[Federal Register Volume 84, Number 142 (Wednesday, July 24, 2019)]
[Rules and Regulations]
[Pages 35750-35810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15000]



[[Page 35749]]

Vol. 84

Wednesday,

No. 142

July 24, 2019

Part III





Department of Homeland Security





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





8 CFR Parts 204 and 216





EB-5 Immigrant Investor Program Modernization; Final Rule

  Federal Register / Vol. 84 , No. 142 / Wednesday, July 24, 2019 / 
Rules and Regulations  

[[Page 35750]]


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

DEPARTMENT OF HOMELAND SECURITY

8 CFR Parts 204 and 216

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


EB-5 Immigrant Investor Program Modernization

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

ACTION: Final rule.

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

SUMMARY: This final rule amends Department of Homeland Security (DHS) 
regulations governing the employment-based, fifth preference (EB-5) 
immigrant investor classification and associated regional centers to 
reflect statutory changes and modernize the EB-5 program. In general, 
under the EB-5 program, individuals are eligible to apply for lawful 
permanent residence in the United States if they make the necessary 
investment in a commercial enterprise in the United States and create 
or, in certain circumstances, preserve 10 full-time jobs for qualified 
United States workers. This rule provides priority date retention to 
certain EB-5 investors, increases the required minimum investment 
amounts, reforms targeted employment area designations, and clarifies 
USCIS procedures for the removal of conditions on permanent residence. 
DHS is issuing this rule to codify existing policies and change certain 
aspects of the EB-5 program in need of reform.

DATES: This final rule is effective November 21, 2019.

FOR FURTHER INFORMATION CONTACT: Edie C. Pearson, Policy Branch Chief, 
Immigrant Investor Program Office, U.S. Citizenship and Immigration 
Services, Department of Homeland Security, 131 M Street NE, 3rd Floor, 
Washington, DC 20529; Telephone (202) 357-9350.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Executive Summary
    A. Purpose of the Regulatory Action
    B. Legal Authority
    C. Summary of the Final Rule Provisions
    1. Priority Date Retention
    2. Increases to the Investment Amounts
    3. TEA Designations
    4. Removal of Conditions
    5. Miscellaneous Changes
    D. Summary of Costs and Benefits
    E. Effective Date
    F. Implementation
II. Background
    A. The EB-5 Program
    B. The Regional Center Program
    C. EB-5 Immigrant Visa Process
    D. Final Rule
III. Response to Public Comments on the Proposed Rule
    A. Need for Rulemaking and Regulatory Process
    B. Priority Date Retention
    1. Proposed Standards for Retaining a Priority Date
    2. Other Comments on Priority Date Retention
    C. Increases to the Investment Amounts
    1. Increase to the Standard Minimum Investment Amount
    2. Use of CPI-U
    3. Adjustments Every Five Years Tied to CPI-U
    4. Implementation of the Increase in Investment Amount
    5. Increase to the TEA Minimum Investment Amount
    6. Investment Level Differential Between Standard Investment 
Amount and TEA Investment Amount
    D. Revisions to the Targeted Employment Area (TEA) Designation 
Process
    1. Standards Applicable to the Designation of a TEA
    2. Proposal To Eliminate State Designation of TEAs
    4. Other Comments on Proposal To Change to Special Designation 
of High Unemployment Area
    5. Other Comments on the TEA Designation Process
    E. Technical Changes
    1. Separate Filings for Derivatives
    2. Equity Holders
    F. Other Comments on the Rule
    1. Processing Times
    2. Visa Backlogs
    3. Timing of the Rule
    4. Material Change
    5. Comments Outside the Scope of This Rulemaking
    G. Public Comments and Responses on Statutory and Regulatory 
Requirements
    1. Data, Estimates, and Assumptions Used (Executive Orders 12866 
and 13563)
    2. Costs (Executive Orders 12866 and 13563)
    3. Other Impacts (Executive Orders 12866 and 13563)
    4. Other Comments on the Regulatory Impact Analysis (Executive 
Orders 12866 and 13563)
    5. Comment on Unfunded Mandates Reform Act (UMRA)
IV. Statutory and Regulatory Requirements
    A. Executive Orders 12866 (Regulatory Planning and Review), 
13563 (Improving Regulation and Regulatory Review), and 13771 
(Reducing Regulation and Controlling Regulatory Costs)
    B. Small Business Regulatory Enforcement Fairness Act of 1996
    C. Regulatory Flexibility Act
    1. Industry Classifications/NAICS Codes To Classify Regional 
Centers
    2. Industry Classifications/NAICS Codes To Classify NCEs
    3. Sources of Revenue for RCs and NCEs
    4. Other Comments on the RFA
    D. Unfunded Mandates Reform Act of 1995
    E. Executive Order 13132
    F. Executive Order 12988
    G. National Environmental Policy Act
    H. Paperwork Reduction Act

I. Executive Summary

A. Purpose of the Regulatory Action

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

B. Legal Authority

    The Secretary of Homeland Security's authority for this final rule 
can be found in various provisions of the Immigration and Nationality 
Act (INA), 8 U.S.C. 1101 et seq., as well as the Departments of 
Commerce, Justice, and State, the Judiciary, and Related Agencies 
Appropriations Act, 1993, Public Law 102-395, 106 Stat. 1828; the 21st 
Century Department of Justice Appropriations Authorization Act, Public 
Law 107-273, 116 Stat. 1758; and the Homeland Security Act of 2002 
(HSA), Public Law 107-296, 116 Stat. 2135, 6 U.S.C. 101 et seq. General 
authority for issuing this final rule is found in section 103(a) of the 
INA, 8 U.S.C. 1103(a), which authorizes the Secretary to administer and 
enforce the immigration and nationality laws, including by establishing 
such regulations as the Secretary deems necessary to carry out her 
authority; section 101(b)(1)(F) of the HSA, 6 U.S.C. 111(b)(1)(F), 
which establishes that a primary mission of DHS is to ensure that the 
overall economic security of the United States is not diminished by the 
Department's efforts, activities, and programs aimed at securing the 
homeland; and section 102 of the HSA, 6 U.S.C. 112, which vests all of 
the functions of DHS in the Secretary.
    The aforementioned authorities for this final rule include:
     Section 203(b)(5) of the INA, 8 U.S.C. 1153(b)(5), which 
makes visas available to immigrants investing in new commercial 
enterprises in the United States that will benefit the U.S. economy and 
create full-time employment for not fewer than 10 United States 
workers.
     Section 204(a)(1)(H) of the INA, 8 U.S.C. 1154(a)(1)(H), 
which requires individuals to file petitions with DHS when seeking 
classification under section 203(b)(5).
     Section 216A of the INA, 8 U.S.C. 1186b, which places 
conditions on permanent residence obtained under section 203(b)(5) and 
authorizes the Secretary to remove such conditions for immigrant 
investors who have met the applicable investment requirements, 
sustained such investment, and

[[Page 35751]]

otherwise conformed to the requirements of sections 203(b)(5) and 216A.
     Section 610 of Public Law 102-395, 8 U.S.C. 1153 note, as 
amended, which created the Immigrant Investor Pilot Program (the 
``Regional Center Program''), authorizing the designation of regional 
centers for the promotion of economic growth, and which authorizes the 
Secretary to set aside visas authorized under section 203(b)(5) of the 
INA for individuals who invest in regional centers.

C. Summary of the Final Rule Provisions

    DHS carefully considered the public comments received and this 
final rule adopts, with appropriate changes, the regulatory text 
proposed in the Notice of Proposed Rulemaking (NPRM) published in the 
Federal Register on January 13, 2017. See EB-5 Immigrant Investor 
Program Modernization; Proposed Rule, 82 FR 4738. This final rule also 
relies on all of the justifications articulated in the NPRM, except as 
reflected below.
    This rule makes the following changes as compared to the NPRM:
     The rule clarifies that the priority date of a petition 
for classification as an investor is the date the petition is properly 
filed.
     The rule clarifies that a petitioner with multiple 
approved immigrant petitions for classification as an investor is 
entitled to the earliest qualifying priority date;
     The rule retains the 50 percent minimum investment 
differential between a targeted employment area (TEA) and a non-TEA 
instead of changing the differential to 25 percent as proposed, thereby 
increasing the minimum investment amount in a TEA from $500,000 to 
$900,000 (rather than $1.35 million, as DHS initially proposed);
     The rule makes a technical correction to the inflation 
adjustment formula for the standard minimum investment amount and the 
high employment area investment amount, such that future inflation 
adjustments will be based on the initial investment amount set by 
Congress in 1990, rather than on the most recent inflation adjustment. 
Thus, for instance, the next inflation adjustment will be based on the 
initial minimum investment amount of $1,000,000 in 1990, rather than 
this rule's minimum investment amount of $1,800,000, which is a rounded 
figure. This change better implements the intent of the proposed rule; 
it ensures that future inflation adjustments more accurately track 
inflation since 1990, rather than being based on rounded figures.
     The rule modifies the original proposal that any city or 
town with a population of 20,000 or more may qualify as a TEA, to 
provide that only cities and towns with a population of 20,000 or more 
outside of metropolitan statistical areas (MSAs) may qualify as a TEA.
     The rule modifies the application of the rule, such that 
amendments or supplements to any offering necessary to maintain 
compliance with applicable securities laws based upon the changes in 
this rulemaking will not independently result in denial or revocation 
of a petition, provided the petition meets certain criteria.
     The rule also makes other minor non-substantive and 
clarifying changes.
    This final rule makes the following major revisions to the EB-5 
program regulations:
1. Priority Date Retention
    The final rule authorizes certain EB-5 petitioners to retain the 
priority date \1\ of an approved EB-5 immigrant petition for use in 
connection with any subsequent EB-5 immigrant petition.\2\ See final 8 
CFR 204.6(d). Petitioners with approved immigrant petitions might need 
to file new petitions due to circumstances beyond their control (for 
instance, DHS might have terminated a regional center associated with 
the original petition), or might choose to do so for other reasons (for 
instance, due to business conditions a petitioner may seek to 
materially change aspects of his or her qualifying investment). This 
rule generally allows EB-5 petitioners to retain the priority date of a 
previously approved petition to avoid delays on immigrant visa 
processing associated with loss of a priority date. DHS believes that 
priority date retention may become increasingly important due to the 
strong possibility that the EB-5 category will remain oversubscribed 
for the foreseeable future.
---------------------------------------------------------------------------

    \1\ An EB-5 immigrant petition's priority date is the date on 
which the petition was properly filed. In general, when demand 
exceeds supply for a particular visa category, an earlier priority 
date is more advantageous than a later one.
    \2\ This is subject to conditions and limitations described in 
more detail elsewhere in this rule.
---------------------------------------------------------------------------

    In the final rule, DHS amends the originally proposed regulatory 
text by defining the term ``priority date'' to mean the date that the 
petition is properly filed. See final 8 CFR 204.6(d). DHS inadvertently 
left this definition out of the NPRM's proposed regulatory text, see 82 
FR 4738, even though this definition is in the current regulation, see 
8 CFR 204.6(d) and acknowledged in the NPRM preamble, see 82 FR 4738, 
4739 n. 1 (``An EB-5 immigrant petition's priority date is normally the 
date on which the petition was properly filed. In general, when demand 
exceeds supply for a particular visa category, an earlier priority date 
is more advantageous than a later one.''). This change is for clarity.
    DHS also amends the originally proposed regulatory text by changing 
``approved EB-5 immigrant petition'' to ``immigrant petition approved 
for classification as an investor, including immigrant petitions whose 
approval was revoked on grounds other than those set forth below,'' and 
also ``approved petition'' to ``immigrant petition approved for 
classification as an investor.'' The purpose of these revisions is to 
clarify that an investor may retain a priority date from petitions that 
had been approved but have since been revoked on grounds not 
specifically excepted in the provision. DHS further amends the 
originally proposed regulatory text by changing ``based upon that 
approved petition'' to ``using the priority date of the earlier-
approved petition.'' This revision makes it clear that once a 
petitioner uses that approved petition's priority date to obtain 
conditional permanent residence, that priority date is no longer 
available for use on any later-filed petition.
    Last, DHS amends the originally proposed regulatory text by adding 
the sentence: ``In the event that the alien is the petitioner of 
multiple immigrant petitions approved for classification as an 
investor, the alien shall be entitled to the earliest qualifying 
priority date.'' This sentence was added to mirror a similar sentence 
at 8 CFR 204.5(e) pertaining to other employment-based categories, and 
clarifies which date applies should an investor have multiple approved 
petitions.
2. Increases to the Investment Amounts
    Pursuant to 8 U.S.C. 1153(b)(5)(C), DHS consulted with the 
Departments of State and Labor \3\ to increase the minimum investment 
amounts for all new EB-5 petitioners in this final rule. See final 8 
CFR 204.6(f). The increase will ensure that program requirements 
reflect the present-day dollar value of the investment amounts 
established by Congress in 1990. Specifically, consistent with the 
NPRM, the rule increases the standard minimum investment amount, which 
also applies to high employment areas, from $1

[[Page 35752]]

million to $1.8 million. Final 8 CFR 204.6(f)(1), (3). This change 
represents an adjustment for inflation from 1990 to 2015 as measured by 
the unadjusted Consumer Price Index for All Urban Consumers (CPI-U), an 
economic indicator that tracks the prices of goods and services in the 
United States.\4\ This rule also makes a technical correction to the 
inflation adjustment formula, so that future inflation adjustments will 
be based on the initial investment amount set by Congress in 1990, 
rather than on the most recent inflation adjustment.
---------------------------------------------------------------------------

    \3\ DHS includes in the docket for this rulemaking a letter from 
each department detailing the consultation.
    \4\ See Bureau of Labor Statistics, CPI-U Inflation Calculator, 
https://www.bls.gov/data/inflation_calculator.htm.
---------------------------------------------------------------------------

    For investors seeking to invest in a new commercial enterprise that 
will be principally doing business in a TEA, the proposed rule would 
have decreased the differential between TEA and non-TEA minimum 
investment amounts to 25 percent, thereby increasing the TEA minimum 
investment amount to $1.35 million, which is 75 percent of the 
increased standard minimum investment amount. However, based on a 
review of the comments, the final rule will retain the 50 percent 
differential, and only increase the minimum investment amount from 
$500,000 to $900,000. Final 8 CFR 204.6(f)(2).
    In addition, the final rule sets the schedule for regular CPI-U-
based adjustments in the standard minimum investment amount, and 
conforming adjustments to the TEA minimum investment amount, every 5 
years, beginning 5 years from the effective date of these regulations.
3. TEA Designations
    Congress authorized DHS to set a different minimum investment 
amount for investments made in TEAs, or ``targeted employment areas'' 
(i.e., rural areas and areas of high unemployment). See INA section 
203(b)(5)(C)(ii), 8 U.S.C. 1153(b)(5)(C)(ii). The final rule reforms 
the TEA designation process to ensure consistency in TEA adjudications 
and better ensure that TEA designations more closely adhere to 
congressional intent. Specifically, the final rule eliminates the 
ability of a state to designate certain geographic and political 
subdivisions as high unemployment areas; instead, DHS will make such 
designations directly, using standards described in more detail 
elsewhere in this final rule. See final 8 CFR 204.6(i). DHS believes 
these changes will help address inconsistencies between and within 
states in designating high unemployment areas, and better ensure that 
the reduced investment threshold is reserved for areas experiencing 
sufficiently high levels of unemployment, as Congress intended.
    DHS is making three changes from the NPRM, with respect to TEA 
designations. First, DHS is modifying its proposal on high unemployment 
areas to include only cities and towns with a population of 20,000 or 
more outside of MSAs as a specific and separate area that may qualify 
as a TEA. See final 8 CFR 204.6(j)(6)(ii)(A). By contrast, the NPRM 
proposed to allow any city or town with high unemployment and a 
population of 20,000 or more to qualify as a TEA, regardless of whether 
located within an MSA. Under the current regulatory scheme, TEA 
designations are not available at the city or town level, unless a 
state designates the city or town as a high unemployment area and 
provides evidence of such designation to a prospective EB-5 investor 
for submission with the Form I-526. See proposed 8 CFR 
204.6(j)(6)(ii)(A). DHS recognizes the proposal was inadvertently over-
inclusive because DHS intended the proposal to provide non-rural cities 
and towns located outside of MSAs additional methods to qualify as a 
TEA, but the proposal would have allowed cities and towns with high 
unemployment and a population of 20,000 or more located within MSAs to 
qualify. DHS did not necessarily intend to permit cities and towns 
within MSAs to qualify or to create any new distinctions between cities 
and towns of various populations within MSAs. The final rule modifies 
the proposal to include only cities and towns with a population of 
20,000 or more outside of MSAs as a specific and separate area that may 
qualify as a TEA based on high unemployment. See final 8 CFR 
204.6(j)(6)(ii)(A).
    Second, DHS is finalizing a technical change to 8 CFR 204.6(i) and 
(j)(6)(B) by removing the mention of ``geographic and political 
subdivisions'' for special designations. Because DHS proposed and is 
finalizing the census tract process for special designations, 
references to other subdivisions are no longer required.
    Third, DHS is making an additional technical change to the 
description of special designation TEAs at 8 CFR 204.6(i) proposed in 
the NPRM, replacing ``contiguous'' as it is used to describe additional 
census tracts that can be added to the census tract(s) in which the NCE 
is principally doing business, with ``directly adjacent.'' This 
technical change was made to mirror the description of special 
designation TEAs elsewhere in the rule and to minimize confusion to the 
public, as the term ``contiguous'' could be read to include census 
tracts beyond those directly adjacent to the census tract(s) in which 
the NCE is principally doing business.
4. Removal of Conditions
    The final rule revises the regulations to clarify that derivative 
family members must file their own petitions to remove conditions on 
their permanent residence when they are not included in a petition to 
remove conditions filed by the principal investor. See final 8 CFR 
216.6(a)(1)(ii). In addition, the rule improves the adjudication 
process for removing conditions by providing flexibility in interview 
locations and updates the regulation to conform to the current process 
for issuing permanent resident cards. See generally final 8 CFR 216.6.
5. Miscellaneous Changes
    The final rule updates the regulations to reflect miscellaneous 
statutory changes made since DHS first published the regulation in 1991 
and clarifies definitions of key terms for the program.\5\ By aligning 
DHS regulations with statutory changes and defining key terms, the rule 
provides greater certainty regarding the eligibility criteria for 
investors and their family members.
---------------------------------------------------------------------------

    \5\ See final 8 CFR 216.6(a)(4)(i) and (c)(1)(i). DHS proposed 
this specific change to remove references to the requirement that 
immigrant entrepreneurs establish a new commercial enterprise, 
because the requirement was removed by the 21st Century Department 
of Justice Appropriations Authorization Act, Public Law 107-273, 116 
Stat. 1758. 82 FR at 4751. However, this change was inadvertently 
left out of the proposed regulatory text. This final rule reflects 
the appropriate changes.
---------------------------------------------------------------------------

    This final rule will apply to petitioners who file on or after the 
effective date. To respond to concerns regarding the potential effect 
of this rule on existing petitioners, DHS has clarified in the final 
regulatory text that DHS will not deny a petition filed prior to this 
rule's effective date (or revoke an approved petition) based solely on 
the fact that the underlying investment offerings have been amended or 
supplemented as a result of this rulemaking to maintain compliance with 
applicable securities laws. See final 8 CFR 204.6(n). This addresses 
situations in which, for instance, an investor is actively in the 
process of investing into an ongoing offering and filed a Form I-526 
petition that is pending on the effective date of this final rule, but 
the documents for the offering need to be modified to ensure compliance 
with applicable securities laws because of the increase to the minimum 
investment amounts resulting from this rulemaking DHS provides further 
detail on this provision below.

[[Page 35753]]

D. Summary of Costs and Benefits

    This final rule changes certain aspects of the EB-5 program that 
are in need of reform and updates the regulations to reflect statutory 
changes and codify existing policies. This final rule makes five major 
categories of revisions to the existing EB-5 program regulations. Three 
of these categories, which involve (i) Priority date retention; (ii) 
increasing the investment amounts; and (iii) reforming the TEA 
designations, are substantive. The two other major categories, focused 
on (iv) the removal of conditions; and (v) miscellaneous changes, 
involve generally technical adjustments to the EB-5 program. Details 
concerning these three major substantive and two major technical 
categories of changes are provided in above sections, and in Table 2 in 
terms of benefit-cost considerations.
    Within the five major categories of revisions to existing 
regulations, this final rule also makes some changes from the NPRM. 
Most importantly, the reduced investment amount for TEAs will be raised 
to $900,000 instead of the proposed $1.35 million, in order that the 50 
percent differential between investment tiers be maintained. The other 
changes between this final rule and the NPRM are not expected to create 
costs and are listed here:
     Clarifies that the priority date of a petition for 
classification as an investor is the date the petition is properly 
filed;
     Clarifies that a petitioner with multiple approved 
immigrant petitions for classification as an investor is entitled to 
the earliest qualifying priority date;
     Modifies the original proposal that any city or town with 
a population of 20,000 or more may qualify as a TEA, to provide that 
only cities and towns with a population of 20,000 or more outside of 
metropolitan statistical areas (MSAs) may qualify as a TEA;
     Modifies the application of the rule, such that amendments 
or supplements to any offering necessary to maintain compliance with 
applicable securities laws based upon the changes in this rulemaking 
will not independently result in denial or revocation of a petition, 
provided the petition meets certain criteria;
     Makes a technical correction to the inflation adjustment 
formula for the standard minimum investment amount and the high 
employment area investment amount, such that future inflation 
adjustments will be based on the initial investment amount set by 
Congress in 1990, rather than on the most recent inflation adjustment; 
and
     Makes minor non-substantive and clarifying changes.
    DHS analyzed the five major categories of revisions carefully. EB-5 
investment structures are complex, and typically involve multiple 
layers of investment, finance, development, and legal business 
entities. The interconnectedness and complexity of such relationships 
make it very difficult to quantify and monetize the costs and benefits. 
Furthermore, since demand for EB-5 investments incorporate many factors 
related to international and U.S. specific immigration and business, 
DHS cannot predict with accuracy changes in demand for the program 
germane to the major categories of revisions that increase the 
investment amounts and reform the TEA designation process. DHS has no 
way to assess the potential reduction in investments either in terms of 
past activity or forecasted activity, and cannot therefore 
quantitatively estimate any impacts concerning job creation, losses or 
other downstream economic impacts driven by these major provisions. DHS 
provides a full qualitative analysis and discussion in the Executive 
Orders 12866 and 13563 section of this final rule.
    There are several costs involved in the final rule for which DHS 
has conducted quantitative estimates. For the technical revision that 
clarifies that derivative family members must file their own 
petitioners to remove conditions on their permanent residence when they 
are not included in the principal investor's petition, we estimate 
costs to be approximately $91,023 annually for those derivatives. 
Familiarization costs to review the rule are estimated to be $629,758 
annually.
    In addition, DHS has prepared a Final Regulatory Flexibility 
Analysis (FRFA) under the Regulatory Flexibility Act (RFA) to discuss 
any potential impacts to small entities. As discussed further in the 
FRFA, DHS cannot estimate the exact impact to small entities. DHS, 
however, does expect some impact to regional centers and non-regional 
center projects. As it relates to the FRFA, each of 1,570 business 
entities involved in familiarization of the rule would incur costs of 
about $401.

