[Federal Register Volume 63, Number 229 (Monday, November 30, 1998)]
[Rules and Regulations]
[Pages 65657-65660]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31953]


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DEPARTMENT OF JUSTICE

Immigration and Naturalization Service

8 CFR Parts 103, 214, and 299

[INS 1962-98]
RIN 1115-AF31


Petitioning Requirements for the H-1B Nonimmigrant Classification 
Under Public Law 105-277

agency: Immigration and Naturalization Service, Justice.

action: Interim rule with request for comments.

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summary: This interim rule amends the Immigration and Naturalization 
Service's (Service) fee schedule and regulations with respect to filing 
requirements for Form I-129, Petition for H-1B Nonimmigrant Worker, for 
alien workers coming to perform services in a specialty occupation. 
Specifically, this rule amends the regulations to reflect an additional 
$500 billing fee, added by the American Competitiveness and Workforce 
Improvement Act (ACWIA), for H-1B petitions filed on or after December 
1, 1998. This rule also describes the organizations that are exempt 
from the new fee requirements. Finally, this rule amends the 
regulations to reflect the new annual numerical limits on H-1B 
classification.

dates: Effective date: This rule is effective December 1, 1998.
    Comment date: Written comments must be submitted on or before 
January 29, 1999.

addresses: Please submit the original and two copies of written 
comments to the Director, Policy Directives and Instructions Branch, 
Immigration and Naturalization Service, 425 I Street NW., Room 5307, 
Washington, DC 20536. To ensure proper handling, please reference the 
INS No. 1962-98 on your correspondence. Comments are available for 
public inspection at the above address by calling (202) 514-3048 to 
arrange for an appointment.

for further information contact: John W. Brown, Adjudications Officer, 
Benefits Division, Immigration and Naturalization Service, 425 I Street 
NW., Room 3214, Washington, DC 20536, telephone (202) 514-4754.

supplementary information:

Background

    On October 21, 1998, Congress enacted the American Competitiveness 
and Workforce Improvement Act of 1990 (ACWIA), as Title IV of Div. C of 
Public Law 105-277. This new legislation amended and created several 
statutory provisions relating to the H-1B nonimmigrant classification. 
These amendments include, among others:
    (1) revisions to the attestation requirements for labor condition 
applications (LCA) under section 212(n) of the Immigration and 
Nationality Act (INA);
    (2) new penalties and definitions of violations of LCA conditions;
    (3) amendments to prevailing wage computations for academic and 
research organizations; and
    (4) data collection and reporting requirements.
    The Department of Labor is primarily responsible for administration 
and enforcement of the labor condition application and associated 
penalties. Therefore, as a number of these provisions require close 
coordination between the Department of Labor and the Service, they will 
be the subject of a separate rulemaking.
    For this rulemaking, the Service is implementing only the 
provisions of section 414(a) and 415(a) of ACWIA, addressing the new 
fees for United States employers filing petitions for H-1B 
nonimmigrants and the organizations that are exempt from the new fee 
requirements. The Service is also revising the regulations at 
Sec. 214.2(h)(8)(i)(A) to reflect the increase in the annual 
limitations on the number of aliens who can be granted an H-1B visa or 
otherwise accorded such status.

What Is the New Fee Required by H-1B Petitions?

    ACWIA requires certain H-1B petitioners to pay an additional fee of 
$500, in addition to the standard $110 filing fee for Form I-129 
petitions. This $500 fee will be disbursed between the Department of 
Labor and National Science Foundation for job training, low-income 
scholarships, grants for mathematics, engineering, or science 
enrichment courses, systematic reform activities, and administration 
and enforcement of the H-1B program. The Service will receive 1.5 
percent of the fee as reimbursement for the costs of collection and 
processing of H-1B nonimmigrant petitions.

Who Is Required to Pay This Fee?

