requirement described in INA section 216A(d)(1)(B), 8 U.S.C. 1186b(d)(1)(B), on any of the three dates listed above.

If the Secretary determines that the alien has met the job creation and capital investment requirements outlined by Public Law 107-273, and there is no material misrepresentation with respect to Form I-829, the Secretary of Homeland Security must notify the alien and, if the alien is not in deportation or removal proceedings, remove the conditional basis of the alien's status as of the second anniversary of the alien's lawful admission for permanent residence. The Secretary of Homeland Security will also remove the conditional status of the alien's accompanying spouse and children as of that same date. See Public Law 107-273 at section 11031(c)(1)(E); see also proposed 8 CFR 216.7(a)(4)(i). For aliens in deportation or removal proceedings, further action will be taken in deportation or removal proceedings. See Public Law 107-273 at section 11031(b)(2)(C).

If the Secretary of Homeland Security makes an adverse determination regarding material misrepresentation, job creation, or capital investment, the Secretary must provide the alien with notice of this adverse determination and an opportunity to submit evidence to rebut the adverse determination. Id. at section 11031(c)(1)(F)(i). If the Secretary reverses all adverse determinations, the Secretary will notify the alien and his or her accompanying spouse and children that the adverse determination has been reversed. The Secretary will then remove the conditions of the alien, accompanying spouse, and children, effective as of the second anniversary of the alien's lawful admission for permanent residence if the alien is not in removal proceedings. Id. at sections 11031(c)(1)(F)(i) and 11031(b)(2)(C); see also proposed 8 CFR 216.7(a)(4)(i) and (iii). If the alien is in removal proceedings, DHS will move to recalendar the removal proceedings for appropriate action. Id.

If no such reversal takes place, the Secretary of Homeland Security (or the Attorney General if the alien is in deportation or removal proceedings) must continue the conditional basis of the alien's permanent resident status and that of the alien's spouse and children for a two-year period, but only if the adverse determination is based upon the capital investment or job creation requirements and does not involve a finding of material misrepresentation. Public Law 107-273 at sections 11031(c)(1)(F)(ii) and 11031(b)(2)(C). When an adverse determination is based upon the existence of a material misrepresentation, and the alien's rebuttal does not lead to reversal of that determination, the alien's conditional resident status and that of the alien's spouse and children must be terminated, subject to review of the adverse determination in deportation or removal proceedings. Id. at sections 11031(c)(1)(F)(iii) and 11031(d); see also proposed 8 CFR 216.7(a)(4)(vi)(A).

For any adverse determination, and prior to a subsequent decision regarding the alien's status, the alien may seek administrative review of the determination by the BIA. If the BIA denies the petition, the alien may seek judicial review. During any period of administrative or judicial review, the alien's conditional residence, along with the conditional residence of the alien's accompanying spouse and children, would continue. Public Law 107-273 at section 11031(c)(1)(F)(iv). The law provides that the procedures for judicial review are the same as the procedures for the judicial review of a final order of removal. See INA section 242(a)(1), 8 U.S.C. 1252(a)(1).

In this rule, USCIS is proposing several steps leading up to its initial determination. USCIS would first make a determination on the initial Form I-829 pursuant to section 11031(c)(1) of Public Law 107-273 based on the evidence previously submitted with Form I-829. USCIS would not request additional evidence or an interview. See proposed 8 CFR 216.7(a)(4). While much time has passed since the passage of Public Law 107-273 in November of 2002, USCIS will be able to process these cases more efficiently if it first makes determinations on the evidence in the record rather than implementing a time-consuming request for evidence process before making a decision. Because Public Law 107-273 requires a rebuttal process in case of an adverse determination, USCIS believes that this rebuttal process is the most efficient and appropriate means to allow for the updating of information in the record.

If USCIS makes a favorable determination such that the conditions on permanent resident status should be removed, USCIS would provide written notice to the alien and, unless the alien is in removal or deportation proceedings, remove conditions. Proposed 8 CFR 216.7(a)(4)(i). If USCIS makes an adverse determination, the alien will be afforded an opportunity for the alien to update the evidence in the record. Following is a discussion of USCIS's specific proposals in this rulemaking.

Eligible aliens may receive removal of the conditions on their permanent resident status if the Secretary of Homeland Security determines that there was no material misrepresentation on the Form I-829 and that the job creation and capital investment requirements have been met. Public Law 107-273 at section 11031(c)(1)(E). For eligible aliens who are in deportation or removal proceedings or who are overseas, additional steps may apply to effect the removal of conditions.

For aliens in deportation or removal proceedings, the decision to remove conditions must take place in those proceedings. Public Law 107-273 at section 11031(b)(2)(C). Therefore, after the Secretary of Homeland Security makes a favorable determination on an eligible alien's Form I-829, jurisdiction shifts back to the immigration judge for a decision on whether the alien's conditions may be removed. To shift jurisdiction back to the immigration judge, this rule provides that DHS must file a motion to re-calendar proceedings with the immigration judge. Proposed 8 CFR 216.7(a)(4)(i). The motion to re-calendar serves to reopen the proceedings, which previously were administratively closed. The immigration judge will issue an order terminating proceedings or vacating the order of deportation or removal and remove the conditions from an eligible alien's permanent resident status where the alien is not inadmissible or deportable on other grounds. Public Law 107-273 at section 11031(b)(2)(C). If the immigration judge determines that removal of conditions is not warranted, such as when the alien is found to be inadmissible, then deportation or removal proceedings will continue.

Public Law 107-273 is silent with respect to the procedures for removing the conditions on the permanent status of overseas aliens who were not paroled into the United States for the special determination process. DHS is not aware of any potential eligible aliens currently residing abroad and has not, therefore, included any procedures for parole in this rulemaking. Should such a case arise, USCIS will notify the overseas alien of the favorable determination and removal of conditions and direct such alien to the appropriate U.S. consular office for the procedures by which he or she can secure documentation for admission to the United States. Note that if an alien with conditional resident status has been absent from the United States for 180 days or more or departed from the United States while in removal proceedings, he or she will be subject to inspection and, therefore, a determination of admissibility. INA section 101(a)(13)(C), 8 U.S.C. 1101(a)(13)(C).

USCIS is proposing in this rule a 12-week period within which an alien may submit evidence to disprove the adverse determination(s). Proposed 8 CFR 216.7(a)(4)(ii). In rebuttal, aliens would be able to submit evidence of investments in and job creation resulting from enterprises other than the commercial enterprise named in the initial Form I-829 and qualifying Form I-526. Id. USCIS would require such aliens to request consideration of investments in and job creation resulting from additional commercial enterprises by filing a new Supplement to the Petition to Remove Conditions. Id.

Public Law 107-273 represents a significant departure from the strict rules normally applicable to the removal of conditions from an alien entrepreneur's permanent resident status. This legislation applies to a very limited group of individuals whose Form I-829 petitions were either pending at the time of the enactment of Public Law 107-273 or were reopened pursuant to the terms of that law. It was intended to redefine the standards applicable to this limited group and provide these eligible aliens who had failed to comply with these strict requirements of the existing EB-5 statutes and regulations an opportunity to cure the deficiencies of their initial petitions. Section 11031(c)(1)(A) does not preclude the consideration of capital investment in or job creation from commercial enterprises not identified in the initial Form I-829. Accordingly, consistent with the unique provisions and ameliorative purpose of Public Law 107-273, DHS will consider evidence of additional, qualifying investments and resulting job creation at the initial determination stage under section 11031(c)(1)(A), an option that ordinarily is not available to EB-5 conditional resident aliens. Additional investments and resulting job creation must be documented by completing a new supplement to Form I-829 and providing the evidence described in proposed 8 CFR 216.7(a)(5)(i)(C). See proposed 8 CFR 216.7(a)(4)(ii).

As more fully described below, permitting consideration of evidence of investment in commercial enterprises that are not listed in the initial Form I-829 could create instances where an eligible alien has made capital investments in commercial enterprises that are located within a targeted employment area (TEA), while also making capital investments in commercial enterprises not located in a TEA which require at least $1,000,000 in capital investment. Under these circumstances, the pro-rating process described at proposed 8 CFR 216.7(a)(5)(iii) will be applied to determine the total amount of capital that must be invested in such instances.

The 12-week period for submitting rebuttal evidence, including the Supplement for investments in additional commercial enterprises (if applicable), would run from the date of an adverse determination notice. Id. The proposed timeframe would provide a substantial amount of time in which eligible aliens may submit rebuttal evidence. It also is consistent with the timeframe for submitting additional evidence currently prescribed in 8 CFR 103.2(b)(8)(iv) and that is generally applicable to petitions and applications for immigration benefits.

Whether or not the alien submits rebuttal evidence during the 12-week period, USCIS would render a decision on whether to reverse its adverse determination(s). Proposed 8 CFR 216.7(a)(4)(ii). DHS is proposing this requirement given the age of the petitions and evidence that USCIS will be reviewing and because treatment of the alien's conditional resident status (if USCIS determines that it will not reverse the adverse determination(s)) depends on the basis of the adverse determination. If the adverse determination is based on material misrepresentation, Public Law 107-273 requires termination of conditional resident status. Public Law 107-273 at section 11031(c)(1)(F)(iii). If the adverse determination(s) is based on failure to meet the job creation or capital investment requirements, Public Law 107-273 requires continuation of conditional resident status. Public Law 107-273 at section 11031(c)(1)(F)(ii). Given these considerations, DHS prefers to proceed with its initial determination cautiously.

Public Law 107-273 requires that if all adverse determination(s) are reversed based on the rebuttal, then the alien must receive notice of this reversal. Public Law 107-273 at section 11031(c)(1)(F)(i). This rule proposes that USCIS must send written notice of its decision whether USCIS reverses the adverse determination or does not reverse the adverse determinations. Proposed 8 CFR 216.7(a)(4)(iii). The date of the notice would determine the period for administrative or judicial appeal of USCIS' adverse determinations, and when the continuation of conditional residence begins for purposes of a second determination.

If USCIS determines that reversal of adverse determinations is appropriate, then the procedures proposed for favorable determinations at proposed 8 CFR 216.7(a)(4)(i) would apply. If USCIS determines that reversal of adverse determination is not appropriate, then the procedures that apply would depend on whether the alien is or is not in deportation or removal proceedings. Id. If the alien is in deportation or removal proceedings, the decision on the alien's conditional resident status must be made by the immigration judge in proceedings. Proposed 8 CFR 216.7(a)(4)(iv). Therefore, DHS would need to file a motion to re-calendar proceedings. Id. If the alien is not in deportation or removal proceedings, USCIS would extend the conditional residence of an eligible alien (and that of the alien's spouse and/or children if their status was obtained under section 216A of the Act) for a two-year period upon an adverse determination that is not based on a material misrepresentation. Proposed 8 CFR 216.7(a)(4)(v)(B).

Regardless of whether the alien is in proceedings or not, DHS is proposing to require that the notice affirming the adverse determinations must contain the reasons for the decision, as well as USCIS's determination (if applicable) regarding the number of qualifying jobs created, amount of capital investment made, and the date described in section 11031(c)(1)(D) of Public Law 107-273 that USCIS applied to each determination. Proposed 8 CFR 216.7(a)(4)(iii). In the case of multiple investors, jobs would be allocated among the investors. Id.

As required by section 11031(c)(1)(F)(iv) of Public Law 107-273, an alien may seek administrative review with the BIA of an adverse determination, and during the period in which the adverse determinations are pending with the BIA or circuit court, this rule provides that the conditional basis of the alien's permanent resident status and that of any accompanying spouse and/or children be continued automatically. See proposed 8 CFR 216.7(a)(4)(vi). This rule implements the authority of both DHS and the Department of Justice (DOJ) to continue status most efficiently by granting continued status automatically. To receive evidence of the continuation of status, however, aliens would need to appear at a USCIS office as they do now in keeping with current USCIS policies applicable to conditional residents. See Chapter 25.2(c) of the Adjudicator's Field Manual. 3

Section 11031(c)(1)(F)(ii) of Public Law 107-273 provides for the continuation of conditional resident status for an additional two-year period after an adverse determination based on failure of the alien to meet the job creation and capital investment requirements if rebuttal evidence does not result in reversal of the adverse determination. Reversal may also occur following review by the BIA or the federal courts. See Public Law 107-243 section 11031(c)(1)(F)(iv).

Consistent with removal of conditions following favorable determinations, this rule proposes that either USCIS or an immigration judge (if the alien is in deportation or removal proceedings) may continue conditional residence for a new two-year period. See proposed 8 CFR 216.7(a)(4)(v). For aliens who are not in deportation or removal proceedings, this rule proposes that USCIS would continue conditional resident status and send notice of the continuation of status. See proposed 8 CFR 216.7(a)(4)(v)(B). For aliens in deportation or removal proceedings, proceedings would have been administratively closed pursuant to proposed 8 CFR 216.7(a)(3) in order for USCIS to have jurisdiction to render its determinations. Therefore, to shift jurisdiction from USCIS back to the immigration judge for a decision on whether continuation of conditional residence is appropriate, the rule proposes that DHS (USCIS or ICE) file a motion to re-calendar proceedings with the immigration judge. Proposed 8 CFR 216.7(a)(4)(iv).

The starting date for the new two-year period of conditional residence will vary, depending upon several factors. This rule proposes that if the alien is not in deportation or removal proceedings, the date of USCIS's decision following receipt of rebuttal evidence, or, if no evidence is submitted, the date of the close of the rebuttal period, would trigger the new two-year period. Proposed 8 CFR 216.7(a)(4)(v)(C). However, if the alien seeks review of the adverse USCIS determinations by the BIA or the federal courts, DHS does not believe the two-year period should begin until after there is a final decision by the highest appellate body. Therefore, this rule proposes that the two-year period should begin after the alien has exhausted the avenues for appellate review by the BIA or the federal courts. See proposed 8 CFR 216.7(a)(4)(v)(C).