                        Table 2--Summary of Changes and Impact of the Adopted Provisions
----------------------------------------------------------------------------------------------------------------
              Current policy                            Adopted change                          Impact
----------------------------------------------------------------------------------------------------------------
                                             Priority Date Retention
----------------------------------------------------------------------------------------------------------------
Current DHS regulations do not permit      DHS will allow an EB-5 immigrant          Benefits:
 investors to use the priority date of an   petitioner to use the priority date of    Makes visa
 immigrant petition approved for            an immigrant petition approved for        allocation more
 classification as an investor for a        classification as an investor for a       predictable for investors
 subsequently filed immigrant petition      subsequently filed immigrant petition     with less possibility for
 for the same classification.               for the same classification for which     large fluctuations in visa
                                            the petitioner qualifies, unless DHS      availability dates due to
                                            revokes the petition's approval for       regional center
                                            fraud or willful misrepresentation by     termination.
                                            the petitioner, or revokes the petition   Provides greater
                                            for a material error.                     certainty and stability
                                                                                      regarding the timing of
                                                                                      eligibility for investors
                                                                                      pursuing permanent
                                                                                      residence in the U.S. and
                                                                                      thus lessens the burden of
                                                                                      unexpected changes in the
                                                                                      underlying investment.
                                                                                         Provides more
                                                                                         flexibility to
                                                                                         investors to contribute
                                                                                         to more viable
                                                                                         investments,
                                                                                         potentially reducing
                                                                                         fraud and improving
                                                                                         potential for job
                                                                                         creation.
                                                                                     Costs:
                                                                                      None anticipated.
----------------------------------------------------------------------------------------------------------------

[[Page 35754]]

 
                                         Increases to Investment Amounts
----------------------------------------------------------------------------------------------------------------
The standard minimum investment amount     DHS will account for inflation in the     Benefits:
 has been $1 million since 1990 and has     investment amount since the inception     Increases in
 not kept pace with inflation--losing       of the program. DHS will raise the        investment amounts are
 almost half its real value.                minimum investment amount to $1.8         necessary to keep pace
Further, the statute authorizes a           million to account for inflation          with inflation and real
 reduction in the minimum investment        through 2015, and includes a mechanism    value of investments;
 amount when such investment is made in a   to automatically adjust the minimum       Raising the
 TEA by up to 50 percent of the standard    investment amount based on the            investment amounts
 minimum investment amount. Since 1991,     unadjusted CPI-U every 5 years.           increases the amount
 DHS regulations have set the TEA          DHS will retain the TEA minimum            invested by each investor
 investment threshold at 50 percent of      investment amount at 50 percent of the    and potentially increases
 the minimum investment amount.             standard amount. The minimum investment   the total amount invested
Similarly, DHS has not increased the        amount in a TEA will initially increase   under this program.
 minimum investment amount for              to $900,000.                              For regional
 investments made in a high employment     DHS is not changing the equivalency        centers, the higher
 area beyond the standard amount.           between the standard minimum investment   investment amounts per
                                            amount and those made in high             investor will mean that
                                            employment areas. As such, DHS will set   fewer investors will have
                                            the minimum investment amounts in high    to be recruited to pool
                                            employment areas to be $1.8 million,      the requisite amount of
                                            and follow the same mechanism for         capital for the project,
                                            future inflationary adjustments.          so that searching and
                                                                                      matching of investors to
                                                                                      projects could be less
                                                                                      costly.
                                                                                     Costs:
                                                                                      Some investors may
                                                                                      be unable or unwilling to
                                                                                      invest at the higher
                                                                                      levels of investment.
                                                                                      There may be fewer
                                                                                      jobs created if
                                                                                      significantly fewer
                                                                                      investors invest at the
                                                                                      higher investment amounts.
                                                                                         For regional
                                                                                         centers, the higher
                                                                                         amounts could reduce
                                                                                         the number of investors
                                                                                         in the global pool and
                                                                                         result in fewer
                                                                                         investors, thus
                                                                                         potentially making the
                                                                                         search and matching of
                                                                                         investors to projects
                                                                                         more costly.
                                                                                      Potential reduced
                                                                                      numbers of EB-5 investors
                                                                                      could prevent certain
                                                                                      projects from moving
                                                                                      forward due to lack of
                                                                                      requisite capital.
                                                                                      An increase in the
                                                                                      investment amount could
                                                                                      make foreign investor visa
                                                                                      programs offered by other
                                                                                      countries more attractive.
----------------------------------------------------------------------------------------------------------------
                                                TEA Designations
----------------------------------------------------------------------------------------------------------------
A TEA is defined by statute as a rural     DHS will eliminate state designation of   Benefits:
 area or an area that has experienced       high unemployment areas. DHS also         Rules out TEA
 high unemployment (of at least 150         amends the manner in which investors      configurations that rely
 percent of the national average rate).     can demonstrate that their investments    on a large number of
 Currently, investors demonstrate that      are in a high unemployment area.          census tracts indirectly
 their investments are in a high           (1) DHS will add cities and towns with a   linked to the actual
 unemployment area in two ways:             population of 20,000 or more outside of   project tract by numerous
(1) Providing evidence that the             MSAs as a specific and separate area      degrees of separation.
 Metropolitan Statistical Area (MSA), the   that may qualify as a TEA based on high   Potential to
 specific county within the MSA, or the     unemployment.                             better stimulate job
 county in which a city or town with a     (2) DHS will amend its regulations so      growth in areas where
 population of 20,000 or more is located,   that a TEA may consist of a census        unemployment rates are the
 in which the new commercial enterprise     tract or contiguous census tracts in      highest, consistent with
 is principally doing business, has         which the new commercial enterprise is    congressional intent.
 experienced an average unemployment rate   principally doing business if            Costs:
 of at least 150 percent of the national    the new commercial enterprise     This TEA provision
 average rate; or                           is located in more than one census        could cause some projects
(2) submitting a letter from an             tract; and                                and investments to no
 authorized body of the government of the   the weighted average of the       longer qualify as being in
 state in which the new commercial          unemployment rate for the tract or        high unemployment areas.
 enterprise is located, which certifies     tracts is at least 150 percent of the     DHS presents the potential
 that the geographic or political           national average.                         number of projects and
 subdivision of the metropolitan           (3) DHS will also amend its regulations    investments that could be
 statistical area or of the city or town    so that a TEA may consist of an area      affected in Table 5.
 with a population of 20,000 or more in     comprising the census tract(s) in which
 which the enterprise is principally        the new commercial enterprise is
 doing business has been designated a       principally doing business, including
 high unemployment area.                    any and all adjacent tracts, if the
                                            weighted average of the unemployment
                                            rate for all included tracts is at
                                            least 150 percent of the national
                                            average.
Current technical issues:                  DHS will amend its regulations to         Conditions of Filing:
 The current regulation does not    include the following technical          Benefits:
 clearly define the process by which        changes:                                  Adds clarity and
 derivatives may file a Form I-829          Clarify the filing process for    eliminates confusion for
 petition when they are not included on     derivatives who are filing a Form I-829   the process of derivatives
 the principal's petition.                  petition separately from the immigrant    who file separately from
 Interviews for Form I-829          investor.                                 the principal immigrant
 petitions are generally scheduled at the   Provide flexibility in            investor.
 location of the new commercial             determining the interview location       Costs:
 enterprise.                                related to the Form I-829 petition.       Total cost to
 The current regulations require    Amend the regulation by which     applicants filing
 an immigrant investor and his or her       the immigrant investor obtains the new    separately will be $91,023
 derivatives to report to a district        permanent resident card after the         annually.
 office for processing of their permanent   approval of his or her Form I-829        Conditions of Interview:
 resident cards.                            petition because DHS captures biometric  Benefits:
                                            data at the time the immigrant investor   Interviews may be
                                            and derivatives appear at an ASC for      scheduled at the USCIS
                                            fingerprinting.                           office having jurisdiction
                                            Add 8 CFR 204.6(n) to allow       over either the immigrant
                                            certain investors to remain eligible      investor's commercial
                                            for the EB-5 classification if a          enterprise, the immigrant
                                            project's offering is amended or          investor's residence, or
                                            supplemented based upon the final         the location where the
                                            rule's effectiveness.                     Form I-829 petition is
                                                                                      being adjudicated, thus
                                                                                      making the interview
                                                                                      program more effective and
                                                                                      reducing burdens on the
                                                                                      immigrant investor.

[[Page 35755]]

 
                                                                                           Some
                                                                                           petitioners will
                                                                                           benefit by traveling
                                                                                           shorter distances for
                                                                                           interviews and thus
                                                                                           see a cost savings in
                                                                                           travel costs and
                                                                                           opportunity costs of
                                                                                           time for travel and
                                                                                           interview time.
                                                                                        Costs:
                                                                                      None anticipated.
                                                                                     Investors obtaining a
                                                                                      permanent resident card:
                                                                                     Benefits:
                                                                                      Cost and time
                                                                                      savings for applicants for
                                                                                      biometrics data.
                                                                                        Costs:
                                                                                      None anticipated.
                                                                                     Eligibility Following
                                                                                      Changes to Offering:
                                                                                     Benefits:
                                                                                      An amendment to a
                                                                                      project's offering based
                                                                                      on the final rule's
                                                                                      provisions might not
                                                                                      result in the denial or
                                                                                      revocation of a petition.
                                                                                        Costs:
                                                                                      None anticipated.
----------------------------------------------------------------------------------------------------------------
                                              Miscellaneous Changes
----------------------------------------------------------------------------------------------------------------
Current miscellaneous items:               DHS will amend its regulations to make    These provisions are
 8 CFR 204.6(j)(2)(iii) refers to   the following miscellaneous changes:      technical changes and will
 the former U.S. Customs Service.           DHS is updating references at 8   have no impact on
 Public Law 107-273 eliminated      CFR 204.6(j)(2)(iii) from U.S. Customs    investors or the
 the requirement that alien entrepreneurs   Service to U.S. Customs and Border        government.
 establish a new commercial enterprise      Protection.
 from both INA section 203(b)(5) and INA    Removing references to
 section 216A.                              requirements that alien entrepreneurs
 8 CFR 204.6(j)(5) introductory     establish a new commercial enterprise
 text and (j)(5)(iii) reference             in 8 CFR 216.6.
 ``management'';                            Removing references to
 Current regulation at 8 CFR        ``management'' at 8 CFR 204.6(j)(5)
 204.6(j)(5) has the phrase ``as opposed    introductory text and (j)(5)(iii);
 to maintain a purely passive role in       Removing the phrase ``as
 regard to the investment'';                opposed to maintain a purely passive
 Public Law 107-273 allows          role in regard to the investment'' from
 limited partnerships to serve as new       8 CFR 204.6(j)(5);
 commercial enterprises;                    Clarifies that any type of
 Current regulation references      entity can serve as a new commercial
 the former Associate Commissioner for      enterprise;
 Examinations.                              Replacing the reference to the
 8 CFR 204.6(k) requires USCIS to   former Associate Commission for
 specify in its Form I-526 decision         Examinations with a reference to the
 whether the new commercial enterprise is   USCIS AAO.
 principally doing business in a targeted   Amending 8 CFR 204.6(k) to
 employment area.                           specify how USCIS will issue a
                                            decision.
    Sections 204.6 and 216.6 use       Revising sections 8 CFR
    the term ``entrepreneur'' and              204.6 and 216.6 to use the term
    ``deportation.'' These sections also       ``investor'' instead of
    refer to Forms I-526 and I-829.            ``entrepreneur'' and to use the term
 8 CFR 204.6(i) and (j)(6)(ii)(B)      ``removal'' instead of
 use the phrase ``geographic or political      ``deportation.''
 subdivision'' in describing state          Removing references to
 designations of high unemployment areas    ``geographic or political subdivision''
 for TEA purposes.                          in 8 CFR 204.6(i) and (j)(6)(ii)(B).
 The priority date of a petition    Providing clarification in 8
 for classification as an investor is the   CFR 204.6(d) that the petitioner of
 date the petition is properly filed.       multiple immigrant petitions approved
                                            for classification as an investor
                                            generally is entitled to the earliest
                                            qualifying priority date.
----------------------------------------------------------------------------------------------------------------
In addition to the above, applicants will need to read and review the rule to become familiar with the final
  rule provisions. Familiarization costs to read and review the rule are estimated at $629,758 annually.

E. Effective Date

    This final rule will be effective on November 21, 2019, 120 days 
from the date of publication in the Federal Register. DHS has 
determined that this 120-day period is reasonable to ensure that EB-5 
petitioners and the EB-5 market have time to adjust their plans to the 
changes made under this rule. DHS believes it will be able to implement 
this rule in a manner that will balance the equities of stakeholders 
and avoid delays of processing these and other petitions.

F. Implementation

    The changes in this rule will apply to all Immigrant Petition by 
Alien Investor (Form I-526) petitions filed on or after the effective 
date of the final rule. Form I-526 petitions filed prior to the 
effective date of the rule will be allowed to demonstrate eligibility 
based on the regulatory requirements in place at the time of filing of 
the petition. DHS has determined that this manner of implementation 
best balances operational considerations with fairness to the public.

II. Background

A. The EB-5 Program

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

[[Page 35756]]

specify a higher investment amount if the investment is in a high 
employment area or a lesser investment amount if the investment is in a 
TEA, defined to include certain rural areas and areas of high 
unemployment. Id.; 8 CFR 204.6(f). The INA allots 9,940 immigrant visas 
each fiscal year for foreign nationals seeking to enter the United 
States under the EB-5 classification. See INA section 201(d), 8 U.S.C. 
1151(d); INA section 203(b)(5), 8 U.S.C. 1153(b)(5). Not less than 
3,000 of these visas must be reserved for foreign nationals investing 
in TEAs. See INA section 203(b)(5)(B), 8 U.S.C. 1153(b)(5)(B).

B. The Regional Center Program

    Enacted in 1992, section 610 of the Departments of Commerce, 
Justice, and State, the Judiciary, and Related Agencies Appropriations 
Act, 1993, Public Law 102-395, 106 Stat. 1828, established a pilot 
program that requires the allocation of a limited number of EB-5 
immigrant visas to individuals who invest through DHS-designated 
regional centers. The Regional Center Program was initially designed as 
a pilot program set to expire after 5 years, but Congress has continued 
to extend the program to the present day. See, e.g., Public Law 115-
141, Div. M, Tit. II, sec. 204 (Mar. 23, 2018).
    Under the Regional Center Program, foreign nationals base their EB-
5 petitions on investments in new commercial enterprises located within 
``regional centers.'' DHS regulations define a regional center as an 
economic unit, public or private, that promotes economic growth, 
regional productivity, job creation, and increased domestic capital 
investment. See 8 CFR 204.6(e). While all EB-5 petitioners go through 
the same petition process, those petitioners participating in the 
Regional Center Program may meet statutory job creation requirements 
based on economic projections of either direct or indirect job 
creation, rather than only on jobs directly created by the new 
commercial enterprise. See 8 CFR 204.6(m)(3). In addition, Congress 
authorized the Secretary to give priority to EB-5 petitions filed 
through the Regional Center Program. See section 601(d) of Public Law 
102-395, 106 Stat. 1828, as amended by Public Law 112-176, Sec. 1, 126 
Stat. 1326 (Sept. 28, 2012).
    Requests for regional center designation must be filed with USCIS 
on the Application for Regional Center Designation Under the Immigrant 
Investor Program (Form I-924). See 8 CFR 204.6(m)(3)-(4). Once 
designated, regional centers must provide USCIS with updated 
information to demonstrate continued eligibility for the designation by 
submitting an Annual Certification of Regional Center (Form I-924A) on 
an annual basis or as otherwise requested by USCIS. See 8 CFR 
204.6(m)(6)(i)(B). USCIS may seek to terminate a regional center's 
participation in the program if the regional center no longer qualifies 
for the designation, the regional center fails to submit the required 
information or pay the associated fee, or USCIS determines that the 
regional center is no longer promoting economic growth. See 8 CFR 
204.6(m)(6)(i). As of September 10, 2018, there were 886 designated 
regional centers.

C. EB-5 Immigrant Visa Process

    A foreign national seeking LPR status under the EB-5 immigrant visa 
classification must go through a multi-step process during which the 
investor must sustain the investment. The individual must first file an 
Immigrant Petition by Alien Investor (Form I-526, or ``EB-5 petition'') 
with USCIS. The petition must be supported by evidence that the foreign 
national's lawfully obtained capital is invested (i.e., placed at 
risk), or is actively in the process of being invested, in a new 
commercial enterprise in the United States that will create full-time 
positions for not fewer than 10 qualifying employees.\6\ See 8 CFR 
204.6(j).
---------------------------------------------------------------------------

    \6\ Under current USCIS policy, the investor must sustain these 
actions through the end of the sustainment period (2 years from the 
date the investor obtains conditional resident status). The total 
amount of time will vary, however, depending on when the investor 
firsts invests or becomes actively in the process of investing as 
well as the amount of time the investor may wait to obtain status 
due to oversubscription for the investor's nationality.
---------------------------------------------------------------------------

    If USCIS approves the EB-5 petition, the petitioner must take 
additional steps to obtain LPR status. In general, the petitioner may 
either apply for an immigrant visa through a Department of State (DOS) 
consular post abroad or, if the petitioner is already in the United 
States and is otherwise eligible to adjust status, the petitioner may 
seek adjustment of status by filing an Application to Register 
Permanent Residence or Adjust Status (Form I-485, or ``application for 
adjustment of status'') with USCIS. Congress has imposed limits on the 
availability of such immigrant visas, including by capping the annual 
number of visas available in the EB-5 category and by separately 
limiting the percentage of immigrant visas that may be issued on an 
annual basis to individuals born in any one country.
    To request an immigrant visa while abroad, an EB-5 petitioner must 
apply at a U.S. consular post. See INA sections 203(e) and (g), 221 and 
222, 8 U.S.C. 1153(e) and (g), 1201 and 1202; see also 22 CFR part 42, 
subparts F and G. The petitioner must generally wait to receive a visa 
application packet from the DOS National Visa Center to commence the 
visa application process. After receiving this packet, the petitioner 
must collect required information and file the immigrant visa 
application with DOS. As noted above, the wait for the visa depends on 
the demand for immigrant visas in the EB-5 category and the 
petitioner's country of birth.\7\ Generally, DOS authorizes the 
issuance of a visa and schedules the petitioner for an immigrant visa 
interview for the month in which the priority date will be current. If 
the petitioner's immigrant visa application is ultimately approved, he 
or she is issued an immigrant visa and, on the date of admission to the 
United States, obtains LPR status on a conditional basis. See INA 
sections 211, 216A, and 221, 8 U.S.C. 1181, 1186, and 1201.
---------------------------------------------------------------------------

    \7\ When demand for a visa exceeds the number of visas available 
for that category and country, the demand for that particular 
preference category and country of birth is deemed oversubscribed. 
The Department of State (DOS) publishes a Visa Bulletin that 
determines when a visa may be authorized for issuance. See U.S. 
Dep't of State, Bureau of Consular Aff., Visa Bulletin, available at 
https://travel.state.gov/content/visas/en/law-and-policy/bulletin.html.
---------------------------------------------------------------------------

    Alternatively, an EB-5 petitioner who is in the United States in 
lawful nonimmigrant status generally may seek LPR status by filing with 
USCIS an application for adjustment of status, Form I-485. See INA 
section 245, 8 U.S.C. 1255; 8 CFR part 245. Before filing such an 
application, however, the EB-5 petitioner must wait until an immigrant 
visa is ``immediately available.'' See INA section 245(a), 8 U.S.C. 
1255(a); 8 CFR 245.2(a)(2)(i)(A). Generally, an immigrant visa is 
considered ``immediately available'' if the petitioner's priority date 
under the EB-5 category is earlier than the relevant date indicated in 
the monthly DOS Visa Bulletin. See 8 CFR 245.1(g)(1).
    Whether obtained through the issuance of an immigrant visa or 
adjustment of status, LPR status based on an EB-5 petition is granted 
on a conditional basis. See INA section 216A(a)(1), 8 U.S.C. 
1186b(a)(1). Within the 90-day period preceding the second anniversary 
of the date the immigrant investor obtains conditional permanent 
resident status, the immigrant investor must file with USCIS a Petition 
by Investor to Remove Conditions on Permanent Resident Status (Form I-
829). See INA section 216A(c) and (d),

[[Page 35757]]

8 U.S.C. 1186b(c) and (d); 8 CFR 216.6(a)(1). Failure to timely file 
Form I-829 results in automatic termination of the immigrant investor's 
conditional permanent resident status and the initiation of removal 
proceedings. See INA section 216A(c), 8 U.S.C. 1186b(c); 8 CFR 
216.6(a)(5). In support of the petition to remove conditions, the 
investor must show, among other things, that the commercial enterprise 
was established, that he or she invested or was actively involved in 
investing the requisite capital, that he or she sustained those actions 
for the period of residence in the United States, and that job creation 
requirements were met or will be met within a reasonable time. See 8 
CFR 216.6(a)(4). If approved, the conditions on the investor's 
permanent residence are removed as of the second anniversary of the 
date the investor obtained conditional permanent resident status. See 8 
CFR 216.6(d)(1).

D. Final Rule

    In response to the proposed rule, DHS received 849 comments during 
the 89-day public comment period. In addition, DHS reviewed 11 comments 
submitted to the docket USCIS-2016-0008, EB-5 Immigrant Investor 
Regional Center Program, an advance notice of proposed rulemaking 
(ANPRM) published in the Federal Register two days prior to the 
proposed rule,\8\ but which contained content relevant to the proposed 
rule. As a result, DHS considered a total of 860 comment submissions in 
response to the proposed rule. Approximately 560 of the comments were 
letters submitted through mass mailing campaigns and 290 comments were 
unique submissions. Commenters consisted primarily of individuals, 
including some investors, but also included anonymous submissions, law 
firms, advocacy groups, EB-5 job-creating entities, EB-5 new commercial 
enterprises, regional centers, non EB-5 entity companies, industry 
professional associations, industry trade/business associations, 
community or social organizations, members of Congress, and 
representatives from state and local governments.
---------------------------------------------------------------------------

    \8\ The ANPRM is titled, ``EB-5 Immigrant Investor Regional 
Center Program'' and was published on January 11, 2017 at 82 FR 
3211. The eleven comments from the ANPRM docket considered were 
0002, 0005, 0006, 0007, 0008, 0009, 0015, 0018, 0021, 0024, and 
0025.
---------------------------------------------------------------------------

    Following careful consideration of public comments received, DHS 
made some modifications to the regulatory text proposed in the NPRM. 
The rationale for the proposed rule and the reasoning provided in the 
background section of that rule remain valid with respect to these 
regulatory amendments, except where new or supplemental rationale is 
reflected below. Section III of this final rule preamble includes a 
summary and analysis of public comments that are pertinent to the 
proposed rule. A brief summary of comments DHS deemed to be out of 
scope or unrelated to this rulemaking, making a substantive response 
unnecessary, is provided at the end of Section III. Comments may be 
reviewed at http://www.regulations.gov, docket number USCIS-2016-0006.

III. Response to Public Comments on the Proposed Rule

    DHS reviewed all of the public comments received in response to the 
proposed rule and addresses relevant comments in this final rule, 
grouped by subject area. DHS does not address comments seeking changes 
in U.S. laws, regulations, or agency policies that are unrelated to the 
changes to 8 CFR 204.6 and 216.6 proposed in the NPRM. This final rule 
does not resolve issues outside the scope of this rulemaking.