    The new $500 filing fee must be paid by United States employers 
when they file H-1B petitions on or after December 1, 1998, and before 
October 1, 2001, for any of the following purposes:
    (1) an initial grant of H-1B status under section 
101(a)(15)(H)(i)(b) of the INA;
    (2) an extension of stay for individuals currently in H-1B status; 
or
    (3) authorization for a change in employment for individuals 
currently in H-1B status.
    All United States employers seeking authorization for a change in 
employment (e.g., a change from one specialty occupation to another 
specialty occupation) for an H-1B nonimmigrant must pay the additional 
$500 fee, regardless of whether the request for change in employment is 
the first request for such a change or a subsequent request for the 
same H-1B nonimmigrant. For employers seeking an extension of stay 
under Sec. 214.2(h)(15)(i), the additional $500 fee only applies to the 
first extension request. However, in instances where a new employer has 
received approval for a change in employment for an H-1B nonimmigrant 
and subsequently seeks an extension of stay for that H-1B worker, the 
new employer must also pay the additional $500 filing fee for its first 
request for extension of stay, regardless of whether the prior employer 
had requested an extension of stay for the H-1B nonimmigrant. Finally, 
the additional fee will not be required for employers filing amended 
petitions under Sec. 214.2(h)(2)(i)(E), unless the

[[Page 65658]]

petition has the effect of extending the alien's status and is the 
first petition that the employer has filed to extend that alien's 
status.
    Employers should note that the additional $500 filing fee is not 
waivable under Sec. 103.7(c)(1).

What Are the Application Procedures for H-1B Petitions in Light of 
the New Fee Requirements?

    All H-1B petitions filed on or after December 1, 1998, for new H-1B 
employment, concurrent employment, sequential employment, and the first 
extension of stay filed by an employer for the alien, must be filed in 
accordance with Sec. 103.2(a), at the Service Center having 
jurisdiction over the area where the alien will perform the specialty 
occupation services. The completed Form I-129 must be accompanied by 
the required $110 filing fee and an additional $500 fee in a single 
remittance (one check or money order) of $610, unless the United States 
employer is an ``exempt organization'' as defined under 
Sec. 214.2(h)(19)(iii).
    Those United States employers claiming exemption from the 
additional $500 filing fee should submit a completed Form I-129, the 
$110 filing fee, the Form I-129W, Petition for Nonimmigrant Worker, 
Filing Fee Exemption, and evidence that their organization is an 
``exempt organization'' as defined in Sec. 214.2(h)(19)(iii).
    Employers should note that under section 413(a) of ACWIA, which 
amends section 212(n)(2)(C) of the INA, an employer may not require an 
alien beneficiary to reimburse or otherwise compensate the employer for 
all or part of an H-1B petition filing fee. Therefore, the Service will 
reject remittances from an alien beneficiary or the alien's 
representative that accompanies an H-1B petition.

Who Is Exempt From the $500 Filing Fee?

    The only organizations exempt from paying the additional $500 fee 
for filing H-1B petitions are:
    (1) institutions of higher education, as defined in section 101(a) 
of the Higher Education Act of 1965, or related or affiliated nonprofit 
entities, and
    (2) nonprofit or governmental research organizations.
    The Service has created preliminary definitions for the terms 
``nonprofit'' and ``research'' and the phrase ``related or 
affiliated,'' drawing on generally accepted definitions of the terms. 
In addition, the Service has drawn from definitions of the terms. In 
addition, the Service has drawn from definitions contained in the 
regulations of the Internal Revenue Service (IRS), 26 CFR 1.501(c)(3)-
1, (c)(4)-1, and (c)(6)-1, and Small Business Administration, 13 CFR 
121.103. The Service also consulted with the Department of Labor and 
nonprofit and academic organizations for assistance in developing the 
definitions reflected in this rulemaking. In addition, these 
definitions will be the subject of a separate rulemaking proceeding 
with an opportunity for public comment when the Service and the 
Department of Labor address section 415 and subtitle C of ACWIA. The 
definitions are set forth in new Sec. 214.2(h)(19)(iii). We invite 
public comment on this section.

Which H-1B Petitions Are Affected by ACWIA?