Section 11031(c)(1)(F)(iii) of Public Law 107-273 provides for the termination of conditional resident status upon an adverse determination based on material misrepresentation if rebuttal evidence does not result in reversal of the adverse determination. After termination of status, the underlying adverse determination is subject to review in removal proceedings. Public Law 107-273 at section 11031(d). Since, in addition to the rebuttal review process following an adverse determination, section 11031(c)(1)(F)(iv) of Public Law 107-273 also provides for a review process by the BIA and the federal courts, this proposed rule provides that termination of conditional resident status is appropriate after completion of both the rebuttal process and any BIA or judicial review, if such review is sought. See proposed 8 CFR 216.7(a)(4)(v)(A).

This proposed rule maintains the same distinction made in section 11031(b)(2)(C) of Public Law 107-273 regarding the division of authority to terminate conditional resident status for aliens who are in deportation or removal proceedings and those who are not. Only the Attorney General has authority to terminate status for aliens who are in deportation or removal proceedings. For aliens who are not in such proceedings, this rule is consistent with the procedures for terminating status under the normal process described in 8 CFR 216.6(d)(2). This rule proposes that if the alien is not in deportation or removal proceedings and receives an adverse determination based upon material misrepresentation, status will be terminated automatically, effective on the date of the notice of decision following the rebuttal period. See proposed 8 CFR 216.7(a)(4)(v)(A). If the adverse determination is appealed to the BIA or federal courts pursuant to proposed 8 CFR 216.7(a)(4)(vi), then termination is effective the date of the highest appellate body's decision. Id. The effective dates provided in this rule ensure that termination of status does not occur before a final decision on the adverse determination is made.

Following automatic termination, DHS (USCIS or ICE) will issue a Notice to Appear (NTA) to commence removal proceedings. An alien can seek review of the adverse determinations in those proceedings. Since status has been terminated, the rule requires the alien and the accompanying spouse and/or children to surrender their evidence of conditional resident status (Form I-551, Permanent Resident Card, formerly known as an Alien Registration Receipt Card) to DHS. While there is no appeal following automatic termination of status, aliens whose status has been terminated may seek review of the adverse USCIS determination in removal proceedings. Id.; see also Public Law 107-273 at section 11031(d).

For aliens who are already in deportation or removal proceedings, termination of status under section 11031(c)(1)(F)(iii) of Public Law 107-273 is not automatic since section 11031(b)(2)(C) of Public Law 107-273 requires such decisions to be made in proceedings. So that jurisdiction over such aliens rests with the immigration judge following the USCIS adverse determination process, this rule provides that DHS file a motion to re-calendar proceedings. Id.

For eligible aliens whose conditional residence was continued for a new two-year period due to an adverse determination relating to the job creation or capital investment requirements, section 11031(c)(2) of Public Law 107-273 provides a process for removing those conditions. To remove conditions, the eligible immigrant investor must file a petition within the 90-day period before the second anniversary of the continuation of conditional resident status. Public Law 107-273 at section 11031(c)(2)(B) and (C). If a petition is filed after the 90-day period, the law provides that, with good cause and extenuating circumstances, this late filing may be excused by the Secretary of Homeland Security. Id. at section 11031(c)(2)(C)(ii). Where a petition is timely filed, Public Law 107-273 requires the following determinations to be made by the Secretary of Homeland Security:

• Whether the petition contains any material misrepresentation in the facts and information alleged in the petition with respect to the commercial enterprises included in the petition.

• If the initial determination was adverse with respect to the job creation requirement, whether all the enterprises considered together, including the number of jobs found to have been created at the initial determination stage, created 10 or more full-time jobs for qualifying individuals, and whether those jobs exist on the date of the determination. See Public Law 107-273 at section 11031(c)(2)(E)(ii).

• If the initial determination was adverse with respect to the capital investment requirement, whether the eligible alien is in substantial compliance with the capital investment requirement described in INA section 216A(d)(1)(B), 8 U.S.C. 1186b(d)(1)(B), on the date that the determination is made. Any capital amount that was determined to have been invested in the initial determination must be subtracted from the required capital amount at the time of the second determination. See Public Law 107-273 at section 11031(c)(2)(E)(iii)(II). In addition, the determinations must include consideration of any capital investment made by the alien in a commercial enterprise, regardless of whether the enterprise is a limited partnership, the alien entered the enterprise after its formation, the investment was made before or after the initial determination was made, or the commercial enterprise is the same one considered in the initial determination, so long as such facts and information are included in the petition. Id. at section 11031(c)(2)(A).

Consistent with the initial determination process, a favorable determination at the second stage of review results in the removal of the conditions on permanent resident status for the alien and any accompanying spouse and child. Id. at section 11031(c)(2)(F). The removal of conditions is effective on the second anniversary of the continuation of conditional resident status. Id. at section 11031(c)(2)(F). If the Secretary of Homeland Security renders an adverse determination, the alien must be so notified and provided an opportunity to submit rebuttal evidence. Id. at section 11031(c)(2)(G)(i). Reversal of an adverse determination based upon the rebuttal evidence results in the removal of conditions. Id. If the adverse determination is not reversed, conditional resident status of the alien and any accompanying spouse and children is terminated, subject to review of the determination in removal proceedings. Id. at section 11031(c)(2)(G)(ii).

This rule proposes to implement section 11031(c)(2) of Public Law 107-273 by:

• Establishing procedures for filing the second petition to remove conditions;

• Describing supporting evidence;

• Defining the scope of the determination; and

• Describing DHS favorable and adverse determinations.

These proposals are discussed below and are proposed in 8 CFR 216.7(a)(5).

This rule proposes that the alien's petition to remove conditions from the second period of conditional residence must be filed on Form I-829 in accordance with the form instructions and with appropriate fee as stated in those instructions. Proposed 8 CFR 216.7(a)(5)(i). DHS has determined that the Form I-829 remains an appropriate form to remove conditions at the end of the second two-year period because the same action—removal of conditions—is being requested by the alien. DHS also is proposing that the alien file a supplement to Form I-829 with the second Form I-829. The purpose of the supplement to Form I-829 would be to provide a means within the petition for the eligible alien to state the facts and information described in sections 216A(d)(1)(A) and (B) of the INA with respect to any commercial enterprise which the alien wants to have considered, regardless of whether the enterprise is a limited partnership, the alien entered the enterprise after its formation, or the enterprise was created before or after the initial determination was made. This is the same supplement proposed for the initial determination stage.

Failure to timely file the second Form I-829 results in termination of conditional resident status and the institution of removal proceedings. See Public Law 107-273 at section 11031(c)(2)(D). However, a late filing can be deemed timely if the alien establishes good cause and extenuating circumstances. Id. at section 11031(c)(2)(C)(ii). This exception is the same exception that is applicable to aliens seeking removal of conditions under normal procedures. See INA section 216A(d)(2)(B), 8 U.S.C. 1186b(d)(2)(B). To maintain consistency, this rule parallels the regulations applicable to aliens seeking removal of conditions under normal procedures. See 8 CFR 216.6(a)(5).

This rule proposes that failure to timely file the Form I-829 results in the automatic termination of conditional resident status. Proposed 8 CFR 216.7(a)(5)(ii). DHS will provide the alien with notice of termination and issue and serve an NTA to aliens to institute removal proceedings or DHS will move to re-calendar administratively closed deportation or removal proceedings for aliens already in deportation or removal proceedings. Id. USCIS could accept a late filing, but only if USCIS is satisfied in its discretion that the alien has established good cause and extenuating circumstances. Id. If USCIS accepts a late filing before the immigration judge has jurisdiction over the case, this rule proposes that USCIS must restore conditional resident status and adjudicate the petition on the merits. Id. If USCIS accepts a late filed Form I-829 after the immigration judge has jurisdiction, this rule proposes that DHS and the alien file a joint motion to terminate proceedings with the immigration judge and that conditional resident status will be restored after proceedings are administratively closed or terminated and the petition is adjudicated on the merits. Id.

In order for DHS to be equipped to make determinations on the second Form I-829, USCIS must examine the evidence supporting the petition as it does for Forms I-829 filed by aliens under the normal (non-Pub. L. 107-273) process. This rule proposes to require the alien to submit any documentation in support of the second Form I-829 that is necessary for meeting the requirements of section 11031(c)(2) of Public Law 107-273 and the implementing regulations. The proposed rule also specifies particular documentary evidence that the alien must submit with the petition. Proposed 8 CFR 216.7(a)(5)(i)(A)-(D). DHS bases the proposed list of required evidence on the evidence that EB-5 aliens are required to submit with their petitions to remove conditions under the normal (non-Pub. L. 107-273) process. This evidence includes:

• Evidence that the alien invested or was actively in the process of investing the requisite capital, such as an audited financial statement or other probative evidence; and

• Evidence that the alien created, or can be expected to create within a reasonable time, ten full-time jobs for qualifying employees.

In the case of a “troubled business” as defined in 8 CFR 204.6(j)(4)(ii), the alien entrepreneur would be required to submit evidence that the commercial enterprise maintained the number of existing employees at no fewer than the pre-investment level for the period of conditional permanent residence commencing on the effective date of the initial determination. Such evidence could include payroll records, relevant tax documents, and Employment Eligibility Verification forms (Form I-9 or successor form).

To make determinations on the second Form I-829, USCIS must consider in particular: The scope of the second determination, as authorized by Public Laws 107-273; the commercial enterprises and investments that the alien wants USCIS to consider; qualifying jobs; and substantial compliance with the capital investment requirement.

At the second determination stage, Public Law 107-273 requires consideration of material misrepresentation in the petition and limits consideration of the job creation and capital investment requirements to the requirement or requirements that formed the basis for the initial adverse determination. Public Law 107-273 at section 11031(c)(2)(E). Public Law 107-273 further requires the Secretary of Homeland Security to credit the alien for the number of jobs determined to be created or the amount of capital determined to be invested at the initial determination stage by subtracting this amount from the number or amount needed to satisfy the overall EB-5 job creation and capital investment requirements. Id. at section 11031(c)(2)(E)(ii)(III) and (iii)(II); proposed 8 CFR 216.7(a)(5)(iv).

With respect to the types of evidence DHS is proposing for the second determination stage, if the adverse determination at the initial stage was based on failure to meet the job creation requirement, the rule proposes to require the alien to submit evidence of the number of qualifying jobs created since conditional resident status was continued and the beginning and ending dates of when the jobs existed. Proposed 8 CFR 216.7(a)(5)(i)(A). For example, the alien may include with the petition payroll records, tax documents, and Forms I-9 to evidence the additional qualifying jobs that were created.

Note that if the eligible alien has invested in a troubled business, documentation would be necessary to accompany the Form I-829 demonstrating that the level of employment on the date of the second determination was maintained at no less than the pre-employment level. Public Law 107-273 at section 11031(c)(2)(E)(ii)(II) (cross referencing section 11031(c)(1)(C)). If the eligible alien's qualifying investment is within an approved regional center, the eligible alien would need to submit evidence of indirect job creation if the alien is relying on indirect jobs to demonstrate that he or she has met the job creation requirement. Id. (cross-referencing section 11031(c)(1)(B)). Because section 11031(c)(2)(E)(ii)(II) of Public Law 107-273 sufficiently covers the requirements with respect to investments in troubled business and within an approved regional center, DHS has determined that it is not necessary to repeat the requirements in this proposed rule.

If the adverse determination at the initial stage was based on failure to meet the capital investment requirement, this rule proposes to require the alien to provide evidence of his or her capital investment in one or more commercial enterprises since conditional resident status was continued. Proposed 8 CFR 216.7(a)(5)(i)(B). Such evidence could include audited financial statements, federal tax returns, bank statements, bank wire transfers, or escrow agreements.

b. Additional commercial enterprises and investments.

Regardless of whether the initial adverse determinations were based on only the job creation or capital investment requirements, Public Law 107-273 requires the Secretary of Homeland Security to consider for the second determination any capital investments in commercial enterprises in the United States. Public Law 107-273 at section 11031(c)(2)(A) and (B). Such investments include those that were made before or after the initial adverse determination and in commercial enterprises other than the one considered for the initial determination that were created at any time before or after the initial adverse determination and regardless of whether the alien entered the enterprise after its formation. Id. at section 11031(c)(2)(A) and (B).

To implement section 11031(c)(2)(A) and (B) of Public Law 107-273, DHS is proposing to require the alien to provide evidence of the capital investments and corresponding commercial enterprises that he or she wants USCIS to consider for its second determination. See proposed 8 CFR 216.7(a)(5)(i)(C). Evidence of the capital investment made in the commercial enterprise and considered at the initial determination would not be required. Id. DHS has determined that to require aliens to present such documentation would be duplicative and, therefore, unnecessary.

The type of evidence of the alien's capital investments that DHS is proposing to require is based on the type of evidence that was required to be submitted with the initial Form I-829 pursuant to 8 CFR 216.6(a)(4). The evidence that this proposed rule would require for each commercial enterprise which the alien desires to have considered includes:

• Audited financial statements, or other probative evidence of the alien's capital investment for each commercial enterprise to be considered; and

• Evidence of each commercial enterprise's formation and current ownership structure including, but not limited to: Articles of incorporation, certificate of merger or consolidation, partnership agreement, joint venture agreement, business trust agreement, or other similar organizational document for the commercial enterprise; and a certificate evidencing authority to do business in a state or municipality or, if the form of the business does not require such a certificate, a statement to that effect. See proposed 8 CFR 216.7(a)(5)(i)(C).

There may be instances where an eligible alien has made capital investments in commercial enterprises that are located within a targeted employment area (TEA) which require at least $500,000 in capital investment, while also making capital investments in commercial enterprises not located in a TEA which require at least $1,000,000 in capital investment. Section 203(b)(5)(C) of the INA, 8 U.S.C. 1153(b)(5)(C), and 8 CFR 204.6(f) define and describe the amount of investment capital required in both targeted (TEA) and non-targeted locations within the United States. These provisions, however, contemplate the consideration of capital investments in only one commercial enterprise. Sections 11031(c)(2)(A) & (B) of Public Law 107-273 do not discuss how capital investments in commercial enterprises located both within and without a TEA must be evaluated in total at the time of the second determination to meet the capital investment requirements. This rule describes at 8 CFR 216.7(a)(5)(iii) the prorating approach that DHS proposes to use to determine the total amount of capital that must be invested in such instances. DHS proposes to utilize a multi-step process as follows to make such determinations:

• The creditable amount of an eligible alien's capital investments in all of the commercial enterprises located within a TEA would be determined by USCIS. If the eligible alien has complied with the $500,000 capital investment requirement, then the capital investment requirement under Public Law 107-273 will be met. If the eligible alien has not complied with the $500,000 capital investment requirement, then the amount of the eligible alien's creditable capital investment in all commercial enterprises located within a TEA would be divided by 500,000 to determine the prorated percentage of the eligible alien's capital investment based on capital investments in commercial enterprises located in a TEA.