A. Need for Rulemaking and Regulatory Process

    Comments: Multiple commenters expressed support for general 
integrity reforms and measures that deter fraud, but recommended the 
legislative process to reform the program. A few commenters urged DHS 
to withdraw the proposed rule because the proposed reforms should be 
under the purview of Congress, as they stated that the reforms are 
better addressed through the legislative process. The commenters stated 
that the legislative process generally requires consensus building and 
input from various stakeholders. One commenter stated that legislative 
reform would be more comprehensive, address interconnected impacts, and 
provide for needed reforms that go beyond the statutory authority for 
regulatory reform. The commenter also expressed concern that pending 
EB-5 legislation has conflicting changes that, if passed, would 
supersede many or most of the proposed regulatory changes or render 
them moot. Another commenter stated that collecting comments on this 
rule prior to the reauthorization of the EB-5 Regional Center Program 
was premature; the commenter asserted that a legislative solution could 
address the issues in the proposed rule without the need for 
rulemaking. These commenters called for the withdrawal of the proposed 
rule and asserted that even if these changes were effected through 
regulation, any regulatory changes should be drafted from scratch under 
the new administration. Another commenter suggested that the proposed 
regulation exceeds the scope of legislative changes recently discussed 
by Congress.
    Response: DHS disagrees with commenters that it was premature to 
propose the rule prior to the reauthorization of the EB-5 Regional 
Center Program and that the issues addressed in the final rule are best 
resolved through the legislative process. The final rule addresses 
overarching issues concerning the EB-5 program generally, not just the 
Regional Center Program. Additionally, the Regional Center Program has 
been reauthorized numerous times in recent years, without reform. See, 
e.g., Public Law 115-123 (Feb. 9, 2018); Public Law 115-120 (Jan. 22, 
2018); Public Law 115-96 (Dec. 22, 2017); Public Law 115-31 (May 5, 
2017); Public Law 114-254 (Dec. 10, 2016); Public Law 114-223 (Sept. 
29, 2016); Public Law 114-113 (Dec. 18, 2015). DHS has worked 
diligently to provide technical assistance to Congress since 2014 to 
reform the EB-5 program through legislation. To date, Congress has not 
passed comprehensive EB-5 reform legislation.\9\ In fact, some members 
of Congress have specifically requested that ``because Congress has 
failed to reform or end this program, we call on the Department of 
Homeland Security to expeditiously finalize regulations that would 
reduce the widespread abuses of the EB-5 program.'' \10\ DHS would, of 
course, faithfully implement any new legislation, if passed.
---------------------------------------------------------------------------

    \9\ A number of pieces of legislation have been introduced. See 
generally S.1501, the ``American Job Creation and Investment 
Promotion Reform Act of 2015'', 114th Congress (2015-2016); S.2415, 
the ``EB-5 Integrity Act'', 114th Congress (2015-2016); S.2122, the 
``Invest in Our Communities Act'', 114th Congress (2015-2016); H.R. 
5992, the ``American Job Creation and Investment Promotion Reform 
Act of 2016'', 114th Congress (2015-2016); and S.727, the ``Invest 
in Our Communities Act'', 115th Congress (2017-2018).
    \10\ Website of U.S. Senator Charles Grassley, Grassley, 
Goodlatte Call on DHS to Finalize EB-5 Regulations End Unacceptable 
Status Quo, (Mar. 22, 2018), available at https://www.grassley.senate.gov/news/news-releases/grassley-goodlatte-call-dhs-finalize-eb-5-regulations-end-unacceptable-status-quo.
---------------------------------------------------------------------------

    DHS agrees with the members of Congress who requested taking this 
regulatory action because of the lack of legislative reforms. DHS is 
finalizing this NPRM to implement needed regulatory reforms in a timely 
manner. Although the legislative process has certain benefits, the 
regulatory process is transparent and includes the solicitation of 
input from the public. These regulatory reforms do not require new 
legislation; the statutory authority underlying these regulatory 
reforms is

[[Page 35758]]

set forth at length in the preamble to the proposed rule and elsewhere 
in this preamble. For example, when creating the EB-5 program, Congress 
clearly intended that the administering agency may periodically raise 
the minimum investment amounts. The INA provides that the Secretary of 
Homeland Security ``in consultation with the Secretary of Labor and the 
Secretary of State, may from time to time prescribe regulations 
increasing'' the $1,000,000 minimum investment amount.\11\ Yet, even 
though the Immigration and Naturalization Service had recommended 
before the creation of the EB-5 program that the minimum investment 
amount in an investor visa program be ``adjusted periodically based on 
some criteria such as the Consumer Price Index,'' \12\ this has never 
been done in the quarter century since the program's creation. Nor do 
the regulatory reforms require revision solely by virtue of a change in 
administration. Finally, promulgation of these regulatory reforms does 
not preclude legislative reform of the EB-5 program by Congress.
---------------------------------------------------------------------------

    \11\ INA section 203(b)(5)(C)(i).
    \12\ Legal Immigration Reforms: Hearing Before the Subcomm. on 
Immigration and Refugee Affairs of the Senate Comm. on the 
Judiciary, S. Hrg. 100-990 at 90 (1987) (INS responses to questions 
by Senator Paul Simon) (1987).
---------------------------------------------------------------------------

    Comments: Other commenters disagreed with the approach to bifurcate 
EB-5 issues into an NPRM and an ANPRM, stating that the issues 
contained in both were interconnected and must be addressed together. 
The commenters asked DHS to withdraw the NPRM and amend the ANPRM to 
include the issues addressed in the NPRM (namely the designation of 
TEAs and minimum investment levels), as issues for an extended public 
comment process prior to rulemaking. In doing so, the commenters said 
DHS should also extend the comment period for the ANPRM for 60 days, in 
order to solicit more meaningful and data-driven comments.
    Response: DHS disagrees with the commenters. The NPRM focused on 
issues common to all EB-5 petitioners, whether or not they are 
associated with a regional center. The ANPRM focused exclusively on the 
Regional Center Program. DHS believed bifurcating the proposals was 
critical for two reasons: (1) The EB-5 program is in need of reform 
related to the issues addressed in the NPRM and this final rule; and 
(2) DHS believed the agency had sufficient data to support the changes 
proposed in the NPRM for the entire EB-5 program at the time of 
publication, whereas DHS desired to solicit additional data from 
stakeholders regarding potential changes to the Regional Center 
Program. DHS decided to publish an ANPRM to gather this additional 
information. As DHS did not merge the two proposals, DHS believes an 
extension to the almost 90-day comment period was not warranted.

B. Priority Date Retention

1. Proposed Standards for Retaining a Priority Date
    Comments: Many commenters discussed the proposed standards for 
retaining a priority date. Several commenters expressed general support 
for the proposal to allow EB-5 investors to retain the original filing 
date of their Form I-526 petition as logical and necessary, especially 
with ``retrogression'' or oversubscription of the category (i.e., 
lengthening of the period of time before a priority date assigned to a 
Form I-526 petition becomes current and an EB-5 visa becomes available 
for issuance). They asserted that priority date retention would provide 
flexibility to investors as conditions change and may encourage 
investment in the United States by protecting EB-5 petitioners from 
having to ``restart the clock'' on their petition due to circumstances 
outside of their control. One commenter stated that this change will 
mitigate otherwise catastrophic results that would occur to some 
petitioners stuck in the visa queue. One commenter stated that 
preserving the priority date can give the investor an incentive to 
reinvest in a project. DHS agrees that priority date retention would 
protect petitioners and encourage investment.
    Several commenters stated that all EB-5 petitions should retain the 
priority date, even if the EB-5 petition is not yet approved, but did 
not provide any additional justification for this statement. Other 
commenters proposed that the priority date also be retained for those 
petitions that were denied due to no fault of the petitioner--for 
instance, if an associated regional center is terminated before 
adjudication of the petition due to its failure to meet program 
requirements--because circumstances can change as a result of 
potentially lengthy Form I-526 processing times. One commenter 
suggested that DHS use the same standard as INA section 245(i) to 
determine whether an EB-5 petitioner may retain a priority date from an 
earlier filed EB-5 petition, where benefits attach if a petition was 
approvable when filed, defined by the commenter as properly filed, 
meritorious in fact, and non-frivolous. This commenter also recommended 
DHS allow a supplemental Form I-526 filing and priority date retention 
for petitioners if, under USCIS policy, a material change to an 
investment project would require the filing of a new Form I-526 
petition, as long as the petition was approvable when filed.
    Response: The final rule requires that the Form I-526 petition be 
approved for an EB-5 petitioner to retain the priority date associated 
with that petition. DHS disagrees with commenters' proposals that a 
priority date should attach when the petition is filed, rather than 
when it is approved (including (1) where the pending petition is denied 
through no fault of the petitioner, or (2) the petition was approvable 
when filed but a new petition is required due to the USCIS material 
change policy). Section 203(e) of the INA provides that immigrant visas 
must be issued to eligible immigrants in the order in which a petition 
on behalf of each such immigrant is filed. USCIS determines such 
eligibility through its approval of petitions. See also, e.g., INA 
section 203(b)(5) and (f), 8 U.S.C. 1153(b)(5) and (f); INA section 
204(a)(1)(H) and (b), 8 U.S.C. 1154(a)(1)(H) and (b); 8 CFR 
103.2(b)(8)(i). Requiring approval of the petition prior to 
establishment of a priority date is consistent with DHS's historical 
interpretation of eligibility with respect to order of consideration 
for visa issuance under INA section 203(e), the Department of State's 
regulation on priority dates for visa issuance, and DHS's priority date 
retention regulation for other employment-based categories. See 8 CFR 
103.2(b)(1) (mandating eligibility from time of filing through 
adjudication); 22 CFR 42.53(a); 8 CFR 204.5(e) (priority date 
retention). USCIS determines a petitioner's eligibility as part of 
adjudication of the petition, and USCIS's approval of the petition 
along with the filing date establishes the order of consideration for a 
visa.
    Additionally, the commenters' proposals to revise USCIS's material 
change policy would have implications beyond priority date retention 
and the scope of this rulemaking. DHS did not propose to revise its 
material change policy as part of the proposed rule for this action. 
Rather, DHS solicited public feedback on potential changes to the 
policy in the EB-5 Immigrant Investor Regional Center Program ANPRM. 
See 82 FR 3211 (Jan. 11, 2017).
    Moreover, allowing petitioners to establish a priority date prior 
to the adjudication of the petition has negative policy and operational 
implications. DHS believes that assigning a priority date to a pending 
Form I-526 petition would incentivize frivolous petition

[[Page 35759]]

filings solely to establish an earlier priority date. By assigning 
priority dates only upon petition approval, DHS hopes to eliminate the 
possibility that investors may file a petition that is unlikely to be 
approved purely to lock-in an earlier priority date, which may lead to 
further delays in adjudication. Additionally, allowing petitioners to 
retain priority dates for unapproved petitions that may have been 
approvable when filed would present an operational burden that would 
complicate and prolong the adjudications process, as USCIS would need 
to determine whether priority date retention is possible for these 
petitions separate from its normal adjudications framework.
    For these reasons, the final rule will only allow an EB-5 
petitioner to retain the priority date from an approved Form I-526 
petition. Priority date retention is not available in cases involving 
fraud or willful misrepresentation of a material fact by the 
petitioner, or when DHS determines that it approved the petition based 
on a material error. See final 8 CFR 204.6(d). DHS believes this change 
will address situations in which petitioners whom USCIS has already 
determined meet eligibility requirements may become ineligible through 
circumstances beyond their control (e.g., the termination of a regional 
center) as they wait for their visa priority date to become current as 
well as provide investors with greater flexibility to deal with changes 
to business conditions.
    In contrast to the proposed rule, this final rule also clarifies 
that an investor may retain a priority date from a petition that had 
been approved but has since been revoked on grounds not specifically 
described in the provision. The final rule also clarifies that if an 
investor has multiple approved petitions, the investor is entitled to 
the earliest qualifying priority date. See final 8 CFR 204.6(d).
    Comment: One commenter stated that some EB-5 investors with pending 
Form I-526 petitions may have already invested their funds and created 
jobs, but their petitions may no longer be approvable due to 
circumstances outside of their control, such as regional center 
termination. The commenter stated that the proposal would be unfair due 
to processing times, as some investors awaiting approval may have 
already achieved the goals of the program, but cannot retain the 
priority date, while other similarly situated investors will retain 
their priority dates simply because their petitions were approved.
    Response: As explained above, DHS is only providing priority date 
retention to EB-5 investors with approved Form I-526 petitions for a 
range of reasons. DHS also notes that no law, regulation, or DHS policy 
requires that the petitioner's capital be invested prior to petition 
approval. On the contrary, INA section 203(b)(5)(A)(i) provides that an 
investor can qualify for EB-5 status by showing that he or she is 
``actively in the process of investing.'' See also 8 CFR 204.6(j)(2). 
Nothing prevents a petitioner from holding his or her contribution of 
capital in escrow until the petitioner has obtained conditional 
permanent resident status.\13\
---------------------------------------------------------------------------

    \13\ See USCIS Policy Manual, 6 USCIS-PM G (Jun. 14, 2017).
---------------------------------------------------------------------------

    Comments: Several commenters stated the proposal does not protect 
victims of EB-5 scams where investment capital was diverted, 
misappropriated, or subjected to an asset freeze. Some commenters 
suggested that such victims be allowed to choose another project for 
re-investment and retain the filing date of the pending Form I-526 
petition as the priority date. They suggested that, because currently 
many investors who are victims of various EB-5 scams and other criminal 
activities conducted by regional centers and project managers, the 
victims cannot withdraw and reinvest their funding because they would 
lose their original priority date. One commenter suggested that 
allowing victims to reinvest and retain the priority date would provide 
fairness to investors and prevent deliberate EB-5 scams in the future 
since investors would not be forced to maintain their investment in a 
fraudulent project just to preserve a priority date.
    Response: For the reasons explained above, DHS is only providing 
priority date retention to EB-5 investors with approved Form I-526 
petitions. Although DHS is sympathetic to petitioners with pending 
petitions who are victims of scams and other criminal activities 
conducted by regional centers and project managers, a petitioner must 
be eligible at the time of filing and remain eligible until the 
petition is adjudicated. Retention of a priority date does not relieve 
petitioners of their burden to meet the relevant eligibility 
requirements, including their statutory burden of investing the 
required minimum investment pursuant to INA 203(b)(5)(A)(i).
    In addition, certain changes to a pending Form I-526 petition, 
including a change in regional center and certain changes relating to 
the new commercial enterprise or job-creating entity, may constitute a 
material change to the petition.\14\ A change is material if the 
changed circumstances would have a natural tendency to influence or are 
predictably capable of affecting the decision.\15\ Material changes 
prior to the approval of an EB-5 investor's Form I-526 petition would 
render the petition ineligible for the benefit sought. Similarly, 
material changes after the approval of the Form I-526 but before the 
petitioner has obtained conditional permanent residence, would 
constitute good and sufficient cause to issue a notice of intent to 
revoke, which if not overcome would constitute good cause to revoke the 
petition's approval.\16\ This rule provides petitioners faced with 
revocation of an approved petition due to a material change the means 
to retain the priority date of that approved petition when filing a new 
petition, except in cases of fraud, misrepresentation, or material 
error. See final 8 CFR 204.6(d). DHS did not propose to change its 
current material change policy, either with respect to pending 
petitions or its ability to revoke approved petitions, and does not 
intend to do so in this final rule. Rather, the final rule provides 
certain petitioners with the opportunity to retain the priority date of 
their approved petitions if they submit another Form I-526 petition for 
which they are qualified. See final 8 CFR 204.6(d). This additional 
protection helps reduce the impact of material changes to EB-5 
investors with approved petitions due to changed business conditions.
---------------------------------------------------------------------------

    \14\ See USCIS Policy Manual, 6 USCIS-PM G (Jun. 14, 2017).
    \15\ Id.
    \16\ USCIS Policy Manual, 6 USCIS-PM G (Nov. 30, 2016).
---------------------------------------------------------------------------

    Comments: Some commenters recommended that investors who may be 
ineligible for EB-5 status due to circumstances outside their control, 
specifically fraud or force majeure (established by showing any extreme 
circumstance beyond anyone's control), should not lose the benefit of 
any period for which the age of the investor's child has been frozen 
under the Child Status Protection Act (CSPA) such that the child might 
``age-out.'' Other commenters suggested ``freezing'' the child's age at 
the time the EB-5 applicant files his or her Form I-526 without 
specific reference to the CSPA. Several commenters expressed specific 
concerns regarding the children of Chinese investors aging out of the 
program due to the visa backlogs, which may ultimately cause potential 
investors with young children to invest in other countries.

[[Page 35760]]

    Response: While DHS appreciates the commenters' concerns regarding 
minor beneficiaries who may age out during the process, DHS does not 
intend to change its guidance regarding the applicability of the CSPA. 
DHS notes that, by statute, once a person turns 21, he or she is no 
longer a ``child'' for purposes of the INA, subject to certain 
statutory exceptions by which individuals who surpass that age are or 
may be considered to remain a ``child'' by operation of law. See INA 
sections 101(b)(1) and 203(h), 8 U.S.C. 1101(b)(1) and 1153(h). The 
CSPA was enacted on August 6, 2002, and provides continuing eligibility 
for certain immigration benefits to the principal or derivative 
beneficiaries of certain benefit requests after such beneficiaries 
reach 21 years of age. See Public Law 107-208; INA sections 201(f), 
203(h), 204(k), 207(c)(2), and 208(b)(3), 8 U.S.C. 1151(f), 1153(h), 
1154(k), 1157(c)(2), and 1158(b)(3).\17\
---------------------------------------------------------------------------

    \17\ Guidance on the agency's application of the CSPA to visa 
petitions can be found in the USCIS Policy Manual. See USCIS Policy 
Manual, 7 USCIS-PM A (Nov. 30, 2016).
---------------------------------------------------------------------------

    The CSPA, among other things, protects minor beneficiaries from 
aging out of their beneficiary status due to the length of time that it 
takes DHS to adjudicate petitions.\18\ By contrast, the priority date 
retention provision in this rule is meant to protect investors with 
approved petitions from losing a priority date while awaiting an 
immigrant visa. Protection against fraud or force majeure is beyond the 
scope of the CSPA. DHS has not been presented with any evidence of 
reduced interest in the EB-5 program due to its application of the 
CSPA, and has no way of determining in what manner application of the 
CSPA will affect future investment levels under the EB-5 program. DHS 
notes, however, that some children of principal beneficiaries of EB-5 
petitions may benefit from priority date retention in that, if there is 
a visa backlog, they may spend a shorter amount of time in the queue, 
thus reducing the possibility they will reach an age that they no 
longer qualify as derivative beneficiaries.
---------------------------------------------------------------------------

    \18\ See INA section 203(h); USCIS, Child Status Protection Act, 
https://www.uscis.gov/greencard/child-status-protection-act.
---------------------------------------------------------------------------

    Comments: Some commenters suggested that DHS allow an EB-5 investor 
to freely gift and transfer his or her priority date from an approved 
petition to another family member (either by switching the principal 
investor or having a family member file a new Form I-526), such as a 
child, to prevent a child from aging out, or losing the ability to 
immigrate if he or she turns 21 while waiting for an immigrant visa to 
become available.\19\ A commenter also suggested DHS allow priority 
dates to transfer to a petitioner's heir if the petitioner is deceased.
---------------------------------------------------------------------------

    \19\ INA section 203(d) allows a spouse or child as defined in 
INA section 101(b)(1)(A), (B), (C), (D), or (E), 8 U.S.C. 
1101(b)(1)(A), (B), (C), (D), or (E), to accompany or follow to join 
a spouse or parent as a family-preference, employment-based, or 
diversity immigrant. INA section 101(b)(1) defines a child as an 
unmarried person under 21 years of age. Consequently, if a primary 
immigrant's child has turned 21 and has not yet immigrated, that 
child is no longer eligible to accompany or follow to join the 
primary immigrant.
---------------------------------------------------------------------------

    Response: As stated previously, section 203(e) of the INA provides 
that immigrant visas must be issued to eligible immigrants in the order 
in which a petition on behalf of each such immigrant is filed. USCIS 
determines such eligibility through its approval of petitions and 
establishment of priority dates. Determination of eligibility for one 
immigrant cannot be substituted for another; each petitioning immigrant 
must qualify on his or her own merit. INA 203(e); see 8 CFR 103.2(b)(1) 
(``An applicant or petitioner must establish that he or she is eligible 
for the requested benefit at the time of filing the benefit request and 
must continue to be eligible through adjudication.'' (emphasis 
added)).\20\ For that reason, the final rule explicitly states that a 
priority date is not transferable to another alien. See final 8 CFR 
204.6(d).
---------------------------------------------------------------------------

    \20\ In addition, INA 203(b)(5)(A) provides that visas shall be 
made available to qualified immigrants seeking to enter the United 
States ``for the purpose of engaging in an NCE . . . in which such 
alien has invested or is actively in the process of investing . . . 
.'' And INA 203(e) states that immigrant visas made available under 
subsection (a) or (b) of this section shall be issued to ``eligible 
immigrants in the order in which a petition in behalf of each such 
immigrant is filed.'' DHS believes that these provisions, taken 
together, are best read as contemplating eligibility by a single 
petitioner whose visa is made available in the order in which such 
individual petitioned and established eligibility.
---------------------------------------------------------------------------

    Comment: One commenter suggested extending priority date retention 
benefits to investors who have already obtained conditional LPR status 
to alleviate the burden on investors who will otherwise be unable to 
obtain permanent LPR status through no fault of their own. The 
commenter also asserted that delays in adjudicating I-829 petitions 
increase the risk to the investor that ``situations in which 
petitioners may become ineligible through circumstances beyond their 
control (e.g., the termination of a regional center) may occur.
    Response: As explained in the NPRM, DHS proposed priority date 
retention to provide flexibility to deal with changes to business 
conditions in light of oversubscription of the program (i.e., demand 
that outpaced the supply in visa numbers). 82 FR at 4756. Absent 
priority date retention, petitioners who may have met all of the 
requirements to participate in the EB-5 program may face harsh 
consequences upon losing their place in the immigrant visa queue if a 
material change occurs through no fault of the investor. Once a visa 
becomes available and a petitioner becomes a conditional permanent 
resident, oversubscription is no longer a concern. DHS believes there 
are other protections already in place for individuals who are 
conditional permanent residents and who seek to remove conditions. For 
example, an immigrant investor may proceed with the petition to remove 
conditions and present documentary evidence demonstrating that, 
notwithstanding deviation from the business plan contained in the 
initial Form I-526 petition, the requirements for the removal of 
conditions have been satisfied.\21\ Further, a priority date cannot 
generally be re-used in other employment-based or family-based 
preference categories once the individual becomes a lawful permanent 
resident. Thus, consistent with DHS's treatment of individuals who 
obtain permanent residence under other immigrant classifications, DHS 
declines to create an anomalous carve-out for one class of immigrants 
allowing them to repeatedly jump to the beginning of the visa queue 
ahead of others who may have endured a lengthy wait to obtain a visa. 
Once a priority date is used by virtue of the petitioner becoming a 
conditional permanent resident, he or she will have obtained the 
benefit connected to the priority date, and DHS will not permit the 
priority date to be retained for further use.
---------------------------------------------------------------------------

    \21\ USCIS Policy Manual, 6 USCIS-PM G (Nov. 30, 2016).
---------------------------------------------------------------------------