    The new law only applies to petitions filed on or after December 1, 
1998, and before October 1, 2001. For purposes of determining whether a 
petition is filed on or after December 1, 1998, the Service will rely 
on its existing regulation at Sec. 103.2(a)(7), under which ``filing'' 
occurs on the date of receipt. As Senator Abraham stated in the House 
Conference Report 105-825, October 21, 1998, 2nd. Sess. 1998, ACWIA was 
the product of combined efforts by Congress and the business industry 
to implement changes in the H-1B nonimmigrant program. The Service 
believes that United States employers filing for H-1B nonimmigrant 
workers are well aware of the new fee requirements and the December 1, 
1998, effective date for the new fee. In addition, since the Service 
has existing regulations governing filing and receipt of benefit 
applications, and employers of H-1B nonimmigrant workers are familiar 
with these regulations, United States employers should not have 
difficulty complying with the new fee requirement.
    In the rulemaking, the Service also is requiring that a United 
States employer claiming to be an ``exempt organization'' must provide 
the Service with evidence of its section 501 (c)(3), (c)(4), or (c)(6) 
tax exempt status. The Service understands from the IRS that certain 
organizations (e.g., churches) qualify for nonprofit status even 
without a notice from the IRS confirming such status. The Service, 
however, believes that most employers of specialty occupation workers 
claiming an exemption will be able to meet this evidentiary 
requirement, either with a notice from the IRS or other documents 
demonstrating the United States employer's nonprofit status. In 
addition, the Service believes that information to be submitted with 
the H-1B petition, as provided in this interim rule, should provide 
sufficient evidence that the employer is an institution of higher 
education or research institution. The Service is not imposing any 
additional evidentiary requirements at this time; however, the Service 
may invoke its existing authority under Sec. 103.2(b)(8) to request 
additional evidence if there is a question of eligibility for exemption 
from the filing fee. This is consistent with conference report language 
at House Report 105-825, October 21, 1998, 2nd Sess. 1998.

Good Cause Exception

    The Service's implementation of this rule as an interim rule, with 
provision for post-promulgation public comment, is based upon the 
``good cause'' exceptions found at 5 U.S.C. 553(b)(B). Sections 414(a) 
and 415(a) of ACWIA became effective immediately upon enactment on 
October 21, 1998. Publication of this rule as an interim rule will 
expedite implementation of these sections. It also will inform the 
public about the new $500 filing fee for H-1B petitions for 
nonimmigrant workers and allow the Service to begin collecting this fee 
for H-1B petitions filed on or after December 1, 1998.

Regulatory Flexibility Act

    The Attorney General, in accordance with the Regulatory Flexibility 
Act (5 U.S.C. 605(b)), has reviewed this regulation and, by approving 
it, certifies that the rule will not have a significant economic impact 
on a substantial number of small entities. Sections 414(a) and 415(a) 
of ACWIA established the new $500 filing fee and exemptions that are 
effective December 1, 1998. This regulation implements procedures for 
submission of the new $500 filing fee for Form I-129, H-1B Nonimmigrant 
Petitions.

Unfunded Mandates Reform Act of 1995

    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 1 year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

Small Business Regulatory Enforcement Fairness Act of 1996

    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

[[Page 65659]]

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. While the rule is not a major rule, the 
Service recognizes that all businesses, regardless of size, whose 
hiring practices involve H-1B aliens, are affected by this rule in that 
they will be required to submit an additional $500 per petition, unless 
exempt. It is anticipated that this rule will result in an estimated 
annual effect on the economy of $75,050,000 for the first year. It is 
anticipated that the effect on the economy for the second year will be 
$88,550,000. Further, as previously stated in the supplement to this 
rule, sections 414(a) and 415(a) of ACWIA establish the new $500 filing 
fee and exemptions that are effective December 1, 1998. This regulation 
merely implements procedures for the submission of the new $500 filing 
fee for H-1B nonimmigrant petitions.

Executive Order 12866

    This rule is considered by the Department of Justice, Immigration 
and Naturalization Service, to be a ``significant regulatory action'' 
under Executive Order 12866, section 3(f), Regulatory Planning and 
Review. Accordingly, this regulation has been submitted to the Office 
of Management and Budget for review.

Executive Order 12612

    The regulation proposed herein 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 Executive Order 12612, it is determined that this rule 
does not have sufficient federalism implications to warrant the 
preparation of a Federalism Assessment.