• The creditable amount of an eligible alien's capital investments in all of the commercial enterprises that are not located within a TEA would be determined by USCIS. If the eligible alien has complied with the $1,000,000 capital investment requirement, then the capital investment requirement under Public Law 107-273 will be met. If the eligible alien has not complied with the $1,000,000 capital investment requirement, then the amount of the eligible alien's creditable capital investment in all commercial enterprises not located in a TEA would be divided by 1,000,000 to determine the prorated percentage of the eligible alien's capital investment based on capital investments in commercial enterprises that are not located in a TEA.

• The prorated percentage of the eligible alien's capital investment in commercial enterprises located in a TEA would be combined with the prorated percentage of the eligible alien's capital investment in commercial enterprises that are not located within a TEA to arrive at the eligible alien's total creditable capital investment. This total creditable capital investment will be represented as a percentage, and the percentage must equal or exceed 100% in order for the alien to meet the statutory capital investment requirement.

As an example, if an eligible alien's creditable capital investment in a commercial enterprise located within a TEA was $300,000, then the prorated percentage of the eligible alien's capital investment in the commercial enterprise would be 60% ($300,000/500,000 × 100 = 60%). In order for that eligible alien to meet the statutory capital investment requirements based upon an additional capital investment in a commercial enterprise that is not located within a TEA, he or she would have to be credited with an additional capital investment of $400,000 ($400,000/1,000,000 × 100 = 40%). In this example, the $300,000 capital investment and the additional $400,000 capital investment would constitute 100% of the capital investment requirement by utilizing a combination of capital investments in commercial enterprises located both within and without a TEA.

If the failure to meet the capital investment requirement was the basis for the initial adverse determination, eligible aliens must demonstrate that, on the date of the second determination, they are in substantial compliance with the capital investment requirement for the second determination. See Public Law 107-273 at section 11031(c)(2)(E)(iii). This rule proposes to utilize the same definition of substantial compliance for the initial and second determinations, discussed in detail later in this SUPPLEMENTARY INFORMATION . See proposed 8 CFR 216.7(c)(2).

Favorable determinations on the second Form I-829 result in the removal of conditions for the alien and accompanying spouse and children as of the second anniversary of the continuation of conditional resident status. Public Law 107-273 at section 11031(c)(2)(F). This rule proposes that upon a favorable determination by USCIS warranting removal of conditions, USCIS will remove the conditions on the alien's permanent resident status if the alien is not in deportation or removal proceedings, and will send the alien written notice of these decisions. Proposed 8 CFR 216.7(a)(5)(v). Removal of conditions would be effective on the second anniversary of the continuation of conditional residence. Id. Because Public Law 107-273 requires status determinations for aliens in deportation or removal proceedings to take place within those proceedings, this rule would require USCIS to provide written notice of the favorable determinations to those aliens in proceedings and to take no action on removing conditions. Id. DHS also would be required to file a motion to re-calendar proceedings so that the status determinations can take place within proceedings. Id. These procedures parallel those applied to favorable determinations made at the initial determination stage of the process.

An adverse determination on the alien's second Form I-829 leads to termination of conditional resident status. Public Law 107-273 at section 11031(c)(2)(G)(ii). However, prior to termination, the alien may submit evidence to rebut the adverse determinations so that the adverse determinations are reversed. Id. at section 11031(c)(2)(G)(i). This rule proposes a process for rebutting adverse determinations made by USCIS and terminating conditional residence status if no rebuttal is submitted or the rebuttal evidence does not result in a reversal of the adverse determinations.

Similar to the process for rebutting initial adverse determinations, this rule proposes a 12-week period within which the alien may submit a written rebuttal to USCIS after receiving written notice from USCIS of the adverse determinations. Proposed 8 CFR 216.7(a)(5)(vi)(A). USCIS would render a decision on the rebuttal evidence after receiving the rebuttal evidence. If USCIS determines that the rebuttal evidence is not sufficient to reverse its adverse determinations, USCIS would terminate the alien's conditional status and that of his or her accompanying spouse and/or children. If the alien is not already in deportation or removal proceedings, USCIS would issue an NTA to commence removal proceedings regardless of the ground on which the adverse determinations were based. Proposed 8 CFR 216.7(a)(5)(vi)(B)( 2 ). If the alien is in deportation or removal proceedings, USCIS would notify the alien of the adverse determination and file a motion to re-calendar with EOIR so that the termination of the alien's conditional resident status would be made in proceedings. On the other hand, if USCIS determines that the rebuttal evidence is sufficient to reverse the adverse determinations, removal of conditions would result, either by USCIS or the immigration judge (or the BIA) as appropriate. Proposed 8 CFR 216.7(a)(5)(vi)(A).

If USCIS does not receive rebuttal evidence during the 12-week period, this rule proposes that the alien's conditional resident status and that of his or her accompanying spouse and/or children will be automatically terminated, even if the alien is in deportation or removal proceedings. Proposed 8 CFR 216.7(a)(5)(vi)(B)( 1 ). This procedure contrasts with the procedure DHS is proposing for the rebuttal period following the initial determination. As discussed previously, if USCIS does not receive rebuttal evidence during the 12-week period following notice of adverse determinations at the initial determination stage, no automatic consequences result. See proposed 8 CFR 216.7(a)(4)(ii). DHS is proposing differing procedures following the rebuttal period for initial determinations and second determinations because, unlike at the second determination stage, USCIS's consideration of the alien's petition at the initial determination is complicated by two additional considerations: (1) Public Law 107-273 requires differing treatment of an alien's status depending on the basis for the adverse determination; and (2) USCIS's determinations at the initial determination stage would be based on facts and evidence that are dated.

At the initial determination stage, Public Law 107-273 requires termination of conditional resident status only if the adverse determination is based on material misrepresentation. Public Law 107-273 at section 11031(c)(1)(F)(iii). Public Law 107-273 requires continuation of conditional resident status if the adverse determination is based on a failure to meet the job creation or capital investment requirements. Public Law 107-273 at section 11031(c)(1)(F)(ii). By contrast, at the second determination stage, Public Law 107-273 provides for termination of conditional resident status regardless of the basis for the adverse determination. Public Law 107-273 at section 11031(c)(2)(G)(ii). An additional complication at the initial determination stage is that the petitions and supporting documentation reviewed by USCIS for its initial determination date from the late 1990s and, therefore, may no longer provide USCIS with a complete picture of the alien's eligibility. DHS has determined that USCIS should approach these cases cautiously, and provide every opportunity in the decision-making process for USCIS to revisit the evidence before it. At the second determination stage, on the other hand, the petition will be based on contemporary information and evidence. Therefore, USCIS should be able to proceed with its second determination as it would a non-Public Law 107-273 EB-5 petition.

The termination of conditional resident status under proposed 8 CFR 216.7(a)(5)(vi)(B)( 1 ) or ( 2 ) would not be subject to appeal but would be reviewable in subsequent removal proceedings. Public Law 107-273 at section 11031(d); proposed 8 CFR 216.7(a)(5)(vi)(B)( 1 ) or ( 2 ). If the alien's status (and that of his or her spouse and children) is terminated under proposed 8 CFR 216.7(a)(5)(vi)(B)( 1 ) or ( 2 ), the alien and spouse and children would be required to surrender any Form I-551 previously issued.

The rule proposes to define several statutory terms, in some cases for ease of reference and, in other cases, to better explain the statutory terms. The rule proposes to define the following terms for ease of reference and it relieves the regulations from cumbersome descriptions or cross-references to Public Law 107-273 each time the regulations refer to these terms:

• Denied initial Form I-829: an initial Form I-829 that was denied by an INS director on the merits of the petition.

• Initial Form I-829: a Form I-829 that was timely filed before November 2, 2002 by an eligible alien.

• Qualifying Form I-526: a Form I-526 that was approved after January 1, 1995 and before August 31, 1998.

• Second petition to remove conditions: a petition to remove conditions (Form I-829 or successor form) timely filed by an eligible alien following an initial adverse determination.

DHS also is proposing to define the following substantive terms relating to petitions to remove conditions (either under section 11031 or 11032(e) of Pub. L. 107-273):

An adverse determination made on a petition to remove conditions based on “material misrepresentation” leads to termination of conditional resident status. Public Law 107-273 sections 11031(c)(1)(F)(iii), 11031(c)(2)(G)(2), and 11032(e). DHS is proposing in this rule to define material misrepresentation to mean a statement or representation in a petition to remove conditions, as originally filed or supplemented, or in any accompanying documentation, which, as a matter of discretion, is determined to be both false and one to which importance would reasonably be attached for determining whether to grant the petition, without regard to the petitioner's or any other person's intent or to whether or not there was detrimental reliance upon the statement or representation. Proposed 8 CFR 216.7(c)(1); see Kungys v. United States, 485 U.S. 759, 771-772 (1988) (holding that the materiality test is whether the concealments or misrepresentations had a natural tendency to influence the decision of the immigration agency). Material misrepresentation also includes an omission that has the effect of making any material representation in the Form I-829 or accompanying documentation false. For example, if the alien failed to mention in the initial Form I-829 that he or she received his or her capital investment back since becoming a conditional resident, then this omission would constitute a material misrepresentation.

Public Law 107-273 requires DHS to consider whether the eligible alien is in “substantial compliance” with the capital investment requirement. Public Law 107-273 sections 11031(c)(1)(A)(iii), 11031(c)(2)(E)(iii), and 11032(e)(2)(C). By contrast, removing the conditions from permanent resident status of an alien entrepreneur typically requires aliens to demonstrate that they invested, or were actively in the process of investing, the requisite amount of capital. See INA section 216A(d)(1)(A)(i), 8 U.S.C. 1186b(d)(1)(A)(i). The requirement to be “actively in the process of investing” capital has no quantitative aspect with respect to the amount of the investment. Instead, it focuses on the process of investing the required capital, and could be satisfied by showing that the process of investing the capital has been commenced and is continuing. Substantial compliance suggests that the substance of the capital investment has in fact been made.

Accordingly, this rule defines substantial compliance as meaning that that the alien has invested nearly all the requisite amount ( i.e., $1 million or $500,000). 8 CFR 216.7(c)(2). If the remaining amount has not been invested, the alien must provide evidence that the balance is legally obligated for final disbursement within a reasonable period of time after any one of the three dates specified in sections 11031(c)(1)(D) and 11032(e)(3) of Public Law 107-273, as applicable:

(1) The date on which the Form I-829 was filed (not applicable to petitions to remove conditions considered under section 11031(c)(2) of Public Law 107-273, relating to the second determination;

(2) Six months after that date (limited to petitions to remove conditions considered under section 11031(c)(1) of Pub. L. 107-273); or

(3) The date upon which the determinations are made (applicable to petitions to remove conditions considered under sections 11031(c)(1) and (2) and 11032).

DHS has determined that assigning a rigid numerical standard to define “substantial compliance” would not fairly take into account the unique circumstances of each investment. Because several years have passed since the enactment of Public Law 107-273 and the law's deadline for completing the initial determinations, DHS believes that requiring eligible aliens to demonstrate that they have made “nearly all” the required capital investment is reasonable.

This rule proposes to exclude from consideration any funds returned to the alien or required to be returned to the alien (provided by legally enforceable documents or contracts relating to the enterprise) in the form of guaranteed interest payments or as redemption for his or her capital investment interest, or otherwise diverted. Returned funds would not have been made available to the commercial enterprise for the purposes of creating qualifying jobs.

In making its initial and second determinations on petitions to remove conditions under section 11031(c) of Public Law 107-273, the Secretary of Homeland Security must consider whether the commercial enterprise created full-time positions for 10 or more qualifying employees. Public Law 107-273 at section 11031(c)(1)(A)(ii); see also Public Law 107-273 at section 11031(c)(2)(E)(ii)(III). Section 11031(f) of Public Law 107-273 defines “full-time” as “a position that requires at least 35 hours of service per week at any time, regardless of who fills the position.” This rule adopts the statutory definition for “full-time,” but also further describes what is meant by the term “position.” See proposed 8 CFR 216.7(c)(3). This rule provides that a qualifying “position” is one that is required by the commercial enterprise at all times. DHS believes that such a clarification is necessary to ensure that the term full-time employment is given consistent treatment with the interpretation used by DHS in other EB-5 contexts and creates the type of permanent employment contemplated by the EB-5 program. The proposed definition ensures that only continuous full-time employment, rather than intermittent, temporary, seasonal, or transient employment, is considered. Such definition does not, however, require that the position be filled by a specific employee.

If the eligible alien is deceased, this rule proposes that the accompanying spouse and/or children will qualify as eligible aliens provided they meet the requirements of section 11031 of Public Law 107-273 for the removal of conditions in place of the principal. See proposed 8 CFR 216.7(a)(6). This provision is similar to current regulations which permit the spouse and children of a deceased alien entrepreneur to remain eligible for the removal of the conditions. 8 CFR 216.6(a)(6). The basis for this approach is that the alien entrepreneur has not become ineligible to remove conditions due to failure to meet the substantive or procedural requirements, but, instead, because of an outside event. In order to remain eligible for the removal of conditions, the spouse and children can “step into the shoes” of the eligible alien and demonstrate eligibility just as the eligible alien could have done. This rule would clarify that in order to “step into the shoes” of the eligible alien, eligibility can be demonstrated individually or by the alien, spouse and children collectively.