2. Other Comments on Priority Date Retention
    Comment: One commenter requested that USCIS clarify that priority 
dates for EB-5 petitions are determined based on the date of filing the 
initial petition.
    Response: DHS agrees with the commenter and has added language that 
was inadvertently left out of the NPRM to the final regulatory text. 
See final 8 CFR 204.6(d) (``The priority date of a petition for 
classification as an investor is the date the completed, signed 
petition (including all initial evidence and the correct fee) is 
properly filed.'').
    Comment: One commenter expressed concern with DHS proposing 
priority date retention along with changes to the investment amounts 
and TEA

[[Page 35761]]

designation process. The commenter recommended that if DHS finalizes 
the priority date retention provision, the following information will 
also need to be clarified for investors during a transition period: (1) 
The amount of money investors need to invest during the transition 
period if they want to move their investment dollars to a different 
qualifying project (i.e., must they reinvest the amounts required under 
this rule or may they reinvest at the same investment level permitted 
before the new regulatory requirements take effect); and (2) whether if 
investors who are able to reinvest at the earlier levels and retain 
their priority date would be able to reinvest that money into a project 
that was located within a TEA in place before the new regulatory 
requirements have taken effect at the amounts then authorized for 
investment in TEAs. The commenter expressed a preference for allowing 
investment consistent with the regulatory regime in existence prior to 
this rule becoming effective, and allowing investment opportunities in 
any type of project, regardless of the project's future TEA status once 
a final rule takes effect.
    Response: DHS appreciates the commenter's concerns and has 
clarified the effective date and implementation process in this final 
rule preamble in Sections I.E and I.F. The changes in this rule will 
apply to any Form I-526 filed on or after the effective date of the 
rule, including any Form I-526 filed on or after the effective date 
where the petitioner is seeking to retain the priority date from a Form 
I-526 petition filed and approved prior to the effective date of this 
rule. A Form I-526 petitioner can retain the priority date from an 
approved Form I-526 petition filed prior to the effective date of this 
rule, so long as the petitioner is not lawfully admitted to the United 
States as a conditional permanent resident based on that earlier-
approved petition, and USCIS did not revoke the approval based on the 
petitioner's fraud or willful misrepresentation or because USCIS 
determined that it approved the petition based on material error. This 
rule becomes binding on petitioners on the effective date; beginning at 
that time, any new petition, regardless of whether the petitioner had 
previously filed a Form I-526, must meet the eligibility requirements 
in place at the time of filing. See 8 CFR 103.2(b)(1). DHS believes it 
would be operationally burdensome to set and adjudicate different 
eligibility requirements for investors who want to move their 
investment dollars to a different qualifying project and must file a 
new petition. The regulatory requirements, including the minimum 
investment amounts and TEA designation process, in place at the time of 
filing the petition will govern the eligibility requirements for that 
petition, regardless of the priority date. DHS believes this manner of 
implementation best balances the needs of investors, parity of 
treatment among investors, and operational concerns.
    Comment: One commenter stated that the priority date proposal would 
create unexpected delays to petitioners who had done their due 
diligence and chosen a successful project. The commenter believes that 
roughly 15 percent of projects are failing or have failed. The 
commenter argued that, if priority dates can be retained, then most 
petitioners in failed projects are likely to re-file through a 
different project, thus causing petitioners already in the queue to 
wait longer for a visa that otherwise would have become available due 
to the failed projects. The commenter recommended that priority date 
retention be restricted to projects where Form I-829 petitions would be 
denied only because of fraud committed by the ``EB-5 sponsors,'' rather 
than assisting investors whose projects fail for other reasons. Another 
commenter stated that innocent investors should not be punished by 
fraud and scams committed by the investment project.
    Response: As contemplated by Congress, the immigrant investor visa 
was a way to provide aliens an immigration incentive for investing and 
creating jobs in the United States. For petitioners with approved 
petitions who invest in projects that appear unlikely to succeed after 
petition approval and while the investor is awaiting visa availability, 
priority date retention provides further incentive for them to reinvest 
in another project in the United States as opposed to withdrawing their 
investment in the United States. In addition, providing for priority 
date retention only where a Form I-526 petition has been approved is 
consistent with Congress's goal of issuing visas to eligible immigrants 
in the order petitions were filed, in that it allows investors to 
remain in the queue only if the agency had deemed them eligible for EB-
5 classification. Although DHS acknowledges the commenter's point that 
priority date retention could potentially result in a longer wait in 
the visa queue for some petitioners, the final rule provides equitable 
relief to those EB-5 petitioners described in the comment who find 
that, through no fault of their own, their approved Form I-526 cannot 
be used to seek admission to the United States as lawful permanent 
residents. The final rule is also intended to produce parity in 
priority date retention between EB-5 petitioners and beneficiaries of 
petitions under other employment-based categories.
    In response to commenter concerns that a fraudulent project or 
sponsor could affect an innocent petitioner, DHS clarifies in the final 
rule that the fraud or willful misrepresentation of a material fact 
must be done by the petitioner. See final 8 CFR 204.6(d)(1).
    Comment: One commenter suggested that because a petition must be 
approvable both at the time it was filed and also on the date it is 
adjudicated, the priority date retention proposal would create the 
potential for the retroactive application of the regulations to pending 
Form I-526 and Form I-829 petitions as well as to current conditional 
permanent residents. Citing to Bowen v. Georgetown Univ. Hosp., 488 
U.S. 204, 208, 109 S. Ct. 468, 471 (1998), the commenter argued that 
there is no precedent for retroactive application of regulations.
    Response: The final rule does not change the longstanding 
requirement at 8 CFR 103.2(b)(1) that a petitioner demonstrate 
eligibility at the time of filing and throughout adjudication, and thus 
it does not result in a retroactive application of regulations. The 
preamble to this final rule also clarifies the effective date of this 
rule, as well as implementation procedures in Sections I.E and I.F. As 
explained above, the changes in this rule will apply to all Form I-526 
petitions filed on or after the effective date of the final rule. 
Petitions filed before the effective date will be adjudicated under the 
regulations in place at the time of filing. As the final rule will only 
apply to petitions filed on or after the effective date, DHS does not 
anticipate that the final rule will be applied retroactively.

C. Increases to the Investment Amounts

1. Increase to the Standard Minimum Investment Amount
    Comments: Multiple commenters stated that the proposed standard 
minimum investment amount is too high because it would greatly reduce 
the number of investors in the EB-5 program, but did not suggest an 
alternative. Similarly, many commenters agreed that the minimum 
investment amount should increase, but stated that $1.8 million was too 
high because, combined with the TEA designation changes, the increase 
will result in many projects that could previously have been funded 
with $500,000 individual investments now

[[Page 35762]]

needing $1.8 million individual investments. Several commenters noted 
that the proposed amounts far exceed those proposed and under 
consideration by Congress, and one commenter suggested reducing the 
standard and TEA minimum investment amounts by half of the current 
amount. Other commenters suggested DHS consider investment amounts 
ranging from $500,000 to $1.5 million. One commenter stated that the 
amount set in 1990 was too high as evidenced by the program not being 
fully utilized before 2014 and suggested that setting the investment 
amount too high will repeat the mistake. The commenter asserted that 
job creation was the most important principle and the investment amount 
was just a ``gate keeping mechanism,'' but did not provide additional 
support for these assertions.
    Several commenters expressed support for the proposal to increase 
the standard investment amount to $1.8 million; some expressed support 
for the proposed increase, but did not focus on a specific amount. 
Commenters supporting the proposed minimum investment increases stated 
that the market can handle an increase in the minimum investment 
amounts and that leading investor visa programs in other countries 
require investment amounts higher than those recommended by DHS. 
Several commenters agreed with updating the minimum investment amount 
to account for inflation. One commenter agreed with the proposal to 
increase the minimum investment amount to account for inflation, and 
stated the increase was necessary to realistically achieve the goal of 
sustaining 10 full-time employees in light of the increases in national 
average salaries from 1990 to 2015. Some members of Congress noted that 
the increase is important in order for the program to recapture the 
real 1990 investment value and infuse additional capital in to the 
United States. They further stated that the failure to adjust the 
minimum investment amount for inflation has cost the U.S. economy 
billions of dollars each year in potential investment funds, ultimately 
requiring developers to attract more foreign investors than needed in 
order to raise the desired amount of capital.
    Response: In 1990, Congress set the minimum investment amount for 
the program at $1 million and authorized the Attorney General (now the 
Secretary of Homeland Security) to increase the minimum investment 
amount, in consultation with the Secretaries of State and Labor. INA 
section 203(b)(5)(C)(i), 8 U.S.C. 1153(b)(5)(C)(i). Neither the former 
INS nor DHS has exercised its authority to increase the minimum 
investment amount. As a result, over time, inflation has eroded the 
present-day value of the minimum investment required to participate in 
the EB-5 program--leaving it at little more than half its real value 
when the program was created. Thus, after consulting with the 
Departments of State and Labor, DHS proposed in the NPRM to increase 
the minimum investment amount consistent with increases in the CPI-U 
during the intervening period, for a new minimum investment amount of 
$1.8 million.
    DHS disagrees with the commenter who suggested that lower 
utilization of the program is evidence that the investment amount was 
set too high prior to 2014, because DHS has reason to believe other 
factors significantly contributed to lower utilization of the program. 
For example, in 2009, a CIS Ombudsman's recommendation for the EB-5 
program discussed various reasons for the program's lower utilization 
related to administrative obstacles and uncertainties that undermined 
stakeholder confidence, including uncertainty in the program, changes 
in guidance, concerns of insider access, as well as suspicions of 
abuse, misrepresentation, and fraud.\22\ The Ombudsman also cited to a 
2005 Government Accountability Office (GAO) report which attributed 
``low participation to a series of factors that led to uncertainty 
among potential investors. These factors include an onerous application 
process; lengthy adjudication periods; and the suspension of processing 
of over 900 EB-5 cases--some of which date to 1995--precipitated by a 
change in [USCIS'] interpretation of regulations regarding financial 
[qualifications].'' \23\ Although neither the Ombudsman nor the GAO 
expressly reviewed statutory requirements such as the Congressionally-
set minimum investment amount, and were instead focused on USCIS 
implementation of the EB-5 program and how that may have contributed to 
low participation, both reports give DHS reason to believe the 
program's lower utilization in the past is due to a range of reasons.
---------------------------------------------------------------------------

    \22\ CIS Ombudsman, Employment Creation Immigrant Visa (EB-5) 
Program Recommendations, March 18, 2009, available at https://www.dhs.gov/xlibrary/assets/CIS_Ombudsman_EB-5_Recommendation_3_18_09.pdf.
    \23\ GAO, Immigrant Investors: Small Number of Participants 
Attributed to Pending Regulations and Other Factors, p.3 GAO-05-256 
(Apr. 2005).
---------------------------------------------------------------------------

    In addition, DHS notes that other trends led to higher utilization 
of the program over the last 10 years. For example, the reduction of 
available U.S.-based commercial lending funds due to the U.S. financial 
crisis in 2008 led to interest in alternative funding sources, such as 
the EB-5 program.\24\ The commenter who claimed that lower utilization 
of the program in the past was due to the investment amount being too 
high also acknowledged that the demand for EB-5 funds from eligible 
projects is not dependent on the level of investment set by DHS. The 
commenter claimed that demand was instead set by market factors totally 
independent of EB-5, most notably risk tolerance of primary lenders and 
the level of the premium charged by commercial lenders.
---------------------------------------------------------------------------

    \24\ ``A Roadmap to the Use of EB-5 Capital: An Alternative 
Financing Tool for Commercial Real Estate Projects,'' Professor 
Jeanne Calderon and Guest Lecturer Gary Friedland of the NYU Stern 
School of Business (May 22, 2015) (``Despite the Program's enactment 
by Congress in 1990, for many years EB-5 was not a common path 
followed by immigrants to seek a visa. However, when the traditional 
capital markets evaporated during the Great Recession, developers' 
demand for alternate capital sources rejuvenated the Program. Since 
2008, the number of EB-5 visas sought, and hence the use of EB-5 
capital, has skyrocketed. EB-5 capital has become a capital source 
providing extraordinary flexibility and attractive terms, especially 
to finance commercial real estate projects.'').
---------------------------------------------------------------------------

    Regardless of what factors ultimately accounted for higher 
utilization of the program, the reality is that the program has become 
and remains hugely oversubscribed at current investment levels, DHS 
disagrees with commenters who assert that raising the minimum 
investment amount would necessarily cause the number of EB-5 investors 
to return to the levels in the earliest days of the program, or even to 
fall below the number necessary to ensure full utilization of the 9,940 
visas available a year, as demand is related to a range of internal and 
external factors.\25\
---------------------------------------------------------------------------

    \25\ To the extent that the changes made by this rule reduce the 
number of investors, the INA provides that unused visas would be 
allocated to different employment-based categories. See generally 
INA section 203(b), 8 U.S.C. 1153(b).
---------------------------------------------------------------------------

    The program makes available 9,940 immigrant visas a year, and as of 
December 1, 2018, there are 40,017 beneficiaries (principals and 
immediate family members) of approved EB-5 petitions \26\ waiting for 
the availability of immigrant visas. According to the Department of 
State's Visa Bulletin for December 2018, petitioners from mainland 
China must have a priority date (the date of filing of the I-526 
petition with USCIS) before August 22, 2014, in order for an immigrant 
visa to be available.\27\ In addition, as of

[[Page 35763]]

December 1, 2018, USCIS had 13,125 pending I-526 petitions that had yet 
to be adjudicated.\28\ Using the average of 1.81 derivative 
beneficiaries for each EB-5 principal who received an immigrant visa 
over fiscal years 2014-2016 \29\ and assuming that about 10% of 
petitions filed will be denied, terminated, or withdrawn, this would 
represent 33,193 potential beneficiaries. Thus, there are already in 
the pipeline approximately 73,000 beneficiaries or potential 
beneficiaries--representing over seven years' worth of EB-5 immigrant 
visas as allocated by Congress.
---------------------------------------------------------------------------

    \26\ According to internal program office and adjudication 
records.
    \27\ U.S. Dep't of State, Bureau of Consular Aff., Visa Bulletin 
for December 2018, available at https://travel.state.gov/content/travel/en/legal/visa-law0/visa-bulletin/2019/visa-bulletin-for-december-2018.html.
    \28\ According to internal program office and adjudication 
records.
    \29\ See DHS, 2016 Yearbook of Immigration Statistics (table 7); 
DHS, 2015 Yearbook of Immigration Statistics (table 7); DHS, 2014 
Yearbook of Immigration Statistics (table 7).
---------------------------------------------------------------------------

    The inevitable result has been ever growing wait times for 
immigrant visas to become available for EB-5 petitioners with approved 
petitions born in mainland China (and their derivative beneficiaries). 
The annual EB-5 visa cap was reached for the first time in fiscal year 
2014.\30\ In May 2015, the State Department found it necessary to 
establish a waiting list for petitioners with approved petitions born 
in mainland China, when it announced that immigrant visas were 
available only for such petitioners (with investments in regional 
center projects and/or projects in TEAs) whose priority dates were 
earlier than May 1, 2013.\31\ That waiting list has since grown, so 
that EB-5 visas are only now available for petitioners born in mainland 
China with priority dates before August 22, 2014--which represents a 
wait of over 40 months. As there are over seven years' worth of 
beneficiaries in the pipeline, the wait time will likely only grow.
---------------------------------------------------------------------------

    \30\ DHS, 2014 Yearbook of Immigration Statistics (table 7).
    \31\ U.S. Dep't of State, Bureau of Consular Aff., Visa Bulletin 
for May 2015, available at https://travel.state.gov/content/travel/en/legal/visa-law0/visa-bulletin/2015/visa-bulletin-for-may-2015.html. This is a result of the interaction between the 
employment-based green cards per-county caps and the fact that the 
overwhelming majority of EB-5 visas (75% in fiscal year 2017) go to 
beneficiaries born in maintain China. See section 202 of the INA, 8 
U.S.C. 1152; Bureau of Consular Affairs, U.S. State Department, 
Report of the Visa Office Fiscal Year 2017 (table V (part 3)).
---------------------------------------------------------------------------

    Given that over 80% of EB-5 petitioners who receive immigrant visas 
do not adjust their status from within the United States, but receive 
their visas overseas,\32\ many potential EB-5 investors may choose not 
to wait for such an extended period of time before they can immigrate 
to the United States, especially considering that most petitioners 
invest the required capital well before their petitions are approved. 
This might at least in part account for the fact that the number of 
petitions filed has fallen each year since reaching a high water mark 
in fiscal year 2015. By fiscal year 2018, the number of petitions filed 
had fallen by more than half.\33\ In the future, the number of foreign 
investors impacted by the per-country cap and the resultant waiting 
list for EB-5 visas who choose to file petitions may well further 
decline to the point that total petitions filed each year may not even 
account for the 9,940 visas allocated. This decline, of course, would 
be independent of the particular minimum investment amounts required by 
regulation, but may mitigate any decline that might be associated with 
such amounts. This is because some prospective petitioners who might 
have foregone use of the program due to increases in the investment 
amounts would have already foregone use of the program due to overall 
waitlist issues.
---------------------------------------------------------------------------

    \32\ In fiscal year 2017, 83% of EB-5 visas were issued 
overseas. See DHS, 2017 Yearbook of Immigration Statistics (table 
7).
    \33\ In fiscal year 2015, USCIS received 14,373 EB-5 petitions; 
in fiscal year 2016, 14,147; in fiscal year 2017, 12,165; and in 
fiscal year 2018, 6,424. See U.S. Citizenship and Immigration 
Services, Number of Form I-526, Immigrant Petition by Alien 
Entrepreneur, by Fiscal Year, Quarter, and Case Status 2008-2018, 
available at https://preview.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/Immigration%20Forms%20Data/Employment-based/I526_performancedata_fy2018_qtr4.pdf.
---------------------------------------------------------------------------

    To commenters who suggest that DHS establish a new standard minimum 
investment amount below the $1 million threshold, DHS notes that the 
current investment amounts are the minimum set by statute, and DHS does 
not have authority to reduce them beyond those amounts.
    Comments: Many commenters suggested that the proposed increase 
would make the EB-5 program less competitive with other countries' 
programs. Several commenters suggested that the proposed rule's 
comparisons to other investor visa programs were flawed and failed to 
account for the differences between the programs other than the 
investment amount, highlighting that the EB-5 program stands alone in 
requiring investors to place their investment at-risk. Two commenters 
questioned DHS' comparison to Canada's closed Immigrant Investor 
Venture Capital Program, which they described as having failed because 
it required a high capital contribution and funds that must be placed 
at risk, instead of focusing on its Quebec Program. One commenter noted 
that the comparison failed to account for other investor immigration 
programs with minimum investment amounts ranging from $40,000 USD to 
$1.8 million USD, including programs in Antigua and Barbuda, Austria, 
Belgium, Cayman Islands, Cyprus, Dominica, Grenada, Hong Kong, Ireland, 
Jersey, Malaysia, Malta, Monaco, Portugal, and Singapore.
    Response: Even with the increase, the EB-5 program will remain 
competitive with other countries' visa programs as discussed in the 
NPRM.\34\ In the NPRM, DHS compared the EB-5 program to the United 
Kingdom's Tier 1 Investor Visa, Australia's Significant and Premium 
Investment Programs, Canada's Immigrant Investor Venture Capital Pilot 
Program, and New Zealand's Investor 1 Resident Visa. See 82 FR at 4757. 
DHS noted in the NPRM that it has no means of ascertaining an 
investor's preference for a given program, but believes an investor's 
decision would be based in part on the investment amount and country-
specific investment risk preferences of each investor. Id. DHS focused 
on the UK, Australia, Canada, and New Zealand because these countries 
offer similar program requirements, immigration benefits, and 
comparable financial risk to the United States.
---------------------------------------------------------------------------

    \34\ The United Kingdom's Tier 1 Investor visa requires a 
minimum investment of [pound]2,000,000 (approximately $2.7 million 
USD), and offers permanent residence to those who have invested at 
least [pound]5,000,000 (approximately $8.1 million USD). Tier 1 
(Investor) Visa, Gov. UK, https://www.gov.uk/tier-1-investor/overview. Australia's Significant and Premium Investment Visa 
Programs require AU $5 million (approximately $3.9 million USD) and 
AU $15 million (approximately $11.8 million USD), respectively; its 
``investor stream'' visa program requires an AU $1.5 million 
(approximately $1.2 million USD) investment and a host of other 
requirements. Business Innovation and Investment Visa, Australian 
Government, http://www.homeaffairs.gov.au/Trav/Visa-1/188-. Canada's 
Immigrant Investor Venture Capital Pilot Program required a minimum 
investment of CDN $2 million (approximately $1.6 million USD) and a 
net worth of CDN $10 million (approximately $8 million USD) or more. 
Immigrant Investor Venture Capital Pilot Program, Government of 
Canada, https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/immigrant-investor-venture-capital/eligibility.html. New Zealand's Investor 1 Resident Visa requires a 
NZ $10 million (approximately $7.1 million USD) investment, and its 
Investor 2 Resident Visa requires a NZ $3 million (approximately 
$2.1 million USD) investment. Investor Visas, New Zealand Now, 
https://www.newzealandnow.govt.nz/move-to-nz/new-zealand-visa/visas-to-invest/investor-visa. Currency exchange calculations are as of 
January 2018.
---------------------------------------------------------------------------

    DHS disagrees with the comment suggesting that these programs do 
not carry risk. While the types of investments allowed in each program 
differ, they carry varying levels of financial risk. The UK requires

[[Page 35764]]

investments in government bonds, share capital, or loan capital.\35\ 
Australia permits investment in a variety of options, including bonds, 
stocks, and equity funds.\36\ Canada required investment into an at-
risk Immigrant Investor Venture Capital Fund for 15 years.\37\ New 
Zealand's investment options include government bonds, residential 
property development, and equity in public or private New Zealand 
firms.\38\ Such investments present levels of risk that are generally 
comparable to the level of risk associated with many EB-5 investments.
---------------------------------------------------------------------------

    \35\ Tier 1 (Investor) Visa, Gov.UK, available at https://www.gov.uk/tier-1-investor/overview.
    \36\ Business Innovation and Investment Visa, Australian 
Government, available at http://www.homeaffairs.gov.au/Trav/Visa-1/188-.
    \37\ Determine your eligibility--Immigrant Investor Venture 
Capital Pilot Program, Government of Canada, available at https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/immigrant-investor-venture-capital/eligibility.html.
    \38\ Investor Visas, New Zealand Now, available at https://www.newzealandnow.govt.nz/move-to-nz/new-zealand-visa/visas-to-invest/investor-visa.
---------------------------------------------------------------------------

    With respect to the Quebec Program, DHS does not believe it is 
comparable to the EB-5 program. The Quebec program requires a CDN 
$800,000 (approximately $620,000 USD), 5-year non-interest bearing 
investment.\39\ While this amount is lower than the new EB-5 minimum 
investment amounts, that program also has numerous other primary 
requirements in order to qualify. These include requirements that the 
applicant have net assets of CDN $1.6 million (approximately $1.2 
million USD), experience in management, as well as a requirement that 
the investor intends to settle in the Province of Quebec. The EB-5 
program does not have additional experience requirements. Additionally, 
the EB-5 program does not require settlement in a particular location 
in the United States, which would be highly restrictive. The investor 
simply loans his or her money to the Canadian government for 5 years. 
While there is no risk posed to the investor in terms of losing some or 
all of the principal, the zero-interest condition means that investors 
in the Quebec program do incur an opportunity cost of investing, as the 
present value of their investment would be discounted for the five-year 
period.\40\
---------------------------------------------------------------------------