Executive Order 12988--Civil Justice Reform

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

Paperwork Reduction Act

    Under ACWIA, on or after December 1, 1998, a United States employer 
must file an additional $500 fee for all petitions to classify an alien 
as an H-1B nonimmigrant worker. Institutions of higher education or 
related or affiliated nonprofit entities, and nonprofit or governmental 
research organizations, are exempt from this new fee requirement. 
United States employers claiming to be an exempt organization must 
complete Form I-129W, Petition for Nonimmigrant Worker, Filing Fee 
Exemption, and submit it to the Service. This attachment is considered 
an information collection covered under the Paperwork Reduction Act 
(PRA). The estimated burden hours for the first year are 38,500 which 
lead to a cost of $385,000. The additional costs of the collection 
total $75,050,000 for the first year. The estimated burden hours for 
the second year are 46,000 which lead to a cost of $460,000. The 
additional costs of the collection for the second year total 
$88,550,000.
    Accordingly, the Service will be submitting an information 
collection package to the Office of Management and Budget (OMB) for 
review and approval in accordance with 8 CFR part 1320.13.

List of Subjects

8 CFR Part 103

    Administrative practice and procedure, Authority delegations 
(Government agencies), Fees, Forms, Freedom of information, Privacy, 
Reporting and recordkeeping requirements, Surety bonds.

8 CFR Part 214

    Administrative practice and procedures, Aliens, Employment, 
Reporting and recordkeeping requirements.

8 CFR Part 299

    Immigration, Reporting and recordkeeping requirements.

    Accordingly, chapter I of title 8 of the Code of Federal 
Regulations is amended as follows:

PART 103--POWERS AND DUTIES OF SERVICE OFFICERS; AVAILABILITY OF 
SERVICE RECORDS

    1. The authority citation for part 103 continues to read as 
follows:

    Authority: 5 U.S.C. 552, 552a; 8 U.S.C. 1101, 1103, 1201, 1252 
note, 1252b, 1304, 1356; 31 U.S.C. 9701; E.O. 12356, 47 FR 14874, 
15557, 3 CFR, 1982 Comp., p. 166; 8 CFR part 2.

    2. Section 103.7 is amended as follows:
    a. In paragraph (b)(1), remove the entries for ``Form I-129H'' and 
``Form I-129L'' from the listing of fees;
    b. Revise in paragraph (b)(1) the entry for ``Form I-129''; and
    c. In paragraph (c)(1) add a new sentence at the end of the 
paragraph, to read as follows:


Sec. 103.7  Fees.

* * * * *
    (b) * * *
    (1) * * *
* * * * *
Form I-129.  For filing a petition for a nonimmigrant worker, a base 
fee of $110 plus an additional $500 fee in a single remittance of 
$610. Payment of this additional $500 fee is not required if an 
organization is exempt under Sec. 214.2(h)(19)(iii) of this chapter. 
Payment of this additional $500 fee is not waivable under 
Sec. 103.7(c)(1).
* * * * *
    (c) * * *
    (1) * * * The payment of the additional $500 fee prescribed by 
section 214(c)(9) of the Act when applying for petition for 
nonimmigrant worker under section 101(a)(15)(H)(i)(b) of the Act may 
not be waived.
* * * * *

PART 214--NONIMMIGRANT CLASSES

    3. The authority citation for part 214 continues to read as 
follows;

    Authority: 8 U.S.C. 1101, 1103, 1182, 1184, 1186a, 1187, 1221, 
1281, 1282; 8 CFR part 2.

    4. Section 214.2 is amended by:
    a. Revising paragraph (h)(8)(i)(A); and by
    b. Adding a new paragraph (h)(19); to read as follows:


Sec. 214.2.  Special requirements for admission, extension, and 
maintenance of status.