In addition to providing special treatment for certain aliens who previously attained conditional resident status, Public Law 107-273 also provides for the special treatment of “eligible aliens” who have not yet become conditional residents. Specifically, section 11032(a) of Public Law 107-273 requires DHS or the Secretary of State to grant conditional residence status to eligible aliens meeting the following criteria:

• The alien filed a Form I-526 that was approved after January 1, 1995 and before August 31, 1998;

• Pursuant to this approval, the alien timely filed a Form I-485 or an application for an immigrant visa (DS-230) prior to the date of enactment of Public Law 107-273, November 2, 2002; and

• The alien is not inadmissible or deportable.

If the qualifying Form I-526 was revoked following approval, the alien may still be eligible for conditional resident status if the basis for the revocation was failure to meet the job creation requirement in INA section 203(b)(5)(A)(ii), 8 U.S.C. 1153(b)(5)(A)(ii). See Public Law 107-273 at section 11032(c)(1). If the qualifying Form I-485 or application for immigrant visa was denied or terminated on or before November 2, 2002, the alien may still be eligible for conditional resident status if the basis for the denial or termination was the alien's failure to meet the job creation requirement or the alien's departure from the United States without permission (“advance parole”). See id. at section 11032(c)(2)(A). If an eligible alien is no longer in the United States, such alien may be paroled into the United States if necessary to obtain adjustment of status to that of a conditional resident. See id. at section 11032(c)(2)(B).

As the authority of DHS only extends to the adjudication of Form I-485 adjustment applications filed by aliens physically present in the United States, this rule only discusses the applicability of section 11032(c) of Public Law 107-273 to eligible aliens who filed such applications. This rule does not extend to applications for immigrant visas, since such applications are processed by the Department of State.

In this rule, DHS is proposing procedures eligible aliens must follow to request USCIS to consider them for conditional residence under Public Law 107-273. DHS also is proposing to describe how USCIS will make eligibility determinations, including determinations for special cases involving overseas aliens. Finally, DHS is proposing the approval and denial processes.

Before outlining the required procedures, this rule proposes several definitions of terms used in the proposed provisions to avoid repeated cross-references to section 11032(c) of Public Law 107-273 or lengthy descriptions. At proposed 8 CFR 245.25(a), DHS is proposing definitions for the following terms: application for adjustment of status; qualifying Form I-485; qualifying Form I-526; and Form I-485 that is no longer pending. The definitions track the statutory language in Public Law 107-273. For the term, “Form I-485 that is no longer pending,” DHS is proposing an additional clarification. Under this rule, the phrase “no longer pending” would mean that DHS terminated for reasons of abandonment or denied the alien's Form I-485 on or before November 2, 2002, the date of enactment of Public Law 107-273. DHS will disregard the denial or termination without the need for the alien to file a motion to reopen or take other procedural steps.

DHS is proposing in this rule that aliens seeking to qualify for conditional resident status under section 11032 of Public Law 107-273 must, in accordance with the form instructions, file with USCIS a newly completed Form I-485 or succeeding form, without fee, and with any documentary evidence of continued eligibility that is signed and dated after the date that a final rule is effective and on or before the date that is 180 days from date of such effective date. Proposed 8 CFR 245.25(b). The alien would be required to subsequently appear when requested by USCIS to submit certain biometric information (with fee) and for an interview as part of the determination process if USCIS determines that an interview is necessary. Proposed 8 CFR 245.25(b)(1)(iii).

DHS is also proposing the submission of additional documentation with the new Form I-485 in cases where:

• The alien's qualifying Form I-485 is no longer pending or

• The alien's qualifying Form I-526 was revoked.

Without this information, USCIS would not be equipped to make a determination on whether a revoked petition should be disregarded or a denied or terminated application for adjustment of status should be reopened.

If the alien's Form I-485 was no longer pending as of November 2, 2003, DHS is proposing to require the alien to submit evidence to show the reasons why the Form I-485 is no longer pending. To qualify for benefits under section 11032 of Public Law 107-273, the alien must demonstrate that his or her I-485 is no longer pending due to a determination by INS that the alien either failed to satisfy the job creation requirement or departed the United States without advance parole while the Form I-485 was pending. Proposed 8 CFR 245.25(b)(3). The primary evidence would be a decision from INS denying or terminating the Form I-485. However, USCIS would accept secondary evidence, including a sworn statement from the alien regarding the basis for the denial, termination, withdrawal, or abandonment.

Otherwise eligible aliens whose qualifying Forms I-526 were revoked may still be able to receive the benefits of Public Law 107-273 and obtain conditional resident status. See Public Law 107-273 at section 11032(c)(1). USCIS may not grant a request for adjustment of status on Form I-485 based on a revoked Form I-526 because of INA section 245(a)(3), 8 U.S.C. 1255(a)(3), requires that an alien must have an immigrant visa immediately available in order to adjust status. A petition that USCIS revokes based on a finding of ineligibility nullifies the previous USCIS decision to approve the petition. However, under Public Law 107-273, if INS or USCIS revoked the approval of the alien's Form I-526 petition based on a determination that the alien failed to meet the job creation requirement, USCIS must disregard the revocation for purposes of approving the alien's Form I-485. See Public Law 107-273 at section 11032(c)(1). If USCIS revoked the Form I-526 due to other grounds of ineligibility, then USCIS will not disregard the revocation since Public Law 107-273 only authorizes the one basis for disregarding revocations. This rule proposes that in cases where revocation is not authorized, USCIS will deny the Form I-485 if it is still pending. Proposed 8 CFR 245.25(f). Aliens whose Forms I-526 were revoked on other grounds of ineligibility would not be able to establish eligibility for adjustment of status under section 11032 of Public Law 107-273 to file the new Form I-485.

In order for USCIS to be equipped to make determinations regarding the revoked petition, USCIS would need information regarding the revocation. Therefore, if the alien is seeking consideration for conditional residence under section 11032 of Public Law 107-273 notwithstanding the revocation of his or her qualifying Form I-526, DHS is proposing to require the alien to submit evidence demonstrating that USCIS should disregard the revocation. Proposed 8 CFR 245.25(b)(4). The primary evidence would be a copy of the revocation decision where the sole stated reason for the decision is failure of the alien to meet the job creation requirement. However, if the alien lost the decision or no longer has the decision for some other reason, USCIS would accept secondary evidence including a sworn statement of the alien regarding the reasons for the revocation and additional supporting evidence. Using the information submitted by the alien, USCIS would be able to confirm the information contained in its own records.

The procedures and requirements in proposed 8 CFR 245.25(b)(1) would provide USCIS with up-to-date information regarding the alien so that USCIS can make a determination on whether such aliens are currently inadmissible or deportable and, in turn, ineligible for conditional resident status under section 11032(b)(3) of Public Law 107-273. Therefore, failure to follow these requirements would result in denial of the alien's qualifying Form I-485 because USCIS would not be able to determine whether the alien qualifies for conditional residence under Public Law 107-273. Proposed 8 CFR 245.25(b). The requirements would also provide USCIS with information regarding which aliens with qualifying EB-5 petitions are still interested in pursuing conditional residence through the EB-5 program on the basis of such petitions.

Under this rule, aliens who are not physically present in the United States may still qualify for conditional residence under section 11032(c)(2)(B) of Public Law 107-273. Proposed 8 CFR 245.25(b)(2). DHS is proposing that such aliens follow the procedures in proposed 8 CFR 245.25 and timely file a new Form I-485 and any supporting documentation in order for USCIS to consider their cases. However, with respect to the requirement to appear for biometric information capture and an interview, DHS is proposing that USCIS would notify aliens who are not physically present in the United States following receipt of the new Form I-485 to make any required appearances at the DHS office located outside the United States having jurisdiction over the alien's foreign residence. Proposed 8 CFR 245.25(b)(2). After considering the new Form I-485 and information obtained through the biometric capture and interview at the DHS office overseas, USCIS would be better able to make a determination as to whether it is necessary to parole the alien for adjustment of status pursuant to section 11032(c)(2)(B).

At proposed 8 CFR 245.25(b)(5), DHS is proposing to require spouses and children accompanying or following to join principal EB-5 aliens pursuant to section 203(d) of the INA, 8 U.S.C. 1153(d), as permitted under Public Law 107-273, to each file an application for adjustment of status. Applications should be filed with the principal EB-5 alien's application for adjustment of status. However, in case circumstances change between the time that the principal alien files his or her own application for adjustment of status and the date USCIS makes a decision on the principal's application, this rule would permit applications for accompanying and following to join spouses and children to be filed up until the date of decision. Applications filed for accompanying or following to join spouses and children would be required to include evidence of eligibility and, in particular, evidence of the qualifying relationship, such as marriage and birth certificates. For spouses and children who are overseas and seeking to join the principal EB-5 alien after such alien has received conditional resident status ( i.e., “following to join” the principal alien), USCIS cannot grant the adjustment of status application while they are overseas. Therefore, following a determination of eligibility, DHS is proposing to require that these dependents appear at a DHS office abroad to request parole by filing an Application for Travel Document, Form I-131 or successor form, in accordance with the instructions to the form to return to the United States for adjustment of status. Proposed 8 CFR 245.25(c)(3).

DHS is proposing that prior to approving or denying the qualifying Form I-485 under section 11032 of Public Law 107-273, USCIS would make determinations on whether the alien qualifies as an eligible alien. Proposed 8 CFR 245.25(c). DHS is further proposing to create an intermediate step, described more fully below, to accommodate eligible aliens and their spouses and children who are overseas and may need to be paroled into the United States to be granted conditional resident status.

To determine whether an alien qualifies for conditional resident status, USCIS would review the qualifying Form I-485, the new Form I-485, and any information based on the recent collection of biometric information, interview, any Form I-526 revocation proceedings, and any previous denial of Form I-485 if no longer pending. At this stage, USCIS would determine whether all of the requirements in section 11032(a), (b), and (c) are met, such as:

• Whether the revocation of the alien's qualifying Form I-526 was based on failure of the alien to meet the job creation requirement and, therefore, should be disregarded;

• Whether a ground of inadmissibility or deportability applies to the alien; and

• Whether the alien's denied or terminated Form I-485 should be reopened because the denial was based on failure to meet the job creation requirement.

An additional consideration would be whether the alien obtained permanent residence on other grounds. In such a case, there would be no need for USCIS to apply section 11032 of Public Law 107-273 and grant conditional residence. Proposed 8 CFR 245.25(c)(1). Another consideration would be whether the eligible alien departed the United States while his or her qualifying Form I-485 was pending. An alien would not qualify for conditional residence under section 11032 of Public Law 107-273 if he or she departed without advance parole. Proposed 8 CFR 245.25(c)(2). This consequence applies to adjustment of status applicants under regular procedures applicable to Forms I-485. DHS does not believe that a different rule should apply to adjustment applicants seeking benefits under section 11032 of Public Law 107-273.

Finally, for principal aliens and their spouses and children who are not physically present in the United States, DHS is proposing that following a determination of eligibility, USCIS would send such aliens a notice requiring them, by a specific date, to apply for parole to return to the United States at a DHS office located in the jurisdiction of their overseas residence. Proposed 8 CFR 245.25(c)(3). Applicants can learn which DHS office services their residence by viewing the USCIS Office and Service Locator at https://egov.uscis.gov/crisgwi/go?action=offices.type&OfficeLocator.office_type=OS. Applicants may be requested to appear at the overseas DHS office for capture of biometric information and/or an interview in connection with the parole application. DHS proposes to make physical presence in the United States a requirement for adjudication of the I-485 application because its jurisdiction to grant conditional residence based on adjustment of status is limited to the United States.

If USCIS determines that an alien who is overseas does not qualify as an eligible alien or for conditional resident status under section 11032 of Public Law 107-273, USCIS will terminate processing of the alien's Form I-485 and that of any accompanying spouse and children. Proposed 8 CFR 245.25(c) and (e). Likewise, if USCIS determines that an alien who is overseas does qualify as an eligible alien for conditional residence under section 11032 of Public Law 107-273, but that a spouse or child does not qualify for conditional resident status, USCIS will terminate processing of the respective spouse's or child's Form I-485. Proposed 8 CFR 245.25(c) and (e). There is no administrative appeal of a decision to terminate processing of any application of an alien who is overseas. See INA section 245(a), 8 U.S.C. 1255(a). Therefore, under this proposed rule, if the alien fails to obtain parole into the United States, USCIS will deny the alien's Form I-485. In such a case, the alien would not have met the requirements of sections 11032(b)(3) or (c)(2)(B) of Public Law 107-273.

After USCIS makes a determination of eligibility, USCIS would make a decision on the Form I-485. Upon approval of the new Form I-485, USCIS would grant the alien conditional residence under section 216A of the INA, 8 U.S.C. 1186b, as of the date of the approval. USCIS would also approve Forms I-485 filed for the principal alien's accompanying spouse and children, if their Form I-485 is properly filed in accordance with proposed 8 CFR 245.25(b)(5) and the spouse or child is eligible to receive a visa under section 203(d) of the INA, 8 U.S.C. 1153(d). Proposed 8 CFR 245.25(d). USCIS will send written notice of the approval to the eligible alien(s). Note that prior to approval, USCIS must ensure that a visa number is available for each eligible alien from the Department of State under sections 201(d) and 203(b)(5) of the INA. 8 U.S.C. 1151(d) and 1153(b)(5).

Under this proposed rule, USCIS would be required to deny qualifying applications for adjustment of status to conditional residence if it determines that the eligible alien did not meet the requirements in section 11032 of Public Law 107-273 and the regulatory requirements in proposed 8 CFR 245.25. Proposed 8 CFR 245.25(e). In particular, USCIS would deny conditional residence:

• When USCIS cannot disregard the revocation of the eligible alien's qualifying Form I-526;

• When USCIS cannot reopen the eligible alien's Form I-485 that is no longer pending;

• If USCIS determines that the eligible alien is inadmissible or deportable on any ground; or

• If the eligible alien is no longer physically present in the United States and is not timely paroled into the United States if DHS requires such parole.

Section 216A of the INA, 8 U.S.C. 1186b, governs the entire removal of condition process for EB-5 aliens who do not fall within the scope of Public Law 107-273. Section 11032(e) of Public Law 107-273 modifies part of the regular process for removing conditions after USCIS grants conditional residence pursuant to Public Law 102-273.