    \39\ Investor Program, Government of Quebec, available at http://www.immigration-quebec.gouv.qc.ca/en/immigrate-settle/businesspeople/applying-business-immigrant/three-programs/investors/index.html.
    \40\ We refer to the Quebec program in the present tense because 
although it had been terminated several years ago, it was reopened 
recently (2018) for a temporary period.
---------------------------------------------------------------------------

    DHS reviewed each of the countries where government-provided 
information was readily available.\41\ Some countries may require a 
lower investment amount, but include additional requirements that the 
EB-5 program does not require. For example, to be considered for a 
visa/entry permit to enter the Hong Kong Special Administrative Region 
for investment as an entrepreneur, the applicant must, among meeting 
other requirements, have a ``good education background, normally a 
first degree in a relevant field.'' \42\ In general, DHS found that 
none of the countries raised by commenters present a straight-line 
comparison to the EB-5 program. There is no way to quantify an 
individual's desire to resettle in the United States or any other 
country. Each country has varying requirements, and there is no 
universal standard of success for an immigrant investor program. That 
said, DHS believes the increase is reasonable when the minimum 
investment amount is compared to the investor visa programs of 
similarly developed economies, such as the United Kingdom, Canada, 
Australia, and New Zealand, which typically require higher investment 
thresholds than what DHS proposes.\43\
---------------------------------------------------------------------------

    \41\ Citizenship by Investment, Antigua & Barbuda, available at 
http://cip.gov/ag; Persons of Independent Means and Investors, 
Cayman Islands, available at http://www.immigration.gov.ky/portal/page/portal/immhome/livinghere/independentmeans; Citizenship by 
Investment, Commonwealth of Dominica, available at http://cbiu.gov.dm/faqs; Investment as Entrepreneurs, Hong Kong Immigration 
Department, available at http://www.immd.gov.hk/eng/services/visas/investment.html; Investor and Entrepreneur Schemes, Department of 
Justice and Equality, Irish Naturalisation and Immigration Service, 
available at http://www.inis.gov.ie/en/INIS/Pages/New%20Programmes%20for%20Investors%20and%20Entrepreneurs; Jersey 
Immigration Rules, States of Jersey, available at https://www.gov.je/travel/informationadvice/visitors/documents/ld%20immigration%20rules%20jm%20130217.pdf; Individual Investor 
Programme, Republic of Malta, available at http://iip.gov.mt/.
    \42\ Investment as Entrepreneurs, Immigration Department, The 
Government of the Hong Kong Special Administrative Region; available 
at http://www.immd.gov.hk/eng/services/visas/investment.html.
    \43\ See Madeleine Sumption and Kate Hooper, ``Selling Visas and 
Citizenship: Policy Questions from the Global Boom in Investor 
Immigration'', Migration Policy Institute (October 2014) at 7, 
available at https://www.migrationpolicy.org/research/selling-visas-and-citizenship-policy-questions-global-boom-investor-immigration 
(``Among the popular English-speaking destinations, the United 
Kingdom has the highest minimum threshold at GBP 1 million, followed 
by New Zealand and Australia which require US $1.2 million and US 
$1.3 million respectively. The United States' minimum is 
significantly cheaper, at US $500,000, but requires a more risky 
investment (in private-sector businesses rather than government 
bonds).'').
---------------------------------------------------------------------------

    Comments: A few commenters suggested the increase would favor 
continued participation by wealthy investors only, instead of 
encouraging innovative, forward-thinking entrepreneurs, small 
businesses, and younger investors.
    Response: Congress enacted the investor visa program to attract 
entrepreneurs and job-creators into the U.S. economy \44\ and infuse 
new capital into the country.\45\ Congress did not specify any 
particular type of investor it was seeking.\46\ As discussed 
previously, DHS believes that the increase to the minimum investment 
amount is appropriate because inflation has eroded the present-day 
value of the minimum investment required to participate in the EB-5 
program since Congress set the initial investment amounts in 1990, and 
this final rule is an effort at remedying that erosion. In addition, 
DHS believes the increased amount will attract the same type of 
investment levels that Congress intended to attract in 1990.
---------------------------------------------------------------------------

    \44\ 136 Cong. Rec. S35,615 (Oct. 26, 1990).
    \45\ S. Rept. 101-55, p. 21 (1989).
    \46\ 136 Cong. Rec. S35,615.
---------------------------------------------------------------------------

    DHS recognizes that many EB-5 petitioners do not necessarily take 
an entrepreneurial role in the operations of their new commercial 
enterprise; however, the EB-5 program has been and may continue to be 
used by petitioners who do take an entrepreneurial role in the 
operations of their new commercial enterprise. Moreover, under the 
current regulatory and statutory regime, the EB-5 program contains no 
specific entrepreneurship requirements. DHS does not differentiate 
between and collects no data on petitioners who take an entrepreneurial 
role in the operations of their new commercial enterprise relative to 
those who do not. Accordingly, DHS has no data to support and there is 
no persuasive reason to believe that raising the minimum investment 
amount would disproportionately decrease the number of petitioners who 
take an entrepreneurial role in their new commercial enterprise 
relative to those who do not.
    Comments: Several commenters stated that the proposed increase to 
the standard investment amount would result in long wait times for 
projects involving Chinese EB-5 investors due to currency control 
efforts in China that limit the transfer of funds, and concluded that 
the increase therefore will undermine almost any legitimate project. 
One commenter estimated the proposed increases in investment amounts 
would extend the transfer time

[[Page 35765]]

by at least 5 times and another commenter suggesting the transfer time 
would be close to 11 months. Other commenters suggested a more limited 
increase to encourage investors from countries other than China to 
continue to participate in the program. Another commenter stated the 
proposed increase in investment amounts would render the program 
dependent on investors from China.
    Response: DHS does not believe it is appropriate to limit the 
increase to the minimum investment amount below what was proposed in 
order to attempt to attract investment from specific countries, nor 
does DHS believe that the policies of any specific country should 
dictate the administration of the EB-5 program. DHS believes the 
increase to the minimum investment amount based on inflation is 
appropriate and justified for the reasons described.
2. Use of CPI-U
    Comments: Multiple commenters provided input on the methodology 
used to calculate the proposed investment amount increases or provided 
alternative approaches. Several commenters stated that DHS should 
increase the minimum investment amount by the annual household income 
growth rate because it is a better gauge of job creation over time than 
an unadjusted CPI metric and would better link the increase to job 
creation. Another commenter commented that DHS should link the 
investment amount increase to average wage level because changes in 
wages better show the amount required to create the requisite number of 
jobs. Other commenters stated that the increase should consider changes 
in exchange rates since 1990, and how those changes have affected 
foreign investors. For instance, one commenter stated that a $1 million 
investment would have cost 17 million Indian rupees in 1990, but would 
cost 65 million Indian rupees in 2017. Another commenter stated that 
the rule should compare the value in U.S. dollars of the currency of 
the country where the investor has earned or otherwise accumulated his 
or her capital, because there are several countries where the current 
minimum investment amount is now higher than it was in 1990, in 
inflation-adjusted local currency.
    Some commenters agreed with the use of CPI-U to calculate the 
proposed increase, but disagreed with calculating the increase from 
1990. Some of these commenters noted that the standard investment 
amount has never been competitive. They stated that the TEA investment 
amount only became competitive in 2008, when the price of the 
investment program began to match demand and the number of petitions 
began to increase, or in 2011 when the visa allocation was fully 
utilized. Several commenters noted that 2011 was the first year the 
number of Form I-526 petitions filed represented nearly the supply of 
visas available (thus, visa supply nearly equaled visa demand). These 
commenters recommended that DHS calculate the adjustment to the minimum 
investment amounts from a base year later than 1990, such as 2008 or 
2011.
    In addition, one commenter suggested DHS attempt some analysis of 
the price elasticity of demand for EB-5 visas before adjusting the 
minimum investment amount based on the CPI-U for the past 25 years in 
one adjustment.
    Response: DHS considered a number of different measures upon which 
to base the proposed adjustment and future adjustments. DHS considered 
both the average household income and average wage level as potential 
bases for the proposed adjustments as the commenters suggested; 
however, both only look at one factor to determine inflation. DHS 
acknowledges that job creation outcomes depend on multiple factors in 
addition to the wage level. Such factors may include, but are not 
limited to, the perceived level of economic stability and growth 
potential, taxation, workforce availability, level of infrastructure 
development and price stability.
    DHS chose the unadjusted All Items Consumer Price Index for All 
Urban Consumers (CPI-U) for the U.S. City Average (BLS CPI Series Id: 
CUSR0000SA0) because it considers multiple inflationary factors over 
time.\47\ DHS appreciates that singular factors such as average wage 
and income changes can reflect and influence inflation, but because 
such factors are narrower in focus, DHS does not believe that they 
translate to the overall cost of doing business in today's economy as 
well as the CPI-U does. The unchained CPI-U (BLS CPI Series Id: 
CUSR0000SA0) for all items is the ``broadest and most comprehensive 
CPI,'' and is the most widely used measure of inflation.\48\ Because 
the CPI-U is an indicator of the change in costs of goods and services 
necessary for adequate capitalization of an EB-5 enterprise, DHS 
believes that the CPI-U also provides an appropriate reference point 
for the purpose of ensuring the statutorily required level of job 
creation. DHS therefore believes that, as proposed, the CPI-U is an 
appropriate measure for changes to the minimum investment amount.
---------------------------------------------------------------------------

    \47\ CPI-U measures the average change over time in the prices 
paid by urban consumers for a market basket of consumer goods and 
services. Bureau of Labor Statistics, Consumer Price Index: 
Frequently Asked Questions, available at http://www.bls.gov/cpi/cpifaq.htm; Bureau of Labor Statistics, Consumer Price Index: 
Addendum to Frequently Asked Questions, available at http://www.bls.gov/cpi/cpiadd.htm#2_1. (last accessed June 28, 2018).
---------------------------------------------------------------------------

    DHS recognizes that other alternative measures may provide a 
broader or more accurate measure of inflation for certain purposes, but 
DHS also notes that the government uses CPI-U for a range of inflation 
adjustments. The technical change that DHS made to the inflation 
adjustment formula in this rule (tying the adjustment back to 1990, 
rather than to the prior adjustment) will ensure that disparities 
between different measures are not exacerbated over time. Thus, DHS 
believes the CPI-U is the most appropriate reference point for purposes 
of establishing the new investment amount with respect to determining 
the present-day cost to the investor.
    Some commenters recommended using average household income or 
average wage level. The commenters stated that those measurements may 
better reflect the amount required to create the requisite number of 
jobs. However, as stated above, DHS believes an adequately capitalized 
enterprise (as determined by the costs of goods or services required to 
do business) also strongly correlates to job creation, and the CPI-U is 
valuable in this regard because it is appropriately reflects the change 
in costs of goods and services. DHS also believes it is appropriate to 
adjust the minimum investment amount upward based on inflation without 
directly correlating the minimum investment amount to the statutory 
requirement to create a minimum of 10 jobs. As DHS stated in the NPRM, 
Congress did not provide for adjustments in the investment threshold to 
be directly related to the EB-5 job creation requirements.\49\ Indeed, 
the controlling statutory authorities permit varying investment amounts 
in various circumstances (e.g., investment in TEAs or high employment 
areas) while maintaining the requirement that 10 jobs be created.
---------------------------------------------------------------------------

    \49\ 82 FR at 4744.
---------------------------------------------------------------------------

    DHS also disagrees with comments that suggest it should determine 
the impact of the minimum investment amount on the U.S. economy by 
considering the relative value of another country's currency, or the 
relative value of U.S. currency in other countries. The EB-5 program 
encourages investment in the United States and thus it is

[[Page 35766]]

appropriate to use the value of U.S. currency in the United States as 
the focal point. Although some commenters claim that in many source 
countries, the contribution amount has gone up since 1990 when their 
own currencies, adjusted for inflation, are referenced, DHS believes it 
is more reasonable to focus on the U.S. economy rather than take into 
account currency value fluctuations from certain source countries, or 
currency values worldwide. DHS notes that the statute set specific 
minimum investment amounts that are meant to apply to all investors.
    DHS also disagrees with calculating the adjustment from a later 
year than 1990. Commenters who recommend using a later year rely on a 
supply and demand rationale, arguing that the investment amounts-or 
``price'' of the program-only started to match demand around 2008 or 
2011, depending on the commenter. As stated earlier, DHS disagrees that 
prior lower utilization of the program was due primarily to the 
investment amounts being set too high. Both the CIS Ombudsman and the 
GAO pointed out programmatic problems that contributed to the lower 
utilization of the program. Therefore, DHS does not believe it is 
reasonable to assume that supply and demand reached equilibrium simply 
due to the ``cost'' having dropped in present-day values; rather, 
multiple factors contributed to the program's lower utilization in the 
early years and its later oversubscription. DHS believes that 
calculating the increase to account for inflation from 1990 will ensure 
the program requirements reflect the present-day dollar value of the 
investment amount established by Congress in that year.
    Regarding commenters' concern that the increased investment amounts 
will shrink demand for the EB-5 visa to levels experienced in the 1990s 
and early 2000s, DHS believes these suppositions fail to fully account 
for the range of factors that contribute to demand (or lack thereof) 
for the program. As discussed in the sections in the NPRM detailing 
potential benefits and costs, and now updated for this Final Rule, DHS 
appreciates that the minimum investment amount is one key factor that 
could affect utilization of the program, and the increase in the 
minimum investment amount might deter some investors, or otherwise make 
an investment under the EB-5 program no longer affordable for some 
potential investors. DHS does not anticipate, however, that the demand 
for the EB-5 visa will likely revert to 1990 levels, or even fall to 
levels that fail to fully account for the 9,940 visas available a year, 
solely because of the increase in the minimum investment amount, due to 
the numerous other factors involved, including those that have led to 
higher utilization of the program since 2008. Notably, no commenters 
provided concrete evidence to support the speculation that demand would 
decrease so dramatically.
    Finally, with respect to the commenter's suggestion that an 
analysis of the price elasticity of demand for the EB-5 visa would 
offer valuable information regarding investor demand for the EB-5 visa 
and their price sensitivity, DHS observes that the commenter 
erroneously assumes DHS has access to certain data and can control 
certain variables. Since the inception of the program in 1990, the 
required minimum investment amounts, for a standard investment or an 
investment in a TEA, have never changed. Calculating a price elasticity 
of demand for the EB-5 visa would require that DHS know the ratio of 
the percent change in EB-5 visa demand to the percent change in the 
investment amount. However, there are likely numerous factors that have 
influenced the growth of EB-5 investor applications over the past 
several decades. DHS cannot develop a model that controls for all of 
the specific variables nor predicts future unforeseeable events. DHS 
could not accurately measure the influence of the two investment levels 
on demand for past and future EB-5 investment applications.
3. Adjustments Every Five Years Tied to CPI-U
    Comments: Some commenters supported increasing the minimum 
investment amounts every five years. One commenter agreed with the 
general concept of periodically increasing the minimum investment 
amount to prevent past practice from repeating. One commenter stated 
that applying the overall inflation in the U.S. economy to the minimum 
investment amount every 5 years would compound the damaging impact of 
raising the minimum investment amount to $1.8 million now. Another 
commenter suggested developing a different model that would allow the 
minimum investment amount to increase or decrease based on overall 
demand for EB-5 immigrant visas and differences in demand between TEA 
and non-TEA investments (though this commenter acknowledged that the 
statute does not allow for decreases in the minimum investment amount 
below the statutory minimum). Two other commenters suggested that an 
increase should not be automatic every five years, but instead DHS 
should evaluate whether an increase is appropriate at that time and how 
the increase would affect investment and job creation.
    Response: DHS agrees with the commenters who stated that it is 
important to include a periodic inflation-adjustment mechanism to avoid 
a recurrence of the current situation, where the minimum investment 
amount remains unchanged for a lengthy period and is eroded by 
inflation, and thus provides for adjustment based on the change in the 
cumulative annual percentage change in CPI-U. DHS disagrees with basing 
the amount on the overall demand of the program, as the statute does 
not specify that demand be the primary (or even a necessary) factor in 
making a determination to increase the minimum investment amount. 
Moreover, demand could fluctuate for a variety of reasons outside of 
the minimum investment amount and thus does not provide a reliable, 
consistent metric that would permit USCIS and stakeholders to 
anticipate adjustments (if any) to the minimum investment amount for 
purposes of consistent adjudication and investment structuring. 
Further, because the minimum investment amount has not been adjusted 
since the program's inception, DHS does not have adequate data to 
propose adjustment of the minimum investment amount based on the impact 
of such adjustments on overall demand of the program.
    DHS also disagrees with the suggestion to evaluate how an increase 
would affect investment and job creation prior to making future 
adjustments, rather than utilizing an automatic increase. First, 
Congress did not explicitly tie the statutory investment amount to the 
aggregate level of investors, investment, or job creation. The statute 
contains only individualized requirements for each investor to invest 
the specified minimum amount of capital and create at least 10 jobs. It 
is therefore reasonable for adjustments to the individual investment 
amount to keep pace with inflation, as discussed elsewhere in this 
rule, rather than be tied to total investors, investment, or job 
creation.
    Moreover, DHS believes that an automatic adjustment based on CPI-U 
affords greater certainty for investment decisions because stakeholders 
can predict the level of adjustment on the readily available CPI-U. As 
noted by the Organization for Economic Co-operation and Development 
(OECD):

    The aim of policies for attracting foreign direct investment 
must necessarily be to

[[Page 35767]]

provide investors with an environment in which they can conduct 
their business profitably and without incurring unnecessary risk. 
Experience shows that some of the most important factors considered 
by investors as they decide on investment location are: A 
predictable and non-discriminatory regulatory environment and an 
absence of undue administrative impediments to business more 
generally.\50\

    \50\ Christiansen, Hans, Checklist for Foreign Direct Investment 
Incentive Policies, Investment and Services Division, OECD Committee 
on International Investment and Multinational Enterprises (CIME) 
OECD, 2003, available at https://www.oecd.org/daf/inv/investment-policy/2506900.pdf.

Given that uncertainty and perceived risk affect investment decisions, 
DHS believes that an automatic adjustment of the minimum investment 
amount that occurs every five years provides predictability and 
consistency to stakeholders so they can tailor business plans 
accordingly, without needing to wait for DHS' determination.
    This rule also makes a technical correction to the inflation 
adjustment formula for the standard minimum investment amount and the 
high employment area investment amount, such that future inflation 
adjustments will be based on the initial investment amount set by 
Congress in 1990, rather than on the most recent inflation adjustment. 
Thus, for instance, the next inflation adjustment will be based on the 
initial minimum investment amount of $1,000,000 in 1990, rather than 
this rule's minimum investment amount of $1,800,000, which is a rounded 
figure. This change better implements the intent of the proposed rule; 
it ensures that future inflation adjustments more accurately track 
inflation since 1990, rather than being based on rounded figures.
4. Implementation of the Increase in Investment Amount
    Comments: Multiple commenters provided suggestions on how to 
implement the increase in the minimum investment amounts, with most of 
these commenters advocating a phased-in approach. One commenter 
suggested a transition period to ensure the minimum investment amount 
catches up to the ideal minimum investment amount without drying up 
access to capital. Other commenters recommended an incremental approach 
because the market responds better to smaller increases over time 
rather than a single increase, and it would also minimize disruptions 
in EB-5 program activity. Several commenters encouraged DHS to 
implement a reasonable, stepped increase over the next 5 years.
    Response: DHS considered phasing in the minimum investment amount 
over the next five years, including increasing the amount every year or 
every other year. However, DHS believes constantly changing amounts 
would present challenges to the EB-5 market, in that continual, 
frequent increases would commonly require different investment amounts 
for different petitioners within the same investment project over a 
period of time. Such differences would require frequent adjustments to 
offering documents that could overly complicate adjudications and place 
burdens on the EB-5 market, including EB-5 petitioners. Most 
importantly, a phased-in approach or transition period means the 
minimum investment amount would not fully account for the change in 
inflation for another five years. DHS believes it is important to take 
steps to revise the program by making the adjustment now rather than 
continuing to delay the impact of the inflation-adjusted increase.
5. Increase to the TEA Minimum Investment Amount
    Comments: Some commenters expressed support for the proposed 
increase to the TEA minimum investment amount from $500,000 to $1.35 
million. A commenter stated that the demand for EB-5 visas is high and 
the program is oversubscribed, and a higher minimum investment per visa 
will ``increase the overall funding flow and relieve some of the 
pressure/challenge'' to create 10 jobs per visa.
    Many commenters stated that the proposed TEA investment amount was 
too high. Many of these commenters argued that the proposed increase 
would be detrimental to the future viability of the EB-5 program, 
especially in light of the fact that the vast majority of historical 
investments have been made in TEA investments. Many commenters made 
similar arguments against the proposal to increase the TEA minimum 
investment amount as they made against the proposal to increase the 
standard minimum investment amount, such as: The proposed increase 
would make the EB-5 program less competitive with the immigration 
investment programs of other countries; the proposed increase would 
result in minimum investment amounts far exceeding those under 
consideration by Congress; the proposed increase would have the 
unintended consequence of severely limiting the participation of many 
successful mid-career professionals and entrepreneurs; and the proposed 
increase would especially burden investors from China due to currency 
control restrictions. Another commenter recommended that the TEA 
investment amount not be increased in light of a recent GAO study, 
which found that rural America only accounted for 3 percent of the 
projects under the EB-5 program. Some commenters said that an increased 
TEA investment amount provides a disincentive for the type of projects 
in areas of high unemployment and rural areas that the program should 
encourage, and would disproportionately and negatively affect areas 
needing investment the most.
    Commenters proposed several alternative increases to the TEA 
minimum investment amount. A commenter suggested investment levels 
``somewhat less than'' the levels proposed in recent legislation (e.g., 
H.R. 5992, the American Job Creation and Investment Promotion Reform 
Act, which proposed a TEA minimum investment amount of $800,000) 
because such levels would not shock the investor market, would maintain 
the competitiveness of the U.S. program relative to the costs of entry 
for similar investment-related immigration programs in other nations, 
and could ``be reasonably supported by data comparable to that cited 
by'' another commenter. The commenter did not identify which of the 
other commenter's data it found most relevant, and how data comparable 
to the other commenter's data would be used to support an $800,000 
minimum investment amount.
    One commenter suggested setting the TEA investment amount at 
$650,000 now and gradually increasing the amount to adjust for 
inflation. This commenter stated that the EB-5 market would not 
withstand an increase as dramatic as the one proposed; according to the 
commenter, because the majority of investments are currently made at 
the $500,000 level, increasing the amount to $1.35 million will 
significantly reduce the investor pool and make the EB-5 program an 
unattractive investment when compared with other countries. Other 
commenters suggested TEA minimum investment amounts ranging from 
$600,000 to $1 million, similarly arguing that the proposed investment 
amounts are too high.
    One commenter argued for applying an inflation-based increase to 
the TEA minimum investment amount, rather than the standard investment 
amount, so that the TEA minimum investment amount would be $900,000. 
The commenter argued that if a further policy goal is to reduce the TEA 
versus non-TEA differential to 25 percent instead of the current 50 
percent, then