* * * * *
    (h) * * *
    (8) * * *
    (i) * * *
    (A) Aliens classified as H-1B nonimmigrants, excluding those 
involved in Department of Defense research and development projects or 
coproduction projects, may not exceed:
    (1) 115,000 in fiscal year 1999;
    (2) 115,000 in fiscal year 2000;
    (3) 107,500 in fiscal year 2001; and
    (4) 65,000 in each succeeding fiscal year.
* * * * *
    (19) Additional fee for filing certain H-1B petitions--(i) A United 
States employer (other than an exempt employer as defined in paragraph 
(h)(19)(iii) of this section) who files a Form I-129, on or after 
December 1, 1998, and before October 1, 2001, must include the 
additional fee required in Sec. 103.7(b)(1) of this chapter, if the 
petition is filed for any of the following purposes:
    (A) An initial grant of H-1B status under section 
101(a)(15)(H)(i)(b) of the Act;

[[Page 65660]]

    (B) An initial extension of stay, as provided in paragraph 
(h)(15)(i) of this section; or
    (C) Authorization for a change in employment, as provided in 
paragraph (h)(2)(i)(D) of this section.
    (ii) The service will accept remittances of the additional fee only 
from the United States employer or its representative of record, as 
defined under 8 CFR part 292 and 8 CFR 103.2(a)(3).
    (iii) The following exempt organizations are not required to pay 
the additional fee:
    (A) An institution of higher education, as defined in section 
101(a) of the Higher Education Act of 1965;
    (B) An affiliated or related nonprofit entity. A nonprofit entity 
(including but not limited to hospitals and medical or research 
institutions) that is connected or associated with an institution of 
higher education, through shared ownership or control by the same board 
or federation operated by an institution of higher education, or 
attached to an institution of higher education as a member, branch, 
cooperative, or subsidiary;
    (C) A nonprofit research organization or governmental research 
organization. A research organization that is either a nonprofit 
organization of entity that is primarily engaged in basic research and/
or applied research or a United States Government entity whose primary 
mission is the performance or promotion of basic research and/or 
applied research. Basic research is research to gain more comprehensive 
knowledge or understanding of the subject under study, without specific 
applications in mind. Basic research also is not research that advances 
scientific knowledge, but does not have specific immediate commercial 
objectives although it may be in fields of present or potential 
commercial interest. Applied research is research to gain knowledge or 
understanding to determine the means by which a specific, recognized 
need may be met. Applied research includes investigations oriented to 
discovering new scientific knowledge that has specific commercial 
objectives with respect to products, processes, or services.
    (iv) For purposes of paragraphs (h)(19)(iii)(B) and (C) of this 
section, a nonprofit organization or entity is one that is qualified as 
a tax exempt organization under section 501(c)(3), (c)(4), or (c)(6) of 
the Internal Revenue Code of 1986 (26 U.S.C. 501(c)(3), (c)(4) or 
(c)(6)) and has received approval as a tax exempt organization from the 
Internal Revenue Service, as it relates to research or educational 
purposes.
* * * * *

PART 299--IMMIGRATION FORMS

    5. The authority citation for part 299 continues to read as 
follows:

    Authority: 8 U.S.C. 1101, 1103; 8 CFR part 2.

    6. Section 299.1 is amended in the table by adding the Form ``I-
129W'' in numerical order to read as follows:


Sec. 299.1  Prescribed forms.

* * * * *

------------------------------------------------------------------------
                               Edition
          Form No.               date                 Title
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                  *        *        *        *        *
I-129W......................   11-24-98  Petition for Nonimmigrant
                                          Worker, Filing Fee Exemption.
                  *        *        *        *        *
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    7. Section 299.5 is amended in the table by adding Form ``I-129W'' 
in numerical order to read as follows:


Sec. 299.5  Display of control numbers.

* * * * *

------------------------------------------------------------------------
                                               Currently assigned OMB
       INS form No.         INS form title           control No.
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                  *        *        *        *        *
I-129W....................    Petition for  1115-0225
                              Nonimmigrant
                            Worker, Filing
                             Fee Exemption
                  *        *        *        *        *
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    Dated: November 25, 1998.
Doris Meissner,
Commissioner, Immigration and Naturalization Service.
[FR Doc. 98-31953 Filed 11-25-98; 3:36 pm]
BILLING CODE 4410-10-M