Just as under the regular process, an alien granted conditional resident status under section 11032(a) of Public Law 107-273 must file a petition to remove conditions within 90 days prior to the second anniversary of becoming a conditional resident. Public Law 107-273 at section 11032(e)(1). The petition must demonstrate that:

• The alien invested or is actively in the process of investing the requisite capital of $1 million or $500,000,

• He or she has sustained the investment during the period of residence in the United States, and

• He or she is otherwise conforming to the requirements of the EB-5 visa classification. See id.; INA sections 203(b)(5), 216A(d)(1); 8 U.S.C. 1153(b)(5), 1186b(d)(1).

Unlike the regular process, however, section 11032(e) of Public Law 107-273 provides that the petition can be based on any commercial enterprise in the United States in which the alien has made a capital investment at any time. Public Law 107-273 at section 11032(e)(1). In making a determination on the petition to remove conditions, section 11032(e) of Public Law 107-273 requires that three determinations be made. These are similar to the determinations required for eligible aliens seeking removal of conditions under section 11031 of Public Law 107-273:

1. A determination must be made as to whether the petition contains any material misrepresentation in the facts and information alleged in the petition with respect to the commercial enterprises included in the petition. Public Law 107-273 at section 11032(e)(2)(A).

2. A determination must be made as to whether all commercial enterprises included in the petition together created full-time jobs for 10 or more qualifying individuals and that those jobs exist or existed on either of the following dates: The date on which the investor's initial application for adjustment of status or immigrant visa was filed, or the date on which the determination on the Form I-829 is made. Id. at sections 11032(e)(2)(B) and (e)(3). If the investment was made within an approved regional center under the EB-5 Pilot Program, then the indirect jobs that were created can be used to meet this requirement. Id. at section 11032(e)(2)(B). If the immigrant investor has made an investment in a troubled business, the number of employees of the business cannot be any less than the pre-investment level. Id.

3. A determination must be made as to whether, considering the alien's investments in enterprises on either or both of the dates described above, the alien is or was in substantial compliance with the capital investment requirement. Id. at section 11032(e)(2)(C).

Because the requirements in section 11032(e) of Public Law 107-273 are based on the requirements applicable to the regular process for removing conditions in section 216A(c) and (d) of the INA, 8 U.S.C. 1186b(c) and (d), DHS is proposing that the regulations governing the regular removal of condition process at 8 CFR 216.6 also apply to section 11032(e) cases, except where specifically covered by the provisions proposed by this rule. See proposed 8 CFR 216.7(b)(1). Referring to the current regulations at 8 CFR 216.6(a)(1), DHS is proposing that Form I-829 must be filed to remove conditions for aliens granted conditional residence under section 11032(a) of Public Law 107-273. Proposed 8 CFR 216.7(b)(1). This rule also describes the documentary evidence that eligible aliens would be required to include with the Form I-829. Proposed 8 CFR 216.7(b)(2). This list is different from the list applicable to aliens who fall outside the scope of Public Law 107-273, since section 11032(e) of Public Law 107-273 requires that a different inquiry be made on the petitions to remove conditions of eligible aliens. In particular, this rule requires evidence to be presented regarding:

• The dates on which jobs created by the commercial enterprise existed;

• All commercial enterprises in which the eligible alien invested and upon which a determination will be made; and

• Whether the alien is or was in substantial compliance with the capital investment requirement described in section 216A(d)(1)(B) of the INA, 8 U.S.C. 1186b(d)(1)(B).

The rule does not propose special provisions governing the processes for requiring appearances by the alien, issuing a decision on the petition, granting or terminating status, and providing avenues for review of adverse decisions since the current regulations adequately cover these areas. See 8 CFR 216.6.

The special benefits of Public Law 107-273 extend to the spouses and children of eligible aliens. In addition, section 11031(e) of Public Law 107-273 provides that an alien who obtained conditional resident status before November 2, 2002 by virtue of being a child of an eligible alien will be considered to be a child for purposes of this section notwithstanding any subsequent change in age or marital status. Likewise, under section 11032(f) of Public Law 107-273, an alien who was a child on the date that Form I-485 or application for an immigrant visa (DS-230) was filed will be considered to be a child for purposes of this section notwithstanding any subsequent change in age or marital status.

DHS has determined that regulations implementing sections 11031(e) and 11032(f) of Public Law 107-273 are not necessary because the statutory provisions are sufficiently detailed. However, DHS invites comments from the public regarding whether there are issues that should be addressed in the regulations.

The Regulatory Flexibility Act (RFA) mandates that an agency conduct an RFA analysis when an agency is “required by 5 U.S.C. 553 * * *, or any other law, to publish general notice of proposed rulemaking for any proposed rule, or publishes a notice of proposed rulemaking for interpretative rule involving the internal revenue laws of the United States. * * *” DHS has reviewed this regulation in accordance with the Regulatory Flexibility Act, 5 U.S.C. 605(b), and, by approving it, certifies that this rule will not have a significant economic impact on a substantial number of small entities. The factual basis for this determination is that this rule applies to individuals who file petitions and applications under the EB-5 program. The impact is on these persons in their capacity as individuals, so that they are not, for purposes of the RFA, within the definition of small entities established by 5 U.S.C. 601(6).

This rule will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, this rule is not subject to the Unfunded Mandates Reform Act of 1995.

This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996. This 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-based companies to compete with foreign-based companies in domestic and export markets.

This proposed rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review. Accordingly, this rule has not been submitted to the Office of Management and Budget for review. DHS has considered the benefits and costs associated with the changes proposed in this rule and has determined that the benefits justify the costs.

The majority of changes being proposed describe how USCIS would apply adjudication practices to the alien investor population covered by Public Law 107-273. The alien investor population covered by Public Law 107-273 filed petitions with USCIS during the period January 1, 1995 thru August 31, 1998. There are two distinct groups of aliens to which this rule applies: Those who have already obtained permanent resident status on a conditional basis are covered by section 11031 of Public Law 107-273, and those who have never obtained permanent resident status are covered by section 11032 of Public Law 107-273.

Pursuant to section 11031, DHS is proposing to reconsider alien investor petitions for removal of conditions filed during the applicable timeframe that meet the statutory eligibility requirements specified in section 11031 Public Law 107-273. Generally, DHS would apply adjudication standards that are similar to current practices in alien investor adjudication, while offering a few flexibilities. DHS estimates that 581 principal alien investors would be covered under this provision. Under the proposed rule, these covered alien investors would have further opportunity to satisfy their investment criteria in order to qualify for the removal of conditions on their lawful permanent residence. Most significantly, these principal alien investors would have the ability to count investment activities beyond the scope of their original investment. These enhanced flexibilities would represent significant qualitative benefits to the alien investor and their qualifying family members.

Principal alien investors seeking to benefit under section 11031 of Public Law 107-273 would be permitted to complete a Supplement to Form I-829 Petition by Entrepreneurs to Remove Conditions. Currently, there is no fee for the Supplement; thus the compliance cost to alien investors is directly attributable to the opportunity cost of completing the Supplement. According to the form instructions, the Supplement takes approximately 22 minutes to complete. Given the importance of the proposed accommodations, DHS assumes that investors will choose to have the form completed by an attorney. The Bureau of Labor Statistics 2009 Occupational Employment Statistics, reports the average hourly wage of an attorney at $62.03. 4 To account for the additional cost of non-wage benefits such as health insurance, vacation time, etc., we use a factor of 1.43 to burden the wage, resulting in a fully burdened average hourly wage rate for attorneys of $88.70. 5 Using the fully burdened wage rate for attorneys and the form completion time, DHS calculates the opportunity cost of completing the Supplement at $32.82. 6 If all 581 principal alien investors to which the proposed rule applies were to file a Supplement, the total cost imposed by this rule would be $19,068. 7

DHS believes that most cases would be resolved during this initial determination stage. Though unlikely, the highest cost scenario would be if all 581 alien investor cases were not able to be resolved at the initial stage. In this case, the statute provides that these alien investors would be granted a two-year extension or reprieve after which they have the option of petitioning for reconsideration. At the completion of the two-year extension, the investors would have the option of filing a new Petition by Entrepreneur to Remove Conditions, Form I-829, with associated biometrics collection. Additionally, these investors would be permitted to file the optional Supplement, if appropriate, for consideration of investment activities outside the scope of the original petition. DHS assumes that investors that would take advantage of this benefit of the two-year time extension would most likely file the Supplement along with Form I-829. 8 The time burden to complete both Form I-829 and the Supplement combined is 1 hour, 27 minutes. Assuming investors would have an attorney complete both forms, DHS calculates the opportunity cost of completing Form I-829 and the Supplement to be $128.62. 9

Additionally, investors that choose to take advantage of this benefit by filing Form I-829 would be required to travel to the nearest USCIS Application Support Center (ASC) for the collection of biometrics. While travel times and distances will vary, DHS estimates the average round-trip to an ASC will be 20 miles, and that the average time for that trip will be an hour. It will take an average of one hour for an applicant to wait for service, and to have his or her biometrics collected, for a total of compliance time of 2 hours. According to the Bureau of Labor Statistics, the 2009 average hourly wage for all occupations was $20.90, which results in $29.89 per hour in burdened wages. 10 Using a fully burdened wage rate of $29.89 per hour, USCIS calculates the opportunity cost of complying with the biometric collection to be $59.78. The opportunity costs associated with providing biometrics and completing Forms I-829 and the Supplement for all 581 investors under the second determination stage would total $109,460. 11 Investors seeking to benefit under the two-year extension provision would not have their fees waived for Form I-829. The current fees for Form I-829 and biometrics collection are $3,750 and $85, respectively. Thus, if all alien investors were to avail themselves of the benefits associated with the two-year extension, this rule would impose over $2.2 million in fees. 12

Under the highest-cost scenario, where all 581 investors covered under section 11031 would have to undergo both the initial and secondary determination to have their conditions on permanent residence removed, the total opportunity cost imposed by this rule is $128,528. Additionally, the rule would impose over $2.2 million in fees, under the highest-cost scenario.

Section 11032 of Public Law 107-273 also provides benefits for certain individuals and their qualifying family members who applied for admission or adjustment of status on an EB-5 visa prior to the enactment of the legislation. Principal alien investors and qualifying family members seeking to benefit under section 11032 would be required to complete a new Application to Register Permanent Residence or Adjust Status, Form I-485, even though many of these aliens will have previously completed a Form I-485. Additionally, these covered principal aliens and family members would be required to submit biometric information. 13 DHS estimates 109 aliens would be covered under this provision; 31 principal aliens and approximately 78 dependent family members. 14

Under these circumstances, the fee for Form I-485 would be waived; thus the compliance cost to alien investors and family members is directly attributable to the opportunity cost of completing Form I-485. According to the form instructions, Form I-485 takes approximately 6 hours and 15 minutes to complete. In addition, applicants will also be required to travel to the nearest ASC for the collection of biometrics. Therefore, the total time for each applicant to comply with Form I-485 filing and biometric collection requirements is 8 hours and 15 minutes. Using a fully burdened wage rate of $29.89 per hour, USCIS calculates the opportunity cost to be $246.59. 15 If all 109 aliens estimated to be covered under section 11032 were to comply with these provisions, the total opportunity cost imposed by completing Form I-485 and submitting biometrics would be $26,878. 16 In keeping with current alien investor petition processes, two years after obtaining LPR status DHS would require the principal alien investors to file Form I-829, which would not be considered a cost of this rule. However, under the provisions of the statute, these investors have the option of submitting the Supplement if the principal alien investors wish to request that USCIS count investment activities beyond the scope of their original investment. DHS does consider the costs associated with filing the Supplement to be a cost of this rule. Again, assuming that an attorney would complete this form, if all 31 principal alien investors were to file the Supplement this rule would impose an additional opportunity cost of $1,017. 17 Therefore, the total opportunity cost imposed by this rule under section 11032 in completing Forms I-485 and the Supplement and submitting biometrics would be $27,895. In addition, all covered aliens would be required to submit biometric fees. The current fee for biometric collection is $85; thus the total fee collection would be $9,265. 18 In summary, the total costs of the proposed rule are represented by the opportunity cost and fees paid by aliens covered under both section 11031 and 11032, $156,423 and $2,237,400, respectively.

In light of the significant qualitative benefits associated with the proposed rule, DHS has determined the benefits justify the compliance costs of the rule. We request public comment on any costs of the rule that we may not have considered.

This rule will 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. Therefore, in accordance with section 6 of Executive Order 13132, DHS has determined that this rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

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

The information collection requirements (Form I-526, I-829, Form I-485, and Form I-131) contained in this rule have been previously approved for use by the Office of Management and Budget (OMB) under the Paperwork Reduction Act. The OMB control numbers for these information collections are: 1615-0026, 1615-0045, 1615-0023, and 1615-0013, respectively.

USCIS will be creating a supplement to the Form I-829 to accommodate special information that eligible aliens under Public Law 107-273 must provide to establish eligibility. The supplement will require the conditional resident to provide information regarding all commercial enterprises in the United States in which he or she has invested, the number of jobs created with respect to each commercial enterprise, and, where applicable, credits for previous investments that were made and jobs that were created.

Accordingly, the Form I-829 is being revised to include the new supplement. This revision is subject to review by the OMB under the Paperwork Reduction Act of 1995. Written comments are encouraged and will be accepted until November 28, 2011. When submitting comments on the information collection, your comments 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 the information on those who are to respond, including through the use of any and all appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

(1) Type of information collection: Revision of currently approved information collection.

(2) Title of form/collection: Petition by Entrepreneur to Remove Conditions.

(3) Agency form number, if any, and the applicable component of the Department of Homeland Security sponsoring the collection: Form I-829 and Supplement, U.S. Citizenship and Immigration Services.

(4) Affected public who will be asked or required to respond, as well as a brief abstract: Individuals and households. This form provides a uniform petition that enables alien entrepreneurs to request the removal of the conditional basis of their lawful permanent resident status.

(5) An estimate of the total number of respondents and the amount of time estimated for an average respondent to respond: 1931 respondents for Form I-829 at 1 hour and 5 minutes, and 602 respondents filing the supplement at 22 minutes per response.

(6) An estimate of the total of public burden (in hours) associated with the collection: Total reporting burden hours is 2312.