[[Page 35768]]

the minimum for non-TEA investment amount would become $1.2 million.
    Response: DHS considered the comments received on this proposed 
change and, for the reasons explained in the Investment Level 
Differential Between Standard Investment Amount and TEA Investment 
Amount section below, it will retain the 50 percent differential 
between TEA and non-TEA investment amounts.
    DHS agrees with commenters who supported the proposed increase to 
$1.35 million in that DHS also believes a higher minimum investment per 
visa would ``increase the overall funding flow and relieve some of the 
pressure/challenge'' to create 10 jobs per visa. DHS notes that an 
increase from $500,000 to $900,000, though not as high as $1.35 
million, will have a similar benefit.
    Many commenters, however, asserted that the proposed minimum 
investment amount for TEAs was too high, or higher than Congress has 
considered in recent legislation. The proposed increase in the minimum 
investment amount for TEAs was intended in part to remedy the imbalance 
referred to in comments, where the vast majority of investments are 
currently in entities in TEAs, contrary to the balance Congress appears 
to have expected.\51\ While DHS continues to have some concern about 
the imbalance, the reforms to the designation process for high 
unemployment TEAs finalized in this rule will better ensure that, even 
if some imbalance remains, it is benefiting truly deserving 
communities, as Congress intended. Also, it should be kept in mind that 
Congress set aside thousands of EB-5 visas a year for those investors 
(and their immediate family members) investing in TEAs. In fact, while 
no less than 3,000 visas must be so set aside each year, Congress left 
DHS with the discretionary ability to set aside even more.\52\ Congress 
did not reserve visas for investors investing in non-TEA projects. 
These features of the program provide additional indication that 
Congress considered the goal of incentivizing investments in rural and 
high-unemployment areas of crucial importance. This set-aside, along 
with the provision authorizing DHS to institute a substantial 
investment differential between the TEA and non-TEA investments, are 
the primary tools that Congress gave the administering agency to 
achieve this goal.\53\ Ultimately, DHS believes in a meaningful 
incentive to invest in rural areas and areas of true high-unemployment, 
and thus, upon careful consideration of the comments related to this 
issue, DHS opted to retain the differential between TEA and non-TEA 
investments at 50 percent.
---------------------------------------------------------------------------

    \51\ See 136 Cong. Rec. S36,615 (Oct. 26, 1990) (statement of 
Sen. Simon). Senator Simon stated: ``The general rule-and the vast 
majority of the investor immigrants will fit in this category-is 
that the investor must invest $1 million and create 10 U.S. jobs,'' 
but he was also ``mindful'' of the need to target investments in 
rural areas and noted that the higher the differential, the more 
encouragement there would be to invest in TEAs).
    \52\ Section 203(b)(5)(B)(i) of the INA.
    \53\ Congress also gave DHS the ability to set the minimum 
investment amount in non-rural areas with very low unemployment 
rates at up to three times the standard minimum investment amount 
(or up to $5,400,000 under the revised initial minimum investment 
amounts under this rule). Section 203(b)(5)(C)(iii) of the INA. This 
tool has never been utilized, but would be an option to explore in 
the future.
---------------------------------------------------------------------------

    With regard to commenters' suggestions that the current utilization 
and oversubscription of the program are mainly a result of the fact 
that presently a significant number of investors can afford to invest 
at the TEA level amount of $500,000, DHS believes that minimum 
investment levels represent only one of a range of factors that likely 
influence demand for the program, including as compared to other 
countries' investor visa programs. Commenters did not discuss other 
factors, referenced earlier in this preamble, that likely account for 
the program's current and past utilization.
    DHS considered commenters' other objections that repeated those 
expressed regarding the increase to the standard minimum investment 
(the increase will make the EB-5 program less competitive against the 
immigration investment programs of other countries; the increase 
represents amounts far exceeding those under consideration by Congress; 
the increase would have the unintended consequence of severely limiting 
the participation of many successful mid-career professionals and 
entrepreneurs; and the increase would especially burden investors from 
China due to currency control restrictions). DHS disagrees with these 
commenters for the same reasons stated earlier in this preamble.\54\ 
DHS likewise disagrees with the commenter suggesting that the TEA 
minimum investment should be implemented gradually for the same reasons 
described earlier in this preamble related to phasing-in the standard 
minimum investment amount.
---------------------------------------------------------------------------

    \54\ DHS also received comments on the investment level 
differential between the standard minimum investment amount and 
minimum investment amount for TEAs, which will be addressed in the 
following section.
---------------------------------------------------------------------------

    DHS agrees with commenters who assert that not enough EB-5 
investment has gone to rural areas and areas of truly high 
unemployment, but disagrees that this rule will discourage investment 
in such areas. On the contrary, DHS believes that the changes made in 
this rule to the TEA investment amounts and the TEA designation process 
will increase total investment in rural and high unemployment areas. As 
discussed in greater detail below, the changes to the TEA designation 
process made by this final rule will help ensure that areas eligible 
for the lesser investment amounts as areas of high unemployment are 
actually areas of high unemployment. DHS also maintains the 50 percent 
investment level differential between the TEA minimum investment amount 
and the standard minimum investment amount--rather than reducing it to 
25 percent as proposed--in order to continue to incentivize investments 
in TEAs. DHS believes that the increase in the minimum investment 
amount in TEAs, while less than proposed, and the reforms to the TEA 
designation process will result in more overall infusion of capital 
into rural and high unemployment areas.
    DHS considered the alternatives proposed by commenters for the 
level of the TEA minimum investment amount, such as setting the amount 
at a number ranging from $600,000 to $1 million. However, having 
determined to increase the standard minimum investment to $1.8 million 
based on the CPI-U inflation rate for reasons explained elsewhere in 
this preamble, investments in TEAs below $900,000 are not permissible 
under the controlling statute.
    DHS also disagrees with the proposal to first adjust the TEA 
minimum investment amount for inflation, and then determine the 
standard minimum investment amount based on that. In the statute, 
Congress set the standard minimum investment amount and gave DHS the 
authority to increase it. With respect to targeted employment areas, 
Congress authorized DHS to specify a minimum investment amount that is 
less than, but no less than half of, the standard amount. Consistent 
with the mechanism for determining TEA minimum investments under the 
authorizing statute, in this final rule DHS initially sets the standard 
amount and then establishes a lesser minimum investment amount for 
targeted employment areas. INA section 203(b)(5)(C), 8 U.S.C. 
1153(b)(5)(C). In addition, if the minimum investment amount for TEAs 
were adjusted for inflation first and the 25 percent differential were 
maintained, as the commenter suggests, the differential between the two 
investment tiers would have been only $300,000, which is

[[Page 35769]]

appreciably smaller than the differential initially proposed 
($450,000). As discussed further below, the $300,000 differential could 
reduce the incentive to invest in TEAs. Therefore, the final rule 
applies the CPI-U-based increase to the standard minimum investment 
first. Id.
    While DHS disagrees with some of the commenters' bases for setting 
the minimum investment amount for a TEA, DHS will ultimately set the 
amount lower than proposed for the reasons discussed below. The final 
rule does not reduce the differential between the standard minimum 
investment amount and the TEA minimum investment amount from 50 percent 
to 25 percent as proposed. Rather, this final rule sets the TEA minimum 
investment amount at $900,000, making the difference between the two 
investment tiers $900,000.
6. Investment Level Differential Between Standard Investment Amount and 
TEA Investment Amount
    Comments: Some commenters expressed support for the proposed 
investment level differential, reasoning that it will maintain a 
meaningful incentive for foreign investors to invest in a TEA. One 
commenter stated that the adjustment to a TEA minimum investment amount 
that is 75 percent of the standard minimum investment amount will 
continue to attract investors to investments in TEAs since the relative 
proportion of EB-5 investments that are made in TEAs is already very 
high. Multiple commenters stated that the differential between the 
standard minimum investment amount and the minimum investment amount 
for TEAs should be decreased to encourage non-TEA investments. 
Referencing anecdotal evidence, a commenter recommended a differential 
no greater than $200,000 to create an active market for non-TEA 
investments and demand at both price points. Another commenter 
recommended that the percentage discount for TEAs should be no more 
than 20 percent as the only way to make a non-TEA investment feasible. 
One commenter recommended that the minimum investment amount for a TEA 
investment should be two-thirds of the standard minimum investment 
amount, but did not supply any data to support this differential.
    Another commenter recommended a more gradual decrease in the 
relative difference between the standard minimum investment amount and 
the TEA minimum investment amount to ``reduce the severity of the shift 
of capital'' between TEA and non-TEA investments.
    Other commenters recommended that the current 50 percent 
differential should be maintained. One of these commenters argued that 
a substantial differential is essential as an effective incentive to 
make investments in TEAs, and that a substantial differential reflects 
congressional intent. Another commenter stated that the rule should 
maintain the 50 percent differential between TEA and non-TEA minimum 
investment amounts, or at the very least maintain the $500,000 
differential by raising the minimum investments amounts to $750,000 in 
a TEA and $1.25 million outside of a TEA (which would represent a 40 
percent differential). Several commenters felt that revisions to the 
designation of a high unemployment TEA would be effective in directing 
funds to rural and high unemployment areas without changing the 
differential between the two minimum investment amount levels.
    One commenter agreed with DHS that the 50 percent differential 
between the standard investment amount and the TEA investment amount 
has not struck the balance that Congress intended, but believes DHS's 
proposed solution to this problem would substitute one static 
differential for another, which is not nearly as market driven as what 
the commenter would propose to be implemented--a changeable 
differential (the commenter acknowledged that such a differential would 
require congressional action). This commenter also encouraged DHS to 
support legislative resolution of this issue, contending that such 
solutions would be much more effective in improving the program's 
reputation and operability.
    Response: After reviewing the comments, DHS decided that the final 
rule should maintain the 50 percent minimum investment amount 
differential between TEAs and non-TEAs. In order to address the 
imbalance between TEA and non-TEA investments, DHS had originally 
proposed reducing the differential between the investment amounts to 25 
percent in addition to changing the way certain high unemployment TEAs 
are designated. DHS was concerned that maintaining the current 
differential of 50 percent, a reduction of $900,000 from the increased 
standard investment amount, might not adequately correct the current 
imbalance between TEA and non-TEA investments where the vast majority 
of investments are in TEAs, many of which have been criticized as 
gerrymandered as discussed below.\55\ DHS was also concerned that 
maintaining the 50 percent differential may result in too large of a 
dollar difference that may create unintended distortions in investment 
decisions, and that maintaining the differential at a dollar amount 
similar to the one that previously existed ($500,000 to $450,000) could 
soften the impact of the multiple changes that will impact TEA 
investments. Thus, DHS settled on a midpoint between the maximum 
discount allowed by Congress of 50 percent, and no discount at all.
---------------------------------------------------------------------------

    \55\ Cf. 136 Cong. Rec. S35,615 (Oct. 26, 1990) (statement of 
Sen. Simon) (``The general rule--and the vast majority of the 
investor immigrants will fit in this category--is that the investor 
must invest $1 million and create 10 U.S. jobs.'').
---------------------------------------------------------------------------

    DHS continues to recognize that addressing the imbalance between 
TEA and non-TEA investments is worthwhile; however, it must balance 
that concern with a continued interest in providing a strong incentive 
to attract investments to rural areas and areas of true high 
unemployment under the modified TEA designation standards, in order to 
promote those congressional aims. As noted by one of the commenters, 
the NPRM quoted Senator Rudolph Boschwitz and Senator Paul Simon, both 
of whom expressed in 1990 the importance of attracting investment to 
rural locations and areas with particularly high unemployment.\56\ 
Notably, Senator Simon stated that the lower the investment level for 
TEAs, the more encouragement there would be for investments in those 
areas.\57\ The same commenter quotes an April 6, 2017 letter from 
Senator Charles Grassley and other lawmakers to Senator Mitch McConnell 
and others identifying rural and distressed urban areas as ``the very 
communities this program was originally intended to benefit.'' \58\ DHS 
finds the comment that a substantial differential is essential as an 
effective incentive to make investments in TEAs, and that a substantial 
differential is consistent with congressional intent, to be persuasive. 
DHS also feels that

[[Page 35770]]

maintaining the 50% differential is responsive to commenters who 
suggested lower differentials and discounts, as well as commenters who 
suggested gradual implementation of the differential change, since the 
differential will no longer be changing over time. Further, DHS is 
satisfied that the reform to TEA designations and the move away from 
deferring to state TEA designations will address the concerns about 
gerrymandering that contribute to the imbalance between TEA and non-TEA 
investments: That investors may choose TEA investments because the 
designated areas are affluent, due to gerrymandering. It is possible 
that the percentage of petitioning investors seeking to invest in 
projects in TEAs will decrease simply because they no longer will have 
the ability to invest in projects in affluent areas and at the same 
time reap the benefits of investing in TEA areas. The GAO found that of 
a random sample of petitioning investors (filing petitions in the 
fourth quarter of fiscal year 2015) investing in high-unemployment 
TEAs, 90% were investing in projects that relied on combining census 
tracts or census block groups.\59\ GAO also found that, for those 
petitioners that elected to invest in a high unemployment TEA, the 
unemployment rate in the census tract(s) where the projects were 
---------------------------------------------------------------------------
physically located was:

    \56\ See 135 Cong. Rec. S7858-02 (July 13, 1989) (statement of 
Sen. Boschwitz that the amendment's purpose was to ``attract 
significant investments to rural America.''); 136 Cong. Rec. S35,615 
(Oct. 26, 1990) (statement of Sen. Simon: ``[W]e are mindful of the 
need to target investments to rural America and areas with 
particularly high unemployment--areas that can use the job creation 
the most . . . America's urban core and rural areas have special job 
creation needs.'')
    \57\ Id.
    \58\ Letter from Senator Grassley, Senator Leahy, Senator 
Feinstein, Representative Goodlatte, and Representative Conyers to 
Senator McConnell, Speaker Ryan, Senator Schumer, and Representative 
Pelosi (Apr. 6, 2017), available at https://d2xxqpo46qfujt.cloudfront.net/downloads/letter-to-leadership.pdf.
    \59\ GAO, Immigrant Investor Program: Proposed Project 
Investments in Targeted Employment Areas, GAO-16-749R, at 7 (figure 
2) (Sept. 19, 2016).

 0-2% in 7% of EB-5 petitioners,
 greater than 2-4% in 29% of EB-5 petitioners,
 greater than 4-6% in 41% of EB-5 petitioners,
 greater than 6-8% in 12% of EB-5 petitioners,
 greater than 8-10% in 3% of EB-5 petitioners,
 greater than 10-12% in 3% of EB-5 petitioners, and
 greater than 12% in 6% of EB-5 petitioners.\60\
---------------------------------------------------------------------------

    \60\ Id. at 8 (table 1).

Joint commenters noted that GAO's findings indicate that only 12 
percent of EB-5 petitioners that qualified for the lower investment 
amount based on being in high-unemployment TEAs were actually investing 
in projects physically located in census tracts with unemployment rates 
of greater than 8 percent. However, the national unemployment rate in 
the fourth quarter of 2015 averaged 5.15 percent. The commenters stated 
that given that, under section 203(b)(5)(B)(ii) of the INA, ``high 
unemployment'' means ``at least 150 percent of the national average 
rate,'' these projects would have had to show an unemployment rate of 
in the neighborhood of 7.725 percent.\61\ Accordingly, if DHS had 
looked at the actual physical location of the projects, few would have 
qualified as being in high unemployment areas.
---------------------------------------------------------------------------

    \61\ Id.
---------------------------------------------------------------------------

    Congress authorized DHS to create a multi-leveled investment 
framework with different minimum investment amounts for investments in 
TEAs. This final rule retains the current 50 percent differential 
between TEA and non-TEA investment amounts. DHS believes it is 
reasonable to conclude, as a matter of common sense, that the revisions 
to the high unemployment TEA designation standards and process 
finalized in this rule will likely ameliorate the current imbalance 
between TEA and non-TEA investments, although some investors may 
continue to favor investments in more affluent urban areas. Even if the 
imbalance remains, keeping the current 50 percent differential for TEA 
investments will benefit the areas intended by Congress by preserving 
the incentive for investments in rural and high unemployment areas. DHS 
acknowledges the commenter's concern that a static differential is not 
market driven. DHS also notes that this final rule in no way affects 
Congress's ability to pursue a legislative change, for which the 
commenter advocated.

D. Revisions to the Targeted Employment Area (TEA) Designation Process

1. Standards Applicable to the Designation of a TEA
1.1. Proposal To Allow Designation of a City or Town With High 
Unemployment and a Population of 20,000 or More
    Comments: Several commenters discussed the proposal to allow cities 
and towns with a population of 20,000 or more to be independently 
designated as a TEA if the average unemployment rate for the city or 
town is at least 150 percent above the national average. Most of these 
commenters supported the proposal. Two commenters stated this was a 
logical extension of the current policy. One commenter said that 
setting clear guidelines will help clear up discrepancies and 
inconsistencies in the EB-5 immigration process. One commenter stated 
that the addition of municipalities will lead to robust economic growth 
and opportunities for communities that need it most. One commenter 
opposed to the proposal contended that the proposal limits areas that 
can independently qualify as TEAs by removing the TEA possibility for 
all cities and towns with populations less than 20,000 that can 
currently qualify through state designation. The commenter further 
added that the proposal mistakenly confused the population criteria for 
TEAs because the 20,000 population requirement pertains to cities and 
towns residing in counties outside of MSAs that do not meet the 
requirements for rural TEA status. The commenter stated the population 
criteria should be 25,000 and not 20,000 because BLS data is only 
published for cities and towns with populations of 25,000 or more.
    Response: DHS disagrees with the commenter opposing this proposal 
but recognizes that the proposal was inadvertently over-inclusive, 
because DHS intended the proposal to provide additional options for 
non-rural cities and towns outside of MSAs to qualify as a TEA. DHS did 
not intend to create an additional option for cities and towns within 
MSAs. And DHS did not intend to create an artificial distinction 
between cities and towns within MSAs that have a population of 20,000 
or more, on the one hand, and cities and towns within MSAs that have a 
population under 20,000, on the other. The current regulations do not 
contain such a distinction.
    Accordingly, the final rule only finalizes a portion of the 
proposal. The final rule allows designation of cities and towns with a 
population of 20,000 or more outside of MSAs as a specific and separate 
area that may qualify as a TEA based on high unemployment. See final 8 
CFR 204.6(j)(6)(ii)(A). DHS is not finalizing the aspect of the 
proposal that allowed such designation for cities and towns with a 
population of 20,000 or more within an MSA. The statute expressly 
excludes cities and towns with populations of 20,000 or more as well as 
MSAs from qualifying as ``rural'' TEAs and existing regulations have 
permitted MSAs to independently qualify as TEAs based on high 
unemployment, but non-rural cities and towns with a population of 
20,000 or more outside of MSAs have had only one expressly identified 
means to qualify as TEAs, i.e., based on the unemployment levels of the 
county in which they are located.\62\ In order to

[[Page 35771]]

address this lack of parity with respect to TEA options available to 
NCEs principally doing business in non-rural areas outside of MSAs, DHS 
is finalizing the rule to expressly include cities and towns with a 
population of 20,000 or more outside of MSAs as a specific and separate 
area that could independently qualify as a TEA if the average 
unemployment rate is at least 150 percent of the national average. See 
final 8 CFR 204.6(j)(6)(ii)(A).
---------------------------------------------------------------------------

    \62\ Under the current regulatory framework, cities and towns 
with a population of 20,000 or more inside an MSA can qualify as a 
high unemployment area through either their county or their MSA. 
However, cities and towns with a population of 20,000 or more 
outside an MSA can qualify as a high unemployment area only through 
their county. Under the final rule, cities and towns with a 
population of 20,000 or more will each have two options to qualify 
as a high unemployment--through the county or MSA if inside an MSA 
or through the city/town or county if outside an MSA.
---------------------------------------------------------------------------

    Under the EB-5 statute, cities and towns with a population of 
20,000 or more cannot qualify as ``rural'' TEAs, INA section 
203(b)(5)(B)(iii), 8 U.S.C. 1153(b)(5)(B)(iii), and DHS believes that 
maintaining the population criterion at 20,000 for cities and towns 
outside of MSAs to qualify as a high unemployment area TEA comports 
with the overall statutory framework. Additionally, while DHS 
appreciates the comment regarding data availability from the Bureau of 
Labor Statistics, DHS further notes that publicly available 
unemployment data for those cities or towns with a population between 
20,000 and 25,000 can be found within other government sources of 
unemployment data, such as the U.S. Census Bureau's American Community 
Survey (ACS).\63\
---------------------------------------------------------------------------

    \63\ Available at https://www.census.gov/programs-surveys/acs/geography-acs/areas-published.html.
---------------------------------------------------------------------------

    Lastly, DHS notes that other geographic areas with high 
unemployment that are not specifically mentioned above and in the final 
rule can pursue TEA designation through the census tract approach.
1.2. Definition of Rural Area
    Some commenters commented on DHS's proposed amendment to the 
definition of ``rural area'' clarifying that qualification as a rural 
area is based on data from the most recent decennial census of the 
United States. One commenter supported the proposed clarification on 
the definition of ``rural area.''
    Comments: Some commenters stated that there has been a larger 
legislative discussion about the definition of what qualifies as 
``rural'' for purposes of a TEA, and accordingly, that ``regulatory 
discussion should be held'' until a legislative resolution is enacted. 
Another commenter said proposed 8 CFR 204.6(j)(6)(i) must be revised 
for consistency with the definition of ``rural area'' that appears in 
both Section 203 of the INA and the substantive definition of ``rural 
area'' at 8 CFR 204.6(e), as well as an Office of Management and Budget 
(OMB) directive that states that many counties included in an MSA 
``contain both urban and rural territory and populations.'' \64\ The 
commenter suggested replacement text for 8 CFR 204.6(j)(6)(i).
---------------------------------------------------------------------------

    \64\ OMB, Revised Delineations of Metropolitan Statistical 
Areas, Micropolitan Statistical Areas, and Combined Statistical 
Areas, and Guidance on Uses of the Delineations of These Areas, OMB 
Bulletin No. 15-01 (July 15, 2015), available at https://obamawhitehouse.archives.gov/sites/default/files/omb/bulletins/2015/15-01.pdf.
---------------------------------------------------------------------------