All comments and suggestions or questions regarding the Form I-829 and supplement should be directed to the Regulatory Products Division, Office of the Executive Secretariat, U.S. Citizenship and Immigration Services, Department of Homeland Security, 20 Massachusetts Avenue, NW., Washington, DC 20529-2020.

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

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2011-1022; Directorate Identifier 2011-NE-20-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of the Web site, anyone can find and read the comments in any of our dockets, including, if provided, the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78).

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA Airworthiness Directive 2011-0082, dated May 10, 2011 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

These affected fuel pressure regulators may have non-conforming threads in the banjo bolt fitting for the fuel return line to the fuel tank from original manufacture. These non-conforming threads could result in fuel leakage during engine operation, in-flight fire, and damage to the airplane.

For the reasons described above, this proposed AD would require the replacement of all affected P/N 887130 fuel pressure regulators with parts eligible for installation. You may obtain further information by examining the MCAI in the AD docket.

This product has been approved by EASA, and is approved for operation in the United States. Pursuant to our bilateral agreement with the European Community, EASA has notified us of the unsafe condition described in the MCAI. We are proposing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design. This proposed AD would require the replacement of all affected P/N 887130 fuel pressure regulators with parts eligible for installation, within 100 flight hours after the effective date of the proposed AD.

The EASA AD requires replacing the fuel pressure regulator within 100 flight hours (FH) or 6 months after the effective date of that AD, whichever occurs first. This proposed AD would require replacing the fuel pressure regulator within 100 FH after the effective date of this proposed AD.

We estimate that this proposed AD would affect about 75 products of U.S. registry. We also estimate that it would take about 2 work-hours per product to comply with this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $180 per product. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $26,250.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect 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.

For the reasons discussed above, I certify this proposed regulation:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

Background

In 1998, the Online Copyright Infringement Liability Limitation Act (Title II of the Digital Millennium Copyright Act, Pub. L. 105-304, 112 Stat. 2860 (Oct. 28, 1998)) amended chapter 5 of the Copyright Act, Title 17 of the United States Code, to provide limitations on liability for online service providers relating to material on their systems. With respect to material residing, at the direction of a user, on a system or network controlled or operated by or for the service provider, the limitations of liability under section 512 are available only if the service provider has satisfied certain conditions, one of which is the designation of an agent to receive notification of claimed copyright infringement to the Copyright Office, and through the service provider's Web site in a publicly accessible location. The Copyright Office is required to maintain an online directory of designated agents. 17 U.S.C. 512(c)(2). Although this takedown notification process is detailed in subsection 512(c) and is a condition precedent for the limitations of liability under that subsection, the notification process and the elements of notification set forth in subsection 512(c)(3) are also referenced in subsections 512(b) and (d), relating to system caching and information location tools respectively.

Because that Act was effective on its date of enactment and a procedure to enable the designation of agents needed to be in place immediately thereafter, the Copyright Office issued, without opportunity for comment, interim regulations governing the designation by service providers of agents to receive notifications of claimed infringement. 63 FR 59233 (Nov. 3, 1998). The Office made clear that the interim regulations would be replaced by more complete regulations to be promulgated following notice and opportunity for comment. The interim regulations have functioned satisfactorily for many years, but issues have arisen with respect to the currency and accuracy of the information in the directory, and the Office also intends to implement an electronic process by which service providers may designate agents to receive notifications of claimed infringement and an electronic database to search for designated agents of online service providers. This notice provides a general overview of the Office's vision for the new system and seeks public comment on proposed rules that would govern the submission and updating of information relating to designated agents.

Electronic Filing. The Copyright Office is developing an online submission form to be used by service providers to designate their respective agents to receive notifications of claimed copyright infringement. If a service provider chooses to designate an agent, it will be required to utilize the online procedure to submit the required information to the Copyright Office. Service providers that have already designated an agent under the interim regulations will be required to file new designations. A submission that does not provide information for each required field, or that provides information identified as inappropriate ( e.g., a phone number field that is completed with all zeros), will be automatically rejected. Once this electronic system is adopted, the Office will no longer accept paper submissions, including documents entitled “Interim Designation of Agent to Receive Notifications of Claimed Infringement,” as it did pursuant to the interim regulations. Given that online service providers, by definition, operate in an online environment, the Office does not anticipate that an electronic-only designation procedure would be burdensome to submitters. Moreover, an exclusively electronic process is integral to an increase in efficiency and a reduction of costs in the system.

In order to access the electronic designation of agent form, the Office proposes to require service providers to establish accounts with the Copyright Office, obtaining a username and password, through the Copyright Office's Web site. There would be no charge for establishing an account. The account must be used in order to periodically validate designation information or to make changes to designation information. The account will serve as a means of authenticating the person or entity entitled to validate or amend a service provider's designation of agent information. The Office seeks comment on this requirement.

While the Copyright Office is willing to consider allowing a service provider to delegate this responsibility to an agent or other designee, there may be reasons to be concerned about the accuracy of amendments or validations of existing designation information that are not provided by the service provider itself. If the designated agent were permitted to do so, the service provider nevertheless would bave to assume all responsibility for the acts of the agent. The Office seeks public comment on the costs and/or benefits of allowing service providers to delegate, to persons other than their employees, responsibility for maintaining their designated agent information. The current proposed regulation requires that the designation, or any validation or updating of the information in the designation as described below, be submitted by the service provider itself.

Periodic Validation. A small random sampling of a portion of the current directory reveals that a number of existing designations are associated with businesses that have ceased operations. Although the interim regulations require a service provider that ceases operations to notify the Copyright Office by certified or registered mail, few online service providers have complied with this requirement. Similarly, although the Office is unable to discern the precise percentage of designations that contain outdated information, the number of amended designations that the Office does receive suggests that many designations probably are outdated, and it is likely that a sizable portion of paper designations contain information that is no longer accurate. In order to help maintain the accuracy and utility of the directory of designated agents, the Office proposes that each entity that has filed a designation of agent using the online template be required, either annually, every two years, or at some other regular interval, to validate the information set forth in its designation to insure that the directory remains accurate. If any information is no longer accurate, the validation process would enable the responsible party to amend the designation to correct any outdated information. Any revision in a service provider's designation of an agent would create a new record, or version, within the Copyright Office's database. Through the use of “versioning” of the records, the Copyright Office will be able to provide a record indicating what information was in the directory for a particular service provider on any given date. Such information could become important in litigation in order to ascertain whether a service provider was in compliance with the requirements of the statute at a particular point in time. Prior versions of a designation will constitute public records that may be obtained from the Copyright,Office, e.g., when needed for use in litigation. The Office requests comments on whether such prior versions should also be made accessible via the Office's public Web site. In determining whether to make prior versions available via the Web site, consideration should be given to the possible additional cost of constructing a system that provides this form of access (a cost that would most likely be reflected in greater fees), the potential for confusion ( i.e., whether a person seeking current information about a service provider's designated agent might inadvertently end up with the information from a prior version), and the benefit of being able to gain immediate access to such information.

The Office's online system would automatically generate, at specific periods of time ( e.g., 30 and 60 days) prior to the date on which a service provider is required to validate the information in its designation, e-mails to the e-mail address designated by the service provider for the validation process as well as to the designated agent's e-mail address. These e-mails would contain a link to a login screen and allow the service provider to log in and validate or amend the information associated with the service provider's account. The service provider would be required to click on the link or otherwise log into its account, review the designation of agent information, and then either validate the existing information or amend the information no later than the specified deadline for validation. Should the service provider fail to validate or amend its designation within the allotted time, the designation would expire and be removed from the directory, and the service provider would be notified of that fact. A service provider whose designation has been removed but who desires to receive the benefits of section 512 would be required to file a new designation of an agent or, possibly, to reactivate and validate the expired designation. A fee would be assessed for both validation and amendment for purposes of cost recovery. The proposed rule specifies that a service provider must validate the information relating to its designated agent at least every two years, but the Office invites comment as to the appropriate time period.

As is discussed further below (“ Contact Information for the Service Provider” ), the Copyright Office proposes to require the submission of the service provider's e-mail address as well as the e-mail address of the designated agent. This is necessary in order for the Office to transmit reminder notices of validation deadlines. However, only the designated agent's e-mail address will be made publicly accessible through the online directory. The service provider's e-mail address will be maintained for Office correspondence only.

The Office proposes to also require contact information for the person filing the designation if that information is different from contact information for the online service provider, to be used in case the Office has any questions regarding the designation or the designated agent. The Office invites comments as to whether such information should be displayed in the online directory. Moreover, because of the likelihood that over time, a person responsible for the filing and updating of a designation may no longer be employed by the service provider, the proposed regulation would require alternate name and contact information for another person connected with the service provider in the event that the person filing the designation cannot be contacted.

Amending a Designation. The new online filing system will permit a service provider to amend the information in its designation of agent at any time, and not only during the validation process. It is anticipated that any amendments will appear in the online directory no later than 24 hours after they are entered by the service provider. The prior version of the designation will be archived by the Office as an official record, but as noted above, the information contained in that prior version is likely to be removed from the online database.

Currently, the interim regulations require a service provider to submit an entire new designation if any of its information has changed. This requirement has created some confusion and has led to the unintentional elimination of some information because some service providers submitted only the new or changed information ( e.g., the name of a recently purchased Web site), erroneously believing that it would supplement rather than supplant the original designation. The Copyright Office seeks to prevent this confusion by permitting the service provider to make changes only in those fields that contain out of date information. The current information will be the starting point for any changes. For instance, in the field identifying alternative name(s) of the service provider (including DBAs), it will be possible to add to the existing list of names or remove names, or both. It is anticipated that upon amendment of the form, and prior to its submission, the software will generate a preview feature to allow the user to see all of the information that will be contained in the new record.

Amendment of a designation will require the payment of a fee (to be determined) and will generate an e-mail from the Office to the old e-mail address and any new e-mail address(es) provided as a means of reducing the likelihood of unauthorized changes. Even though there will be a fee associated with amending a designation in the Copyright Office's directory, it is prudent for online service providers to maintain current and accurate information, since courts may find that incorrect or outdated information constitutes a material failure to comply with the statutory requirements necessary for invoking the limitations on liability in section 512. See, e.g., Ellison v. Robertson, 189 F. Supp. 2d 1051, 1057-1058 (C.D. Cal. 2002), aff'd in part and rev'd in part and remanded, 357 F.3d 1072 (9th Cir. 2004). Moreover, the Copyright Office requests comment on whether it should set the fee for interim amendments below the fee for periodic validation in order to encourage the timely provision of accurate information.

The Office also intends the amendment process to serve as a means of correcting any mistakes in a previous submission. However, as with all amendments, a fee will be required to correct any mistakes and the previous designation containing the mistakes will be maintained in the Office's archived records.

Overlapping Designations. A related issue has periodically arisen when one service provider transfers a Web site to another service provider, but fails to notify the Office of the change. The result is that when the buyer files its designation of agent and lists the purchased Web site as an alternative name, both the seller's and the buyer's designations include that Web site in the directory. This can create confusion for copyright owners who find two different agents identified in the directory for the same service provider. This problem exists with the current directory. ( See, e.g., the various designations for “Altavista,” at http://www.copyright.gov/onlinesp/list/a_agents.html ) The Office can conceive of two options in such situations. First, the two designations can both exist in the online directory until the time for the validation of the old designation, at which time the old designation would expire. In the meantime, persons seeking the identity of and contact information for a service provider's agent may find two inconsistent listings for the service provider's designated agent and might have to suffer the inconvenience of serving a notice of claimed infringement on both the old and the new designated agent. Alternatively, it might be required that the seller, who has control of the existing entry in the online directory of designated agents, amend the designation to identify the buyer as the new service provider and identifying the new agent (or confirming that the existing agent is continuing in that role). The Office seeks public comment on these alternatives and any other alternatives that might address this issue.

Of course, situations may arise (and have already arisen) in which two different service providers have the same name. This is particularly likely with respect to alternative names ( i.e., other names by which a service provider is doing business). See, e.g., the two entries for “CUA” at http://www.copyright.gov/onlinesp/list/c_agents.html. While the Office is not aware of any filings by two different service providers with the same corporate name, it is certainly conceivable that there might be an XYZ Corporation in Alaska and an unrelated XYZ Corporation in Maine, each of which operates as an online service provider. Each would be entitled to file a designated agent. For that reason, the Office is inclined to conclude that it should play no role in “policing” the submission of potentially conflicting information designating the agents for service providers with the same name.

At the same time, the Office recognizes the possibility of fraudulent (or negligent) filings and solicits comment on whether and how it might resolve such situations without having to engage in the adjudication of disputes over who has the right to designate an online service provider's agent.

Alternatively, problems caused by overlapping designations could possibly be eliminated if the organizing principle of the directory were to be shifted to focus on service provider's web address. See the discussion below (“ Possible Alternative Organizing Principle for Directory: Designation of Web Address” ).

Mandatory Re-filing. As the Office makes the transition to an electronic filing system, it will be necessary that all service providers refile (and, if necessary, update) their previously filed designations of agents to receive notifications of claimed infringement. The Office proposes the requirement for two reasons: (1) As noted above, due to the passage of years since it was created, the current directory contains out-of-date information, including information about service providers that no longer exist, and (2) the current directory consists of a list of service providers with a link, for each service provider, to a pdf file of the paper “Interim Designation of Agent to Receive Notifications of Claimed Infringement” or “Amended Interim Designation of Agent to Receive Notifications of Claimed Infringement” that was submitted to the Office by the service provider. The new directory will consist of a database to be populated with data entered online by the service provider itself. In order to ensure that the database contains accurate, up-to-date information, and in order to avoid requiring Copyright Office personnel to key in the information from the existing directory, creating additional costs that would have to be passed on to service providers and creating the potential for errors as the information is keyed into the directory, the Office proposes to place the burden of supplying complete, up-to-date information on service providers, who are in the best position to ensure that the new directory consists of complete and accurate information.

Upon adoption of the electronic system, an approximately one year transition period will begin. During the transition period, the existing paper-generated database will be maintained. At the same time, the new designated agent database will begin to be populated and no new paper designations will be accepted. During the transition period, a listing in either database will satisfy the requirements of section 512(c)(2) and parties seeking to locate a service provider's designated agent will need to search both databases. Approximately one year after the effective date of the final rule, all paper-submitted designations will become invalid and only those designations contained in the new electronically-submitted directory will satisfy the statutory requirement for designating an agent with the Copyright Office.

Filing Fee. The Copyright Office will establish fees to file, validate, or amend a designation of agent to receive notifications of claimed copyright infringement. In each instance, a new record, or version, will be created, including when a preexisting record is simply validated. The Office will conduct a cost study as it builds the online system to determine the appropriate fee or fees and then will publish an additional notice of proposed rulemaking to seek comments on the proposed fees. Such fee(s) will also be incorporated into the Office's general fee schedule set forth at 37 CFR 201.3. The online filing fee may be less than the current $105 fee for a paper filing due to the likely decrease in human labor required to manually input and cross-reference the information to the online directory of designated agents appearing on the Copyright Office's Web site, but it is likely that part of the fee, during an initial period of time, will be used to recoup the costs of building the new online system. Since a validation or an amendment will result in a replacement of the prior version, there is likely to be a fee associated with these transactions, but the fees for amendment and/or validation may be lower than the initial filing fee. The cost study will also examine the additional cost associated with indexing multiple alternative names for a single service provider. Based on a random sampling of a portion of the designations, the Office concludes that the majority of service providers list five or fewer alternative names, but that a significant remainder list fifty to as many as three thousand alternative names. While the Office is inclined to continue to make it possible for service providers to list as many alternative names as they deem relevant in order to enhance the utility of the directory, those service providers with larger numbers of alternative names should pay their proportionate share of the indexing cost. Therefore, the Office contemplates continuing to charge an additional fee for alternative names of the online service provider. Currently, the Copyright Office charges $30 for each group of ten (or fewer) alternative names, but for technical reasons it is preferable to charge at least a nominal fee for each alternative name.

Content. The Office proposes that the information required from service providers through the online submission process should be, for the most part, the same as that currently required on the paper designations under the interim regulation. Under the proposed regulatory amendment, a service provider would be required to state its full legal name, its physical street address, its e-mail address (a new requirement; see the discussion below), all alternative names under which it does business, and the name, address, telephone number, and e-mail address of the agent designated to receive notification of claimed infringement. The Office is inclined to continue to require that the e-mail address be submitted in traditional format ( e.g., userid@domain.com ) so that it can automatically verify the authenticity of the address and return e-mails to that address. Some concern has been expressed in the past about displaying the agent's e-mail address on the Office's Web site, and suggestions have been made to the Office to display e-mail addresses as text ( e.g., userid at domain dot com) in order to reduce automated harvesting and spam software programs from locating service providers' e-mail addresses. While the Copyright Office is sympathetic to this problem, it is a fact of the Internet that online users and online service providers must resolve by their own means. Translating working e-mail addresses into text and vice versa would require additional programming costs and may create additional problems for the system. Moreover, the whole point of the database is to make it easy to locate a service provider's designated agent and to serve a notification of claimed infringement on that agent. On balance, it seems that there is more to be said for facilitating such notifications by providing an operable e-mail address than for requiring someone who wishes to send such a notification to key in the address in each case. Accordingly, the Office is not inclined to alter e-mail addresses within the database, but solicits comments from the public on this issue.

Service Provider Identity and Alternative Names. In addition to the legal name of the individual or corporation meeting the statutory definition of a service provider, the Office allows the service provider to list any alternative names (including DBAs) that would enable a copyright owner to identify the service provider and its agent. The Copyright Office leaves the determination of what alternative names to include up to the service provider, but the information provided should reasonably identify the service provider.

Agent's Identity. Under the interim regulation, the Office initially required the online service provider to identify the proper name of the designated agent to whom notifications of alleged copyright infringement are to be sent. However, as a result of concerns that personnel changes could inadvertently render a designation of agent obsolete, the Office has subsequently allowed service providers to designate a specific position or a particular title ( e.g., Copyright Manager, VP legal affairs, or General Counsel) rather than an individually named person as its agent. The Office is inclined to allow such designations in the proposed rule, but is not inclined to permit a service provider to designate an entity generally ( e.g., law firm or copyright management agency) as its agent. The Office is concerned that notices of claimed infringement addressed to a general entity, rather than a natural person or specific title, will be overlooked or not attended to in a timely fashion. This concern is reduced when a service provider designates a specific position or title at an entity or a natural person as its agent, particularly when that role is associated with a specific e-mail address.

Section 512(c)(2)(A) specifies that the limitation of liability under subsection (c) is contingent on substantially providing “the name, address, phone number and electronic mail address of the agent.” The legislative history explains that: “The substantial compliance standard in subsections (c)(2) and (c)(3) are intended to be applied so that technical errors (such as misspelling a name, supplying an outdated area code if the phone number is accompanied by an accurate address, or supplying an outdated name if accompanied by an e-mail address that remains valid for the successor of the prior designated agent or agent of a copyright owner) do not disqualify service providers and copyright owners from the protections afforded under subsection (c). It is expected that the parties will comply with the functional requirements of the notification provisions—such as providing sufficient information so that a designated agent or the complaining party submitting a notification may be contacted efficiently—in order to ensure that the notification and take down procedures set for in this subsection operate smoothly.” Staff of House Committee on the Judiciary, 105th Cong., Section-By-Section Analysis of H.R. 2281 as Passed by the United States House of Representatives on August 4, 1998, (Rep. Coble) (Comm. Print 1998), at 31-32. Accord: Report of the House Committee on Commerce on the Digital Millennium Copyright Act of 1998, H.R. Rep. No. 105-551, pt. 2, at 56 (1998).

The only judicial decision to address whether Congress's use of the word “name” requires a personal name or may be interpreted broadly to encompass a position or title, in dictum, stated that “[n]othing in the DMCA mandates that service providers must designate the name of a person as opposed to a specialized department to receive notifications of claimed infringement.” Hendrickson v. eBay Inc., 165 F. Supp. 2d 1082, 1092, fn. 13 (C.D. CA 2001).

The Office invites public comment on the question of whether an online service provider must provide the actual name of a natural person or whether the name of a specific position or title will satisfy this requirement.

The Office is also inclined to permit a service provider to designate as an agent a position or individual within the service provider's organization itself rather than requiring the agent to be an unrelated third party. Since there are arguably both benefits and drawbacks to having a third party or an internal representative serve as the agent, the Office is inclined to permit each service provider to make the decision that best suits its needs. The Office is not, however, inclined to permit the designation of multiple agents, as doing so would unjustifiably complicate the statutory process. Although the Office is sensitive to the concern that multiple agents would be helpful in case of personnel turnover, the Office believes that the ability to name a position or title rather than an individual adequately addresses this issue.

Contact Information for the Service Provider. The statute addresses some of the information a service provider must provide to the Copyright Office, but also authorizes the Register of Copyrights to determine any additional contact information that is deemed appropriate. Under the current interim regulation, the service provider is required only to provide its legal name and permitted to provide alternative names used by the service provider. The Office is inclined to require the service provider to provide an e-mail address in order to send validation notifications to the service provider as well as the designated agent. This information is sought for the benefit of the service provider so that it is directly on notice of the impending validation requirement and potential expiration of its designated agent's listing with the Copyright Office. Since the service provider will be required to create an account in order to use the online system, the service provider will also be required to use that account to validate or amend the designation. Therefore, it is necessary to have a means of contacting the service provider. However, this e-mail address will not be posted in the Copyright Office's directory of designated agents, but rather used by the Office for the maintenance of the designated agent listing.

Contact Information for the Designated Agent. The statute requires the online service provider to provide the telephone number and e-mail address of the designated agent. This information is central to the requirements of 512(c)(2) and it is particularly important that it be kept current. See, e.g., Ellison v. Robertson, 189 F. Supp. 2d 1051, 1057-1058 (C.D. Cal. 2002), aff'd in part and rev'd in part and remanded, 357 F.3d 1072 (9th Cir. 2004). A fax number may be provided, but is optional information that supplements, but does not supersede the requirement of listing a telephone number and e-mail address for the designated agent.

Service Provider's and Agent's Address. The Office proposes to change its rules to permit a post office box to serve as a designated agent's address. The Office proposes this change due to concerns raised about an agent's privacy, particularly where the agent's only address is a home address. However, the Office proposes not, as a matter of course, to permit a post office box to serve as the address for a service provider, as it can be important that copyright owners are able to physically locate the service provider, e.g., for service of process. The Register of Copyrights may waive this prohibition in exceptional circumstances upon written request from the service provider.

The Office is also taking this opportunity to clarify that a designated agent's address can be outside of the United States; because a copyright owner is permitted to give notice of claimed infringement via e-mail, the copyright owner bears no additional expense or burden in giving notice to an agent located in a foreign country. The Office also permits a service provider to list a foreign address for itself. Although the limitations on liability in the United States Copyright Act may not apply to a particular foreign entity, the Office believes that if a U.S. court finds cause to assert jurisdiction over a foreign service provider pursuant to the U.S. Copyright Act, then no reason exists why the Copyright Office's regulations should prohibit that service provider from having filed a designation of agent as a condition precedent to receiving the benefits of the limitations of liability afforded by section 512.

Signature. The Office proposes to eliminate the requirement of an actual signature, which has been a requirement for the paper designations that have been submitted up to now. Because all online filings will require the creation of an online account as well as payment via pay.gov with a credit card, a checking account, or a Copyright Office deposit account, the online system will be able to reasonably verify and authenticate the identity of the person submitting, validating or amending the designation of agent filing. The person submitting the designation will also be required to provide contact information and attest to his or her authority to file on behalf of the subject service provider.

Related Service Providers. The Copyright Office solicits comments as to whether related service providers ( e.g., parent and subsidiary companies) should be permitted to file a single, joint designation of agent to receive notifications of claimed infringement. Under the interim regulations, related companies are considered separate entities and thus required to file separate designations. The Office has received occasional complaints from service providers about the inefficiency of this practice. The Office is receptive to any process which eases the burden on service providers without sacrificing clarity and usefulness of the online directory, and is inclined to permit related service providers to file a joint designation. However, it may be that any efficiency gained by a joint filing would be undercut should changes to a designation become necessary. For example, if one of the related companies were to change its address, agent or one of its Web site alternative names, then the joint designation would have to be revised and perhaps even severed to account for the then-current information of each of the related companies. In contrast, if each company had maintained its own designation, then a change at one company would only affect one designation.

If the Office permits joint designations, the service providers named on a joint designation would be required to have and state a legally recognized relationship ( e.g., parent/subsidiary). Informal teaming arrangements would not be acceptable for a joint filing. The person submitting the designation would be required to certify that this requirement had been satisfied and that he or she has the authority of each service provider named on the joint designation to make the submission on each service provider's behalf. The Office will examine as part of its cost study whether there is any additional cost associated with processing a joint designation. If such a fee is imposed, it will be incorporated into the Copyright Office's general fee schedule. The Office requests comments on this proposed change and any information that would weigh in favor of or against such a change. The Copyright Office is particularly interested in knowing whether the benefits of such a change for an online service provider are outweighed by other considerations.

Possible Alternative Organizing Principle for Directory: Designation of Web Address. As noted above, one possible means of minimizing the number of overlapping designations would be to require that a separate designation be filed for each web address. Since all or almost all service providers operate via Web sites, and since in most if not all cases a single web address will be used by only one service provider, requiring that a separate designation be submitted for each web address could effectively prevent all or almost all such duplicative designations. Since each web address is unique, providing that a designation of the agent for a particular web address will not be changed without the consent of the service provider currently identified in that designation in the Office's database should insure against contradictory entries in the directory. Moreover, it may well be that Web addresses are the principal means by which persons identify service providers. A substantial portion of the names currently used in the directory of agents consists of web domains.

The Office seeks comment on whether requiring a separate designation for each web address is the preferable means of organizing the directory. If so, a further question arises as to whether service providers should continue to be able to identify additional names by which they are known, which would be searchable in the directory. Conceivably, the web address is the primary or even the only name that a person searching the directory would need to ascertain who the designated agent of a service provider is.

However, further thought needs to be given to what is meant by “web address.” As a general proposition, this would be the basic domain ( e.g., loc.gov, google.com, or verizon.net ) We recognize the possibility that sometimes, multiple service providers will use the same domain, but in such cases it is our understanding that each service provider would be using a different subdomain ( e.g., thomas.loc.gov).or folder ( e.g., loc.gov/crb). The Office seeks comments on the extent to which subdomains and folders are used by separate service providers, and whether separate designations of agents should be permitted for subdomains and for Uniform Resource Locators (“URLs”) of folders within a domain.

If using web addresses as the organizing principle for the directory makes sense, the Office also seeks comment on whether, as an alternative to a web address, a service provider could in appropriate circumstances identify itself by reference to the name of the “app” through which it offers online services. By “app,” we refer to “an application, typically a small, specialized program downloaded onto mobile devices.” See http://dictionary.reference.com/browse/app (definition of “app”). While it is the Office's impression that as a general proposition, any app currently will be associated with a particular Web site, further information about the current and likely future usage of apps as online services will assist the Office in fleshing out the requirements for the new online directory.

The Copyright Office invites comments on any and all aspects of the proposed regulations and of the proposed new system for processing online service provider agent designations discussed above.

In consideration of the foregoing, the Copyright Office proposes to amend 37 CFR part 201 as follows:

Because EPA has discovered additional information pertinent to the final disposition of the petition, we are withdrawing the proposed rule for Republic Services, Inc./BFI Gulf West Landfill (Gulf West) located in Anahuac, TX, published on January 28, 2011 (76 FR 5110). EPA subsequently received information after the comment period which highlighted several deficiencies in the data submitted by Gulf West. EPA will return the December 2009 petition submitted by Gulf West. No further action will be taken on this petition. A new petition will be required for this waste stream.

The Federal Emergency Management Agency (FEMA) proposes to make determinations of BFEs and modified BFEs for each community listed below, in accordance with section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR 67.4(a).