    Response: DHS disagrees with the commenters. The agency is bound by 
the statutory framework established by Congress in 1990 when it defined 
a ``rural area'' for TEA designation purposes as ``any area other than 
an area within a metropolitan statistical area or within the outer 
boundary of any city or town having a population of 20,000 or more''. 8 
U.S.C. 1153(b)(5)(B)(iii); INA 203(b)(5)(B)(iii). Although, arguably, 
MSAs may include rural territory and populations, for purposes of the 
EB-5 program and this regulation, DHS will continue to mirror the 
statutory language. The final rule revises the existing regulatory text 
to conform with that statutory framework as interpreted by the agency. 
See final 8 CFR 204.6(e). Further, this final rule in no way adversely 
affects Congress's ability to enact relevant legislation. With respect 
to consistency between the definition of ``rural area'' at 8 CFR 
204.6(e) and (j)(6)(i), the final rule revises the definition of 
``rural area'' at 8 CFR 204.6(e) to be consistent with both the 
existing and revised regulations at 8 CFR 204.6(j)(6)(i). DHS 
appreciates the commenter's proposed changes to 8 CFR 204.6(j)(6)(i), 
but believes the revisions to the definition of ``rural area'' at 8 CFR 
204.6(e) achieves consistency between applicable regulatory 
requirements without disturbing the existing agency interpretation as 
found in both the current and revised regulatory requirements at 8 CFR 
204.6(j)(6)(i).
1.3. Alternative Proposals for How To Designate a TEA
    Several commenters offered alternative proposals for TEA 
definitions for purposes of designation.
    Comments: A couple of commenters indicated that public 
infrastructure projects, where the borrower and beneficiary of the EB-5 
capital is solely a governmental body, should be automatically included 
in the definition of a TEA. These commenters were concerned that 
without expressly designating public infrastructure projects as TEAs, 
use of the EB-5 program by public infrastructure projects could be 
hampered because the project necessarily spans multiple census tracts, 
counties, and state boundaries. One commenter said the TEA definition 
should be expanded to include an area that is within the boundaries of 
a state or federally defined economic development incentive program, as 
each of these designations is based on a multi-variable formula. 
Another commenter asserted that some states have rural cities with 
populations as low as a few hundred residents each, but that these 
cities fail to qualify for the rural TEA designation because they sit 
on the outskirts of a county that falls within a large MSA. The 
commenter suggested that the rule discriminates against rural cities 
that happen to be in bigger states, and argued that ``a rural city 
should be a rural city'' no matter where it is located. One commenter 
stated that TEA opportunities could be expanded by granting rural TEA 
status to all census tracts not within an urbanized area with a 
population of 50,000 or more, as defined by the most recent decennial 
census data, if the individual census tract meets a predetermined 
minimum size and maximum population density criteria, such as greater 
than 100 square miles and population density of fewer than 25 people 
per square mile. Another commenter suggested the definition could be 
broadened to include regions with high level of rent burden or provide 
flexibility on the job creation requirement if the investor provides 
affordable housing in the development. Another commenter stated that 
TEA status should only be given to rural and high poverty areas in the 
urban MSAs. Some of these commenters opposed the entire idea of a TEA. 
These commenters suggested that the non-TEA investment amount has never 
been competitive and that visa set-asides would provide the necessary 
incentives for rural and distressed urban areas.
    Response: DHS is bound by the statutory definition of a TEA and 
rural area at section 203(b)(5)(B) of the INA and DHS cannot redefine a 
TEA in a manner that is inconsistent with these statutory parameters. 
The statute defines a TEA as a ``rural area or an area which has 
experienced high unemployment (of at least 150 percent of the national 
average rate)'' and, in turn, defines rural area as ``any area other 
than an area within a metropolitan statistical area or within the outer 
boundary of any city or town having a population of 20,000 or more 
(based on the most recent decennial census of the United States).'' 
While several comments suggested areas that may be in need of 
investment, Congress set the parameters within

[[Page 35772]]

which DHS may define a TEA; the final rule fits within the statutory 
framework. Each of the different alternative criteria suggested are not 
reasonable interpretations of the statute because they either (1) are 
not limited to areas as defined by the statute (public infrastructure 
projects focus on activities rather than areas), (2) are contrary to 
the existing statutory definitions (smaller cities and towns in 
outlying areas of a county within an MSA are still within an MSA and 
thus cannot be rural), or (3) contain criteria that go beyond those 
mandated by the statute (high rent burden, high poverty (or low income) 
areas and population density are not based on unemployment or absolute 
population and areas with a population of 50,000 or more exceeds the 
population criterion of 20,000 or more set by statute). For USCIS to 
base TEAs on economic indicators other than unemployment data or to 
allow local designations based on such indicators would require a 
statutory change. Finally, while DHS has the discretion to adjust the 
minimum investment amount for investments within TEAs, the statute 
nonetheless reserves 3,000 visas for investment into TEAs and, 
therefore, DHS may not eliminate TEAs entirely. See INA sec. 
203(b)(5)(B)(i), 8 U.S.C. 1153(b)(5)(B)(i).
1.4. Other Comments on the Proposed Standards for Designating TEAs
    Comment: One commenter stated that the proposal aims to tighten the 
TEA definition, but hobbles the TEA incentive by decreasing the 
monetary differential between TEA and non-TEA investment amounts. The 
commenter stated that industry studies indicate that tightening the TEA 
definition could, by itself, have the effect of making a majority of 
EB-5 projects subject to the standard investment level. The commenter 
mentioned one study that notes that over 80 percent of EB-5 projects in 
the study's database of large-scale EB-5 projects would not qualify as 
a TEA by solely changing the TEA standard for special designations of 
high unemployment areas.
    Response: DHS agrees with the commenter that decreasing the 
monetary differential between TEA and non-TEA investment amounts 
undermines the incentive to invest in TEAs. As discussed above, Senator 
Rudolph Boschwitz and Senator Paul Simon both expressed in 1990 the 
importance of attracting investment to rural locations and areas with 
particularly high unemployment. Notably, Senator Simon stated that the 
lower the investment level for TEAs, the more encouragement there would 
be for investments in those areas.\65\
---------------------------------------------------------------------------

    \65\ See 136 Cong. Rec. S35,615 (Oct. 26, 1990) (statement of 
Sen. Simon).
---------------------------------------------------------------------------

    The commenter cites to a publication by Jeanne Calderon and Gary 
Friedland of New York University's Stern School of Business, who state 
that

[T]he two essential ingredients to a meaningful TEA incentive are 
(1) a narrowly defined area that limits the number of projects that 
may qualify for the TEA discount, and (2) a sufficiently wide TEA 
spread between the minimum amount required for a TEA project 
location and other location.\66\

    \66\ Gary Friedland and Jeanne Calderon, EB-5 Prescription for 
Reform: Legislation or Regulation?, NYU Stern School of Business, 
June 19, 2017, page 11 available at http://www.stern.nyu.edu/sites/default/files/assets/documents/EB-5%20Prescription%20for%20Reform%20-%20Legislation%20or%20Regulation%206.19.2017%20draft.pdf.

DHS agrees with the commenter that although the reforms to high 
unemployment TEA designation and process address the first ingredient, 
reducing the differential undermines the second ingredient. Thus, in 
the final rule, DHS maintains a 50 percent differential between the TEA 
investment amount and non-TEA investment amount in order to encourage 
development outside of affluent areas and increase investment in TEAs.
    Additionally, many TEAs have been criticized as being 
``gerrymandered'' to qualify for the reduced threshold amount.\67\ DHS 
believes the best solution to deter ``gerrymandered'' TEAs and to more 
effectively utilize the congressionally mandated TEA incentive is to 
reform both the TEA definitions and designation process while 
maintaining the 50 percent differential. DHS believes these changes 
will more optimally incentivize targeted investment into areas of need 
that Congress sought when establishing the TEA provisions of the EB-5 
program.
---------------------------------------------------------------------------

    \67\ For instance, one industry participant expressed a belief 
that a clear majority of EB-5 capital was going to projects relying 
on ``some form of gerrymandering'' to qualify for the reduced 
minimum investment requirement. Eliot Brown, ``How a U.S. Visa-for-
Cash Plan Funds Luxury Apartment Buildings; Program Meant to Spur 
Jobs in Poor Areas Largely Finances Developments in Affluent 
Neighborhoods,'' Wall St. J., Sept. 9, 2015, available at https://www.wsj.com/articles/how-immigrants-cash-funds-luxury-towers-in-the-u-s-1441848965 (last visited Dec. 17, 2018) (citing Michael Gibson, 
managing director, USAdvisors.org).
---------------------------------------------------------------------------

2. Proposal To Eliminate State Designation of TEAs
    Multiple commenters discussed the proposed shift of TEA designation 
from the states to DHS. Of those, most but not all opposed the proposal 
to shift all TEA designation from the states to USCIS.
    Comments: Several commenters provided support for the proposal to 
shift the TEA designation authority from the states to DHS as written. 
Several of these commenters supported the proposal because it would 
standardize and streamline the TEA designation process, provide much 
needed transparency, and align the TEA designations process with 
congressional intent. One commenter noted that most TEA projects are 
not actually located in rural or economically distressed areas because 
states have had such a high degree of flexibility to designate a TEA. 
Many commenters argued that the states have the most expertise with 
local employment and unemployment data, as well as knowledge of local 
demographics and economies to make TEA designation determinations. In 
addition, some commenters indicated their appreciation of working with 
local officials and that such coordination has mutual benefits for the 
project and the local economic development agencies, which they felt 
would be lost if states were removed from the designation process. One 
commenter stated that a state-based perspective is more likely to 
capture an accurate reality of unemployment and the rural conditions of 
Indian tribes.
    Response: DHS recognizes that states may possess expertise in local 
demographics and economies and that states may play an important role 
in facilitating EB-5 projects. However, DHS must weigh such expertise 
against transparency in TEA designations and a state's natural self-
interest in promoting economic development.\68\ This self-interest has 
resulted in the application of inconsistent rules for designation of 
high unemployment areas by the states. This inconsistency results in 
acceptance of TEAs that are criticized as ``gerrymandered.'' \69\ TEA 
designations made by states under the existing system thus do not 
reliably fulfill the congressional intent of the program to

[[Page 35773]]

incentivize the investment of EB-5 capital in actual high unemployment 
areas. To better adhere to this congressional intent, DHS believes the 
EB-5 program is best served by shifting the designation of high 
unemployment areas from the states to DHS.
---------------------------------------------------------------------------

    \68\ The Distortion of EB-5 Targeted Employment Areas: Time to 
End the Abuse: Hearing Before the S. Comm. On the Judiciary, 114th 
Cong. 12 (2016) (statement by Gary Friedland, Scholar-in-Residence, 
N.Y. Univ., Stern School of Bus.) (``Compounding the problem, often 
the state agency that is charged with making the TEA determination 
is the same agency that promotes local economic development.'') .
    \69\ [thinsp]See, e.g., ``Eliot Brown, Swanky New York Condo 
Project Exploits Aid Program,'' Wall St. Journal, Oct. 13, 2015, 
http://www.wsj.com/articles/posh-tower-proposed-for-struggling-new-york-neighborhood-central-park-south-1444728781; Patrick McGeehan 
and Kirk Semple, ``Rules Stretched as Green Cards Go to Investors,'' 
New York Times, Dec. 18 2011, available at https://nyti.ms/2FgZoQq.
---------------------------------------------------------------------------

    DHS also rejects the commenter's assertion that states are better 
positioned to determine the unemployment of Indian tribal areas. The 
commenter failed to provide any data to support the claim that a state-
based perspective is more likely to capture an accurate reality of 
unemployment in and the rural conditions of Indian tribal areas. The 
U.S. Census Bureau conducts outreach to Indian tribes to collect 
information, including unemployment rates, from Indian tribes.\70\
---------------------------------------------------------------------------

    \70\ See Tribal Consultation Handbook: Background Materials for 
Tribal Consultations on the 2020 Census, Fall 2015, U.S. Department 
of Commerce, U.S. Census Bureau, available at https://www.census.gov/content/dam/Census/library/publications/2015/dec/2020_tribal_consultation_handbook.pdf. See also My Tribal Area, a 
collection of American Community Survey data for tribal areas, 
available at https://www.census.gov/tribal/.
---------------------------------------------------------------------------

    Comment: One commenter stated that because USCIS adjudications of 
TEA designations are not within the agency's area of immigration-law 
expertise, such adjudications would not receive deference under Chevron 
USA v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), if 
challenged in federal court. The commenter suggested that the 
possibility of litigation over such adjudications was ``another reason 
to give serious consideration to allowing the states to retain the 
authority to make [TEA] determination[s].''
    Response: DHS disagrees with the commenter's interpretation of the 
case law, but in any case has elected to move forward with its proposal 
for the reasons expressed elsewhere in this preamble.
    Comments: Some commenters expressed concerns about the impact of 
the proposal on processing times. Some commenters argued that states 
have the resources and capacity to process high unemployment 
designation letters relatively quickly, whereas shifting the high 
unemployment designation authority to DHS would exacerbate processing 
backlogs and delay investments and project progress. Some commenters 
explained that DHS must be committed to a speedy TEA designation 
process, as the TEA designation must be secured early in the process of 
analyzing whether a particular project is suitable for EB-5 investment. 
One commenter stated that currently, almost all states are able to 
provide a TEA designation in two weeks or less. The commenter 
questioned DHS's ability to process TEA requests in under 30 days, 
which the commenter claimed is what would be required to make the 
system viable. One commenter noted that developers often seek multiple 
TEA designation letters from states as part of their due diligence, 
further compounding the adjudication demands on DHS. One commenter 
expressed concern about resources at USCIS being moved from Form I-526 
and Form I-829 adjudications to TEA designation determinations, which 
would further increase petition backlogs for all EB-5 forms. Two 
commenters said it is unclear whether there will be any ability for TEA 
designations to be made prior to adjudication of the Form I-526 
petition or Form I-924 application. The commenters stated that TEA 
designations should be available to projects prior to filing of the 
Form I-526 or Form I-924. One commenter stated that DHS should allow 
the filing of Forms I-924 and Forms I-526 while a TEA designation is 
pending, arguing that if the DHS process is uniform and predictable, 
investors and market participants can proceed on an efficient parallel 
track to expedite projects.
    Response: The framework detailed in the NPRM and finalized in this 
rule should not add a significant additional burden to petitioners or 
to DHS in the adjudication process. DHS is committed to providing 
timely TEA designation decisions as part of the adjudication process. 
DHS does not foresee an increase in petition backlogs based on handling 
high unemployment area designations as the agency already reviews state 
designation evidence provided by petitioners As in the current process, 
EB-5 petitioners will be required to provide evidence to demonstrate 
the area in which the new commercial enterprise into which they are 
investing is principally doing business is a TEA. The new framework, 
while implementing a new methodology, still requires petitioners to 
demonstrate that the area specified in the regulations in which the NCE 
is principally doing business has the requisite unemployment level. DHS 
will still review this data as it currently reviews high unemployment 
area designation letters from states, by reviewing the area for which 
TEA designation is sought to confirm it complies with the new 
methodology for including census tracts. As DHS has now set the 
parameters for the size of a TEA, something states previously did, 
there is no longer a role for the states. The new methodology allows 
petitioners to determine on their own whether the proposed location is 
a TEA by reviewing the census tract and, if necessary, the adjoining 
tracts.
    This rule does not establish a separate application or process for 
obtaining TEA designation from USCIS prior to filing the EB-5 immigrant 
petition and USCIS will not issue separate TEA designation letters for 
areas of high unemployment. DHS will make the determination as part of 
the existing adjudication process and does not anticipate an impact to 
the overall timing of the adjudication process.
    DHS recognizes that this final rule represents a shift from the 
current process by which designations of certain high unemployment 
areas may be obtained from states in advance of filing. If a regional 
center prefers to seek TEA determination in advance of investor 
petition filings, the regional center may file an exemplar application 
as part of a Form I-924 adjudication. If the exemplar application is 
approved, the approval (including the TEA determination) will receive 
deference in individual investor petition filings associated with that 
exemplar in accordance with existing USCIS policy (for example, absent 
a material change in facts affecting the underlying favorable 
determination or its applicability to eligibility for the individual 
investor). For non-regional center investors, unemployment data is 
readily available by which they can determine if an investment in a 
particular area satisfies applicable TEA designation requirements. As a 
result of the clearer, more objective designation standards under this 
final rule, this rule should provide sufficient certainty regarding the 
amount and timing of an investment to establish eligibility when filing 
their petitions.
    DHS notes that this change harmonizes the process for all types of 
TEAs--including rural areas, for which no preliminary determination 
process exists. In any event, if necessary, DHS could raise associated 
fees to bring on board additional adjudicators.
    Comments: Some commenters said it is clear from the Federal 
Register and the Adjudicator's Field Manual that congressional intent 
was to allow states to have the right to issue high unemployment area 
designations. These commenters referenced the issuance of the EB-5 
regulations in 1991 where legacy INS previously decided to delegate the 
TEA designation process to the states and further cited the now-
superseded Adjudicator's Field Manual that explained how the agency 
provided deference to decisions made by the states, emphasizing that 
USCIS has no

[[Page 35774]]

role in the determination process. One commenter said that DHS assuming 
the role of high unemployment area designation overturns two decades of 
allowing the formulation of high unemployment areas to be determined by 
states. One commenter stated that the proposal is directly contrary to 
the government's asserted priority to transfer authority from the 
Federal Government to the states, while another commenter expressed 
concern that the shift would ``politicize'' the designation process.
    Response: DHS disagrees with the assertion that the congressional 
intent of the EB-5 program was to allow states to designate high 
unemployment areas. Commenters referenced no statutory text or 
legislative history to this effect. Regulations promulgated by the 
legacy Immigration and Naturalization Service (INS), the predecessor to 
USCIS, and not INA section 203(b)(5), authorized the role of states in 
the TEA designation process. It is clear that the congressional intent 
of the TEA provision was to incentivize EB-5 investment in areas of 
actual high unemployment. Currently, as a result of each state's 
interest in promoting investment with its borders, the states' role in 
designating high unemployment areas for purposes of the EB-5 program 
has resulted in instances when high unemployment area designations 
include areas far outside of actual distressed areas that many have 
called ``gerrymandered.'' \71\ For these reasons, DHS has determined 
that it is necessary to shift the high unemployment area designation 
from the states to DHS.
---------------------------------------------------------------------------

    \71\ [thinsp]See, e.g., Eliot Brown, ``Swanky New York Condo 
Project Exploits Aid Program,'' Wall St. Journal, Oct. 13, 2015, 
http://www.wsj.com/articles/posh-tower-proposed-for-struggling-new-york-neighborhood-central-park-south-1444728781; Patrick McGeehan 
and Kirk Semple, ``Rules Stretched as Green Cards Go to Investors,'' 
New York Times, Dec. 18 2011, https://nyti.ms/2FgZoQq.
---------------------------------------------------------------------------

    DHS recognizes that eliminating the state role in high unemployment 
area designation represents a significant change from the existing 
regulations.\72\ However, as pointed out in the NPRM, allowing states 
to make high unemployment area designations has resulted in the 
application of inconsistent rules by various states in order to 
facilitate EB-5 funding to increase economic development within those 
states.\73\ The result is that 97 percent of all EB-5 petitions filed 
in 2015 were within state-designated high unemployment areas, and 
according to the GAO's analysis of I-526 petitions from the fourth 
quarter of fiscal year 2015, the vast majority of EB-5 petitioners who 
purported to invest in areas of high unemployment had invested in 
projects physically located in a census tract or tracts with 
unemployment levels below the 150% of the national unemployment rate 
threshold for high unemployment.\74\ DHS believes that this is 
inconsistent with clear congressional aims in enacting the EB-5 program 
and therefore warrants a change in policy mandating high unemployment 
area designations by DHS rather than by the states.
---------------------------------------------------------------------------

    \72\ DHS notes that no comments on this change from any state 
government were submitted.
    \73\ Is the Investor Visa Program an Underperforming Asset?: 
Hearing Before the H. Comm. on the Judiciary, 114th Cong. 62 (2016) 
(statement of Matt Gordon, Chief Exec. Officer, E3 Inv. Group) 
(``Generally, States quickly learned to be as permissive as possible 
in an attempt to attract ever greater amounts of EB-5 capital.''); 
see also The Distortion of EB-5 Targeted Employment Areas: Time to 
End the Abuse: Hearing Before the S. Comm. on the Judiciary, 114th 
Cong. 12 (2016) (statement of Gary Friedland, Scholar-in-Residence, 
N.Y. Univ., Stern School of Bus.) (``USCIS' continued delegation to 
the states of the TEA authority without guidelines results in the 
application of inconsistent rules by the various states. More 
important, each state has the obvious self-interest to promote 
economic development within its own borders. Delegation presents an 
opportunity for the states to establish lenient rules to enable 
project locations to qualify as a TEA. Compounding the problem, 
often the state agency that is charged with making the TEA 
determination is the same agency that promotes local economic 
development. As a consequence, virtually every EB-5 project location 
qualifies as a TEA.'').
    \74\ See GAO, Immigrant Investor Program: Proposed Project 
Investments in Targeted Employment Areas, GAO-17-487T, at 8 (Mar. 8, 
2017).
---------------------------------------------------------------------------

    DHS disagrees with the proposition that removing states from the 
high unemployment area designation process will ``politicize'' the 
designation process. DHS has proposed a clear and objective high 
unemployment area designation framework allowing high unemployment 
areas consisting of a census tract, or contiguous census tracts, in 
which the new commercial enterprise is principally doing business, if 
the weighted average of the unemployment rate for the tract or tracts 
is at least 150 percent above the national average. Such determinations 
will not be based on subjective or political factors. DHS will make 
high unemployment designation determinations based solely on publicly 
available data. DHS believes this final rule makes the process more 
transparent and uniform and less subject to political whims by 
eliminating the current political pressures within each state 
associated with the current process.
    Comments: One commenter said shifting designation responsibility to 
the Federal Government will invariably make it harder for direct 
investments (i.e., non-regional center investments) to compete with 
larger, better funded regional centers. Another commenter suggested 
issuance of TEA designation by DHS would be appropriate for regional 
center projects because these projects can cross state lines and the 
size allows for more financial resources to pay for independent 
economic studies. The commenter stated that, on the other hand, TEA 
designation by DHS is not appropriate for direct investment projects 
because the projects tend to be smaller and in the same state, and 
because coordinating with the local government provides the project 
with valuable economic and demographic data.
    Response: DHS rejects the notion that its administration of the TEA 
designation process will make it harder for direct investment projects. 
This final rule lays out a TEA designation process easily navigated by 
any petitioner--whether associated with a regional center or not--for 
little or no cost. The data necessary for the TEA designation 
determination is publicly available from the Bureau of Labor Statistics 
or U.S. Census Bureau. A TEA designation request alternatively can be 
supported with other data, public or private, provided that DHS can 
validate that data. The TEA designation process will not require 
additional costly studies, or steps beyond what is already required as 
part of the Form I-526 petition, that would make TEA designation 
unviable for direct investment projects. More importantly, whereas DHS 
has laid out a transparent process for all new commercial enterprises 
to use, each state has a different high unemployment area designation 
process that petitioners must satisfy. Investigating and complying with 
a particular state's requirements beyond those specified in the 
regulations, or with multiple states' different requirements for direct 
investments that are either not location-specific or located in 
multiple jurisdictions, is likely to require more financial resources 
than adhering to a single, uniform set of standards and processes 
through DHS. DHS thus is not persuaded that changes made by this rule 
will be detrimental to or disproportionately affect direct investment 
projects. Nothing in this rule would inhibit their ability to 
coordinate with units of local government.
    Comments: Several commenters suggested that DHS clearly communicate 
to the states a program-wide set of well-defined, technically sound, 
and transparent guidelines, standards, and rules, such as providing a 
limit of census tracts, or particular data the state must use for the 
designation. This would allow the states