These proposed BFEs and modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities. These proposed elevations are used to meet the floodplain management requirements of the NFIP and also are used to calculate the appropriate flood insurance premium rates for new buildings built after these elevations are made final, and for the contents in those buildings.

Comments on any aspect of the Flood Insurance Study and FIRM, other than the proposed BFEs, will be considered. A letter acknowledging receipt of any comments will not be sent.

National Environmental Policy Act. This proposed rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act. As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Executive Order 12866, Regulatory Planning and Review. This proposed rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866, as amended.

Executive Order 13132, Federalism. This proposed rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This proposed rule meets the applicable standards of Executive Order 12988.

Accordingly, 44 CFR part 67 is proposed to be amended as follows:

This is a summary of the Commission's Notice of Proposed Rulemaking, FCC 11-138, adopted and released on September 19, 2011. The full text is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, SW., CY-257, Washington, DC 20554. This document will also be available via ECFS at http://fjallfoss.fcc.gov/ecfs/. Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat. The complete text may be purchased from the Commission's copy contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an e-mail to fcc504@fcc.gov or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

This document contains proposed information collection requirements. As part of its continuing effort to reduce paperwork burden and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission invites the general public and other Federal agencies to comment on the following information collection(s). Public and agency comments are due November 28, 2011.

Comments should address: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”

To view or obtain a copy of this information collection request (ICR) submitted to OMB: (1) Go to this OMB/GSA Web page: http://www.reginfo.gov/public/do/PRAMain , (2) look for the section of the Web page called “Currently Under Review,” (3) click on the downward-pointing arrow in the “Select Agency” box below the “Currently Under Review” heading, (4) select “Federal Communications Commission” from the list of agencies presented in the “Select Agency” box, (5) click the “Submit” button to the right of the “Select Agency” box, and (6) when the list of FCC ICRs currently under review appears, look for the OMB control number of this ICR as show in the SUPPLEMENTARY INFORMATION section below (or its title if there is no OMB control number) and then click on the ICR Reference Number. A copy of the FCC submission to OMB will be displayed.

OMB Control Number: 3060-XXXX.

Title: Section 79.4, Closed Captioning of Video Programming Delivered Using Internet Protocol.

Form Number: Not applicable.

Type of Review: New collection.

Respondents: Individuals or households; Businesses or other for-profit entities; Not-for-profit institutions.

Number of Respondents and Responses: 1,140 respondents; 12,225 responses.

Estimated Time per Response: 0.084-5 hours.

Frequency of Response: On occasion reporting requirement; Recordkeeping requirement.

Obligation to Respond: Voluntary and required to obtain or retain benefits. The statutory authority for this collection of information is contained in 47 U.S.C. 154(i), 154(j), 303(r), and 613.

Total Annual Burden: 6,140 hours.

Total Annual Costs: $420,000.

Privacy Act Impact Assessment: Yes. The Privacy Impact Assessment (PIA) was completed on June 28, 2007. It may be reviewed at: http://www.fcc.gov/omd/privacyact/Privacy_Impact_Assessment.html. The Commission is in the process of updating the PIA to incorporate various revisions made to the SORN.

Nature and Extent of Confidentiality: Confidentiality is an issue to the extent that individuals and households provide personally identifiable information, which is covered under the FCC's system of records notice (SORN), FCC/CGB-1, “Informal Complaints and Inquiries.” As required by the Privacy Act, 5 U.S.C. 552a, the Commission also published a SORN, FCC/CGB-1 “Informal Complaints and Inquiries”, in the Federal Register on December 15, 2009 (74 FR 66356) which became effective on January 25, 2010.

Needs and Uses: The Commission is seeking approval for this proposed information collection from the Office of Management and Budget (OMB). On September 19, 2011, the Commission released a Notice of Proposed Rulemaking, MB Docket No. 11-154; FCC 11-138. This rulemaking proposed information collection requirements that support the Commission's IP closed captioning rules that would be codified at 47 CFR 79.4, as required by the CVAA.

The proposed information collection requirements consist of:

Pursuant to proposed 47 CFR 79.4(c)(1)(i), video programming owners must send program files to video programming distributors and providers either with captions as required by Section 79.4, or with a dated certification that captions are not required for a specified reason.

Pursuant to proposed 47 CFR 79.4(c)(1)(ii), video programming owners must provide video programming distributors and providers with any revised certifications and newly required captions (if captions were not previously delivered) within seven days of the underlying change.

Pursuant to proposed 47 CFR 79.4(c)(2)(ii), video programming distributors and providers must retain all certifications received from video programming owners pursuant to proposed 47 CFR 79.4(c)(1)(i)-(ii) for so long as the video programming distributor or provider makes the certified programming available to end users through a distribution method that uses IP and thereafter for at least one calendar year.

Pursuant to proposed 47 CFR 79.4(e), a video programming provider or owner may petition the Commission for a full or partial exemption from the closed captioning requirements for IP-delivered video programming based upon a showing that they would be economically burdensome.

Petitions for exemption must by filed with the Commission, placed on Public Notice, and be subject to comment from the public.

Pursuant to proposed 47 CFR 79.4(f)(1), a complaint alleging a violation of the closed captioning rules for IP-delivered video programming may be filed with the Commission. Proposed 47 CFR 79.4(f)(1) would require such a complaint to be in writing, and to include:

The name and address of the complainant;

The name and postal address, Web site, or e-mail address of the video programming distributor, provider, and/or owner against whom the complaint is alleged, and information sufficient to identify the video programming involved;

Information sufficient to identify the software or device used to view the program;

A statement of facts sufficient to show that the video programming distributor, provider, and/or owner has violated or is violating the Commission's rules, and, if applicable, the date and time of the alleged violation;

The specific relief or satisfaction sought by the complainant; and

The complainant's preferred format or method of response to the complaint (such as letter, facsimile transmission, telephone (voice/TRS/TTY), e-mail, or some other method that would best accommodate the complainant).

The Commission is seeking OMB approval for the proposed information collection requirements.

1. The Twenty-First Century Communications and Video Accessibility Act of 2010 (“CVAA”) requires the Federal Communications Commission (“Commission”) to revise its regulations to mandate closed captioning on certain video programming delivered using Internet protocol (“IP”). 1 In this Notice of Proposed Rulemaking (“ NPRM ”), we initiate a proceeding that will fulfill this requirement. We seek comment on proposals that would better enable individuals who are deaf or hard of hearing to view IP-delivered video programming, by requiring that programming be provided with closed captions if it was shown on television with captions after the effective date of the rules adopted pursuant to this proceeding. We also seek comment on requirements for the devices that are subject to the CVAA's new closed captioning requirements. 2 Our goal is to require the provision of closed captions with IP-delivered video programming in the manner most helpful to consumers, while ensuring that our regulations do not create undue economic burdens for the distributors, providers, and owners of online video programming.

2. Closed captioning is an assistive technology that provides individuals who are deaf or hard of hearing with access to television programming. Closed captioning displays the audio portion of a television signal as printed words on the television screen. Existing regulations require the use of closed captioning on television. 3 Until now, however, closed captioning has not been required for IP-delivered video programming. That changed with the enactment of the CVAA. Specifically, Section 202(b) of the CVAA revised Section 713 of the Communications Act of 1934, as amended (the “Act”), to require the Commission to “revise its regulations to require the provision of closed captioning on video programming delivered using Internet protocol that was published or exhibited on television with captions after the effective date of such regulations. 4

3. The CVAA also required the Chairman of the Commission to establish an advisory committee known as the Video Programming Accessibility Advisory Committee (“VPAAC”). 5 Section 201(e)(1) of the CVAA required the VPAAC to submit a report on closed captioning to the Commission six months after its first meeting, or by July 13, 2011. 6 The VPAAC submitted this report on July 12, 2011. 7 By statute, within six months of the submission of the VPAAC Report, the Commission must issue final regulations to require the provision of closed captioning on IP-delivered video programming. 8 Accordingly, the Commission must revise its regulations by January 12, 2012. 9 By the same date, pursuant to Section 203 of the CVAA, the Commission must revise its regulations to include any technical standards, protocols, and procedures needed for the transmission of closed captioning delivered using IP, to ensure that certain apparatus are capable of rendering, passing through, or otherwise permitting the display of closed captions for end users. 10

We consider below revisions to our rules that would implement the requirements of Sections 202(b) and 203 of the CVAA, as well as the conforming amendment set forth in Section 202(c) of the CVAA. These proposals could fulfill Congress' goal of enabling consumers who are deaf or hard of hearing to have access to IP-delivered video programming. As discussed below, we seek comment on rule changes that would:

• Specify the obligations of entities subject to Section 202(b) by:

• Requiring video programming owners to send required caption files for IP-delivered video programming to video programming distributors and video programming providers along with program files;

• Requiring video programming distributors and video programming providers to enable the rendering or pass through of all required captions to the end user; and

• Requiring the quality of all required captioning of IP-delivered video programming to be of at least the same quality as the captioning of the same programming when shown on television;  11

• Create a schedule of deadlines by which:

○ All prerecorded and unedited programming subject to the new requirements must be captioned within six months of publication of the rules in the Federal Register ;

○ All live and near-live programming subject to the new requirements must be captioned within 12 months of publication of the rules in the Federal Register ; and

○ All prerecorded and edited programming subject to the new requirements must be captioned within 18 months of publication of the rules in the Federal Register ;  12

• Craft procedures by which video programming providers and video programming owners may petition the Commission for exemptions from the new requirements based on economic burden;  13

• Establish a mechanism to make information about video programming subject to the CVAA available to video programming providers and distributors, by requiring video programming owners to provide programming for IP delivery either with captions, or with a certification that captions are not required for a stated reason;  14

• Decline to adopt particular technical standards for IP-delivered video programming;  15

• Decline to treat a de minimis failure to comply with the new rules as a violation, and permit entities to comply with the new requirements by alternate means;  16 and

• Adopt procedures for complaints alleging a violation of the new requirements. 17 Additionally, we seek comment on the appropriate requirements for devices subject to the closed captioning requirements of Section 203. 18

5. Captions first appeared on television in the early 1970s in an “open captioning format” by which the text was transmitted with the video in a manner that was visible to all viewers. 19 In 1977, the Commission adopted rules providing that line 21 of the vertical blanking interval (“VBI”) would be used primarily for the transmission of closed captioning to analog receivers. 20 For analog television, closed captioning is transmitted through encoded data within the television signal's VBI “which, when decoded, provides a visual depiction of information simultaneously being presented on the aural channel (captions). 21 Since closed captioning is hidden as encoded data transmitted within the television signal, receivers can be (and are) designed to allow consumers to turn the captioning on and off. 22 In addition to displaying the audio portion of a television signal as printed words, captions may identify speakers, sound effects, music, and laughter. 23

6. The Television Decoder Circuitry Act of 1990 (“TDCA”)  24 required all television receivers with screen sizes of 13 inches or larger, manufactured or sold in the United States, to possess closed captioning capability. 25 In the years that followed, the use of closed captioning increased somewhat, through the voluntary efforts of the video programming industry. 26 As the number of channels of video programming increased, Congress remained concerned that “video programming through all delivery systems should be accessible” to individuals who are deaf or hard of hearing. 27

7. In the Telecommunications Act of 1996, Congress added a new section entitled “Video Programming Accessibility” to the Act. 28 To ensure access for individuals with hearing disabilities, Section 713 of the Act requires the closed captioning of video programming. 29 In 1997, the Commission adopted rules and implementation schedules for closed captioning of video programming, as required by Section 713. 30 The schedules varied based on whether programming is analog or digital, Spanish or English, and whether it is pre-rule ( i.e. , older) or new programming. Today, all new English and Spanish language television programming that is subject to the rule must be provided with closed captions, 31 and 75 percent of pre-rule English language television programming that is subject to the rule must be provided with closed captions. 32 In 2000, the Commission adopted rules governing the display of captions on digital receivers, and the Commission's rules now specify technical standards for the reception and display of captioning on both analog and digital receivers. 33

8. Today, IP-delivered video programming takes a number of forms, such as programming delivered to a personal computer, tablet device, cellular telephone, game console, Blu-ray player, or set top box. The Commission previously recognized that the Internet has become a powerful method of video programming distribution, and that the amount of video content available on the Internet is continuing to increase significantly each year, as consumers increasingly utilize the Internet for this purpose. 34 The Internet's role in video programming delivery “has progressed from negligible just a few years ago to an increasingly mainstream role today.”  35 Although much IP-delivered video programming remains inaccessible to individuals who are deaf or hard of hearing, certain entities have taken voluntarily measures to begin including captions on some of their programming. 36

9. Through the CVAA, Congress sought to “update the communications laws to help ensure that individuals with disabilities are able to fully utilize communications services and equipment and better access video programming.”  37 The Committee reports state that, while modern technology such as the Internet has everyday benefits, those benefits are not always accessible to people with disabilities. 38 Section 202(b) of the CVAA requires the Commission to revise its regulations to require closed captioning of IP-delivered video programming that was shown on television with captions after the effective date of the new regulations. 39

10. The CVAA applies broadly to the distributors, providers, and owners of IP-delivered video programming. Specifically, Section 202(b) of the CVAA amends Section 713 of the Act to require the Commission's regulations to “include an appropriate schedule of deadlines for the provision of closed captioning, taking into account whether such programming is prerecorded and edited for Internet distribution, or whether such programming is live or near-live and not edited for Internet distribution. 40 The Commission may delay or waive the requirements if application to live IP-delivered video programming is “economically burdensome to providers of video programming or program owners, ”  41 and it may exempt a “service, class of service, program, class of program, equipment, or class of equipment for which the Commission has determined that the application of such regulations would be economically burdensome for the provider of such service, program, or equipment. ”  42 Section 202(b) of the CVAA also requires the Commission to “establish a mechanism to make available to video programming providers and distributors information on video programming subject to the [CVAA] on an ongoing basis. ”  43 Section 202(b) further directs the Commission not to find that a de minimis failure is a violation, 44 and to permit entities to meet the new requirements by alternate means. 45 Finally, Section 202(c) of the CVAA consists of a “conforming amendment” to Section 713(d) of the Act, regarding the process for petitioning for an exemption. 46