[[Page 35775]]

to continue to be the designators of high unemployment areas, but would 
require the states to operate in a more streamlined manner.
    Response: DHS rejects the proposal. While the changes in this rule 
to the definition of a high unemployment area that qualifies as a TEA 
could provide the rules for state designators, DHS would still need to 
make individual determinations on each state designation as to whether 
it complies with those rules. DHS believes it would be duplicative and 
wasteful, administratively burdensome, and more difficult to evaluate 
the individualized determinations of the various states than to 
implement and administer a nationwide standard on its own.
3. Proposal To Change Special Designation of a High Unemployment Area
    Some commenters supported the proposed changes to the special 
designation of a high unemployment area. Several commenters said the 
changes align with congressional intent to provide an incentive for 
projects located in a truly high unemployment area and reduce TEA 
gerrymandering and manipulation. Other commenters emphasized that TEA 
gerrymandering and manipulation has been well documented and criticized 
by Congress, the media, scholars, and industry insiders. Other 
commenters appreciated the proposal as a reasonable ``compromise'' to 
the possible definitions of the geographic area that could constitute a 
TEA.
3.1 Alternatives--Use of Census Tracts vs. Block Groups
    Comments: Multiple commenters suggested the use of block groups, 
which are the smallest geographic configuration for which employment 
and unemployment data is available, instead of, or in addition to, 
census tracts. Commenters listed several benefits to using block groups 
instead of census tracts. One commenter indicated block groups allow 
TEAs to better reflect true high unemployment areas that using larger 
areas will not allow (e.g., in smaller pockets of high unemployment 
inner city areas). Another commenter noted that, in urban areas, block 
group high unemployment areas are more equitable because resident 
demographics can change drastically from one city block to the next. 
Commenters indicated that more than 15 states currently use census 
block groups as allowable sub-municipal building blocks in the design 
of areas for high unemployment area approval, and many other states 
have indicated a willingness to consider a census block approach for 
defining high unemployment area TEAs. In proposing the use of census 
blocks, commenters generally suggested a limitation regarding the 
number of census block groups that could be used to define a high 
unemployment area, as long as the limitation reflected the fact that 
census block groups are a significantly smaller area. Commenters 
offered examples, such as San Antonio's limitation to 24 block groups 
and Houston's 60-block-group limitation.
    Response: DHS disagrees with commenters supporting the use of 
census block groups in lieu of or in addition to census tracts. While 
data is available for both census block groups and census tracts in 5-
year estimates,\75\ census tract boundaries are delineated with the 
intention of being maintained over a long period of time so that 
statistical comparisons can be made from census to census.\76\ While 
census tracts are occasionally split due to population growth or merged 
as a result of substantial population decline, such changes are 
generally reflected in census tract numbering to preserve continuity 
for comparison purposes. Census block groups do not offer the same 
longevity analysis and census blocks are not delineated based on 
population. In fact, many census blocks are unpopulated.\77\ Thus, 
census tract data is ultimately more reliable for purposes of 
designating areas of high unemployment, as census tracts, unlike census 
blocks, generally contain certain levels of population at any given 
time, which strengthens the reliability of the unemployment data 
collected for that population.\78\ As DHS reviews areas to determine 
whether they qualify for high unemployment area designation at the time 
of investment or at the time of filing the EB-5 petition, as 
appropriate, DHS believes the use of census tracts provides both 
petitioners and the industry with an overall more statistically 
reliable area for high unemployment area designation.
---------------------------------------------------------------------------

    \75\ See U.S. Census Bureau, American Community Survey (ACS): 
When to Use 1-year, 3-year, or 5-year Estimates, available at 
https://www.census.gov/programs-surveys/acs/guidance/estimates.html 
(last accessed June 27, 2018).
    \76\ See U.S. Census Bureau, Geographic Terms and Concepts--
Census Tract, available at https://www.census.gov/geo/reference/gtc/gtc_ct.html (last accessed June 27, 2018).
    \77\ See U.S. Census Bureau, Census Blogs: What are Census 
Blocks? Available at https://www.census.gov/newsroom/blogs/random-samplings/2011/07/what-are-census-blocks.html (last accessed June 
27, 2018).
    \78\ See U.S. Census Bureau, Geographic Terms and Concepts--
Census Tract, available at https://www.census.gov/geo/reference/gtc/gtc_ct.html (last accessed June 27, 2018); U.S. Census Bureau, 
Geographic Terms and Concepts--Block Groups, https://www.census.gov/geo/reference/gtc/gtc_bg.html (last accessed June 27, 2018).
---------------------------------------------------------------------------

    Commenters indicated some states are currently utilizing census 
block groups in their high unemployment area designations and suggested 
that numerical limitations could be placed on the number of census 
blocks that may be utilized, yet neither the use by states nor 
numerical limitations address the issues presented by census blocks 
relative to census tracts discussed above. The final rule contains a 
consistent and clear adjudication framework to reduce these issues.
    Comments: Some commenters stated that limiting high unemployment 
area configurations to census tracts would negatively affect the many 
states that currently utilize both block groups and census tracts. 
These commenters stated that the exclusion of census block groups would 
particularly affect states in the western United States, where less 
densely populated areas can result in census tracts that are several 
tens of square miles, even hundreds of square miles, in size.
    Response: While DHS appreciates the concerns raised, DHS disagrees 
with the commenters' concerns about the impact to the western United 
States and believes that because the final rule will eliminate the 
states' role in the high unemployment area designation process, it will 
result in uniform application across the United States. As discussed 
elsewhere, census tracts are drawn based on the total population within 
the area. Tracts that are hundreds of square miles in size often would 
not require a high unemployment area designation based on the census 
tract, but would instead qualify as a rural area, and thereby be 
eligible for TEA designation even if ineligible under the high 
unemployment area criteria. Further, even if such a large tract was not 
rural, any concentrated urban area within that tract that is a city or 
town of sufficient population size could independently qualify on that 
basis. Finally, because the census tract is based on population size, 
the size of the area of the tract is ultimately irrelevant. No matter 
the tract size, the methodology for determining whether the tract (or 
combination of tracts) constitutes a TEA is the same, based on the 
unemployment rate, with the calculation being unaffected by the size of 
the tract.
3.2. Alternative--Commuter Patterns
    Comments: Numerous commenters stated that the designation of a high 
unemployment TEA should include a ``commuter pattern'' analysis that 
would

[[Page 35776]]

focus on defining a high unemployment area as encompassing the area in 
which workers may live and be commuting from, rather than just where 
the investment is made and where the NCE is principally doing business.
    Multiple commenters stated that the rule should recognize the 
relationship between job locations and where workers live and that 
urban centers where the jobs are located are not necessarily a measure 
of where unemployed residents reside. These commenters stated that 
limiting TEA designation to the project's census tracts and any 
immediately adjacent tracts (sometimes called ``spooled tracts'' or 
``donuts'') is unnecessarily restrictive, fails to take into account 
the linear economic development of cities following a block-by-block 
path and/or transit lines, and would make many large job-creating 
projects in highly concentrated urban areas ineligible because the non-
contiguous worker-supplying areas (where significant job benefits would 
accrue) would be excluded from the TEA designation calculations. Two 
commenters said the rule inappropriately ignores that EB-5 investment 
projects benefit U.S. workers outside the specific project location who 
use regional mass transit to commute to urban centers of employment. 
One of these commenters asserted that, if the proposed TEA definitions 
are implemented, many large-scale urban projects that meet current 
requirements and have benefited from significant foreign investment 
would no longer qualify for EB-5 investment. Similarly, some 
individuals wrote that the proposal to limit TEAs in urban cores to a 
single census track or cluster of ``spooled'' census tracts would 
unfairly disadvantage ``the most economically viable urban projects''--
described by the commenters as those that create jobs for workers 
commuting from the greater metropolitan area.
    Commenters offered various suggestions to implement a commuter-
based approach. Two commenters recommended employing the contiguous 
model approach with a state-defined limit of census tracts, which would 
limit the area that could be utilized, but still provide a wide enough 
perimeter to allow for commuting pattern approach. Two commenters 
recommended that the rule include high unemployment, non-contiguous 
census tracts (or block groups, as discussed above) in the TEA 
designation. One commenter recommended a statistically driven, 
replicable commuter-based methodology for urban ``high unemployment 
areas'' that would combine ACS unemployment data with the census's best 
available commuting data (which the commenter noted is already used for 
current high unemployment designations) and also merge ACS unemployment 
data with the Federal Highway Administration's online Census 
Transportation Planning Products (CTPP). The commenter said its 
proposed ``9-step'' approach was consistent with statutory text, but 
encouraged closer analysis and refinement of the proposed approach by 
industry and government experts.
    Response: DHS disagrees with these commenters. The statutory 
language regarding TEA designations provides that the targeted 
employment area (i.e., the area experiencing high unemployment or rural 
area) must be the area in which the new commercial enterprise will 
create jobs.\79\ The proposals put forth by the commenters were either 
the same approach previously analyzed by DHS and already deemed 
inappropriate or similar approaches that nonetheless presented the same 
unresolved issues. While DHS appreciates the arguments made by 
commenters regarding economic development and commuting patterns, DHS 
believes that the commuter-based approaches presented do not adequately 
address the issue of selectively choosing among high unemployment 
commuting areas rather than more comprehensively including all areas to 
and from which an individual may commute (including areas of low 
unemployment), which may ultimately result in merely a different form 
of the same type of ``gerrymandering'' that DHS seeks to address with 
this regulation. Moreover, DHS believes that the statutory incentive 
for the reduced investment amount in a targeted employment area is best 
effectuated by restricting its application to investments in new 
commercial enterprises that create jobs in the actual area experiencing 
high unemployment or rural area--not in non-rural areas without high 
unemployment that are physically distant or otherwise disconnected from 
selected outlying areas with high unemployment from which prospective 
workers may commute. Moreover, as discussed in the NPRM, the commuter 
pattern approach previously considered by DHS was deemed too 
operationally burdensome to implement as it posed challenges in 
establishing standards to determine the relevant commuting area that 
would fairly account for variances across the country.\80\ In addition, 
DHS could not identify a commuting-pattern standard that would 
appropriately limit the geographic scope of a TEA designation 
consistent with the statute and the policy goals of this regulation to 
address ``gerrymandering'' concerns and more closely link the locus of 
investment and job-creation with areas actually experiencing high 
unemployment.
---------------------------------------------------------------------------

    \79\ INA 203(b)(5)(B)(i) states: ``No less than 3,000 of the 
visas made available under this paragraph for each fiscal year shall 
be reserved for qualified immigrants who invest in a new commercial 
enterprise described in subparagraph (A) which will create 
employment in a targeted employment area'' (emphasis added).
    \80\ DHS reviewed a proposed commuter pattern analysis 
incorporating the data table from the Federal Highway 
Administration, ``CTPP 2006-2010 Census Tract Flows,'' available at 
http://www.fhwa.dot.gov/planning/census_issues/ctpp/data_products/2006-2010_tract_flows/ (last updated Mar. 25, 2014). DHS also 
reviewed the CTTP updated status report (January 2018) entitled 
``Small and Custom Geography Policy Change Announcement CTPP 
Oversight Board is Discontinuing Census TAZ for Small Geography Data 
Reporting and Urging the Transportation Planning Community to Engage 
in 2020 Census Participant Statistical Areas Program (PSAP),'' which 
is available at: https://www.fhwa.dot.gov/planning/census_issues/ctpp/status_report/sr0118/fhwahep18046.pdf, which will phase in 
slight methodological changes over the next year. DHS found the 
required steps to properly manipulate the Census Transportation 
Planning Product (CTPP) database might prove overly burdensome for 
petitioners with insufficient economic and statistical analysis 
backgrounds. Further, upon contacting the agency responsible to 
manage the CTPP data, DHS was informed that the 2006-2010 CTPP data 
is unlikely to be updated prior to FY2018 to incorporate proposed 
changes to the data table. U.S. Census is currently reviewing the 
CTPP proposed changes. As an alternative methodology for TEA 
commuter patter analysis, DHS reviewed data from the U.S. Census 
Tool, On the Map, available at http://onthemap.ces.census.gov, which 
is tied to the U.S. Census Bureau's American Community Survey. 
Although the interface appeared to be more user-friendly overall, 
using this data would be operationally burdensome, potentially 
requiring hours of review to obtain the appropriate unemployment 
rates for the commuting area.
---------------------------------------------------------------------------

    Assuming that a commuting patterns model might result in jobs being 
created for workers residing in high-unemployment areas, the only way 
to demonstrate that this is the case would be to require that 
petitioners provide W-2s or other evidence demonstrating where the 
workers lived. Even where such evidence could be provided, it would be 
too complex and operationally burdensome to determine which cases would 
be impacted and to review such evidence and link each worker to a 
separate area of high unemployment for each petitioner.
    In any event, commuter pattern analysis would unduly limit the 
effects of TEA investments on the areas that Congress most intended to 
benefit. For instance, the Leadership Conference on Civil and Human 
Rights has argued that ``it is imperative that Investor Visa funds go 
directly into building infrastructure in communities in West

[[Page 35777]]

Baltimore and the South Bronx and the like. Projects in neighboring 
areas will leave these communities of concentrated poverty no better 
off in terms of development and infrastructure after their 
conclusion.'' \81\ In comments to the proposed rule, the Leadership 
Conference similarly suggested that a commuter pattern analysis would 
be misused to continue the practice of cobbling together census tracts 
in order to get the TEA discount for an area that is not in fact a high 
poverty area.
---------------------------------------------------------------------------

    \81\ Nancy Zirkin, Executive Vice President, Leadership 
Conference on Civil and Human Rights, ``Is the Investor Program an 
Underperforming Asset?'' U.S. House of Representatives, 3-4, (Feb. 
11, 2016), available at https://docs.house.gov/meetings/JU/JU00/20160211/104454/HHRG-114-JU00-20160211-SD004.pdf.
---------------------------------------------------------------------------

    DHS considers a variety of officially recognized areas (e.g., 
metropolitan statistical areas and counties) for determining whether a 
given area has experienced high unemployment. Under both the final rule 
and existing regulations, petitioners may demonstrate that the 
metropolitan statistical area in which their new commercial enterprise 
is principally doing business has the requisite unemployment; MSA 
designation is based in part on commuting ties among related 
counties.\82\ Thus, petitioners are not entirely without options to 
achieve TEA designation in non-rural areas that account for commuter 
patterns and that does not present the same issues as the other 
approaches discussed above.
---------------------------------------------------------------------------

    \82\ 2010 Standards for Delineating Metropolitan and 
Micropolitan Statistical Areas; Notice, 75 FR 37246 (June 28, 2010).
---------------------------------------------------------------------------

    Comments: Several commenters stated that it would be inconsistent 
for DHS to dismiss a commuter-based TEA option in the urban context 
because ``rural'' TEAs rely on key OMB and Census Bureau definitions 
that depend on commuting ties. These commenters point to the U.S. 
Census Bureau's definition of a core based statistical area (CBSA) as 
defined by the U.S. Census Bureau:

    A statistical geographic entity defined by the U.S. Office of 
Management and Budget (OMB), consisting of the county or counties 
associated with at least one core (urban area) of at least 10,000 
population, plus adjacent counties having a high degree of social 
and economic integration with the core as measured through commuting 
ties with the counties containing the core. Metropolitan and 
micropolitan statistical areas are the two types of CBSAs.\83\
---------------------------------------------------------------------------

    \83\ 76 FR 53042.

    Response: DHS is bound by the statutory framework defining what 
constitutes a TEA. As explained above, the statute specifically defines 
what constitutes a rural area and the final rule conforms to the 
statutory definition. With respect to areas experiencing high 
unemployment, petitioners may demonstrate that the metropolitan 
statistical area in which their new commercial enterprise is 
principally doing business has the requisite unemployment. Because 
metropolitan statistical areas themselves are defined by reference to 
commuting patterns, petitioners have a TEA option for non-rural areas 
that is reasonably commuter-based.
3.3. Alternative--Tract/Block Limitation
    Comments: Multiple commenters stated that the proposed TEA 
definition should be limited to a single census tract, the tract in 
which the project is located. The commenters stated that this would 
reduce the chance that the TEA status of a project location might be 
based on the economic condition of a remote tract that does not reflect 
the characteristics of the project tract. However, these commenters 
also suggested that if DHS is determined to allow contiguous/adjacent 
census tracts to be included, all contiguous/adjacent tracts should be 
taken into account rather than allowing the applicant to ``pick and 
choose'' any single contiguous/adjacent tract that, taken together with 
the project tract, would meet the high unemployment test.
    Response: DHS appreciates the concerns raised by the commenters. 
While DHS believes that a single-tract approach would be operationally 
efficient to implement, DHS appreciates the concerns held by many other 
commenters regarding the changes to the TEA designation process. 
Allowing petitioners the flexibility to incorporate those tracts 
adjacent to the tract(s) in which the new commercial enterprise is 
principally doing business helps meet the policy goals of reducing 
inconsistencies and inequities in adjudications while also recognizing 
that a single-tract approach may itself be inequitable to particular 
businesses with close connections to adjacent areas that may cross 
census tract boundaries. DHS believes the compromise to allow for the 
inclusion, as needed, of adjacent census tracts will provide for some 
flexibility in business and economic development while still providing 
significant incentive to invest in a high unemployment area as Congress 
intended.
    Comment: While supporting some sort of tract limitation to prevent 
gerrymandering, several commenters argued that there should be 
unlimited configurations of census blocks, block groups, or other 
political subdivisions if the high unemployment area is located 
entirely within either an MSA or county. To further prevent attempts to 
gerrymander TEAs for projects close to the border of MSA regions, some 
commenters said the rule could include a limit to the number of sub-
municipal areas (e.g., a limit of 12 or 15 sub-municipal areas) if the 
TEA were to cross an MSA or county boundary.
    Response: DHS disagrees with these commenters. The final rule 
continues the existing policy of allowing an entire MSA or county to be 
designated as a TEA. Further, the final rule clarifies that a city or 
town with a population of 20,000 or more outside of an MSA can be 
designated entirely as a TEA if otherwise eligible. Where a new 
commercial enterprise is principally doing business in a non-rural area 
that cannot qualify at the MSA, county, or city/town outside of an MSA 
level, the final rule offers the smaller geographic area of a census 
tract(s) and the adjacent census tracts to qualify as a TEA. As 
previously explained, DHS believes the census tract is the most 
appropriate and smallest geographic area from which relevant, reliable 
data can be obtained regarding unemployment statistics. DHS rejects the 
use of census blocks, block groups, or other smaller sub-municipal 
areas for the reasons stated above. Allowing unlimited census tracts 
within an MSA or county would wholly or substantially continue the 
existing practice of certain states along with the attendant concerns 
regarding high unemployment area designation inconsistencies and 
inequities that the final rule eliminates.
3.4. Alternative--California Approach
    Comments: Several commenters supported the approach implemented by 
California, which limits the geographic or political subdivision to 12 
contiguous census tracts. One commenter said all gerrymandering 
concerns can be fully addressed by limiting the number of combined 
areas to 12, or to some other agreed-upon number when a TEA crosses MSA 
(or county) boundaries. One commenter said the stated goal of 
uniformity can be attained by imposing a single federal standard for 
TEA determinations, such as California's rule which has a limit of no 
more than 12 contiguous census tracts. The commenter also said that the 
concerns about gerrymandering can be adequately addressed by requiring 
the responsible state agency to articulate a reasonable basis for its 
determination that investment at the project site will have a 
beneficial job-creating impact across the entire area of the TEA. One 
commenter supported the California

[[Page 35778]]

approach, but suggested a limit of 15 contiguous census tracts.
    Response: DHS disagrees with the commenters that gerrymandering 
concerns would be fully addressed by limiting the number of combined 
areas when a high unemployment area crosses MSA or county lines. DHS 
expressed concerns in the NPRM that the use of a limitation approach, 
such as the one espoused by the California Governor's Office of 
Economic and Business Development, would not be appropriate for 
nationwide application. In particular, given the disparity in the size 
and shape among potentially includable tracts across various regions in 
the United States, DHS continues to believe that the type of 
limitations on the number of tracts used as suggested by the commenters 
would still result in projects in certain regions being much farther 
removed from each of its constituent tracts than in other regions, 
ultimately undermining the very purpose of reforming the high 
unemployment area designation process. The final rule does not adopt a 
numerical limitation on the number of tracts used to ensure that the 
analysis is focused specifically on the area in which job creation is 
occurring, taking into account both the population density and 
geographic area.
3.5. Alternative--New Markets Tax Credit Program and Other Suggestions
    Comments: Several commenters stated that a better approach to 
defining TEAs would be to utilize the criteria established under 
another proven federal economic development program called the New 
Markets Tax Credit (NMTC) program, rather than a single criterion 
(unemployment rate). A commenter stated that NMTCs may be applied based 
on three criteria,\84\ but because they do not focus solely on 
unemployment rates, Congress would have to act in order to recognize 
the NMTC criteria for determining a non-rural area as a TEA. One 
commenter asserted that the use of single-variable definition 
(unemployment rate) is contrary to economic development principles 
practiced elsewhere in the Federal Government, such as measures used by 
HUD to establish beneficial geographies for the NMTC Program. Another 
commenter provided potential guidelines and definitions within the NMTC 
framework that could be adopted in the TEA designation context, 
suggested allowing use of an unlimited amount of census tracts or block 
groups, and suggested the incorporation of the ``urban cluster.'' 
Another commenter suggested use of the NMTC criteria as an alternative 
to the proposed rule's limited geographic area for high unemployment 
area designation, together with use of a single dataset to determine 
the unemployment rate. One commenter requested that DHS allow a Gateway 
City \85\ TEA designation.
---------------------------------------------------------------------------

    \84\ The criteria used to determine low income communities for 
the purposes of the NMTC are (1) median income levels of either the 
urban distressed area or rural area; (2) poverty rate of the area; 
or (3) unemployment rate of the area.
    \85\ As an example of what the commenter means by Gateway City, 
see an explanation of the Massachusetts Gateway City Initiative 
available at http://www.worcestermass.org/city-initiatives/gateway-cities-initiative.
---------------------------------------------------------------------------

    Response: While DHS appreciates these suggestions, the statutory 
definitions of a TEA includes rural areas and areas experiencing high 
unemployment (of at least 150 percent of the national average rate). 
DHS believes the statute is best interpreted as limiting consideration 
to these two factors.
4. Other Comments on Proposal To Change to Special Designation of High 
Unemployment Area
    Approximately 45 commenters provided other input on the proposed 
special designation process for high unemployment areas.
    Comments: One commenter stated that in the preamble to the proposed 
rule, DHS incorrectly defined how the weighted average of the 
unemployment rate is calculated, noting that all official unemployment 
rate calculations derived by BLS and individual states utilize the 
civilian labor force concept, not the total/full labor force (which 
includes military personnel). Another commenter stated that the rule 
presents an oddly complicated manner of calculating a weighted average, 
asserting that the calculation for a TEA's unemployment is simple: Sum 
the number of unemployed people across all of the tracts, sum the 
number of people in the Civilian Labor Force across all of the tracts, 
and divide the number of unemployed by the Civilian Labor Force.
    Response: DHS appreciates these technical comments regarding the 
unemployment data calculations. While the commenter references BLS 
unemployment rate figures, BLS does not make unemployment data publicly 
available for geographic areas with populations less than 25,000.
    DHS mistakenly indicated in the NPRM that it would consider labor 
force to be ``civilians ages 16 and older who are employed or employed, 
plus active duty military'', thus appearing to rely solely on total 
labor force. See 82 FR at 4748 n.41. Elsewhere, DHS referenced the U.S. 
Census Bureau's American Community Survey (ACS) data as an example in 
the NPRM because the survey provides publicly available unemployment 
data at smaller geographic area levels such as the census-tract level, 
see 82 FR at 4749; ACS's unemployment data is based on its calculation 
of the civilian labor force. Thus, the NPRM was not intended to require 
the use of total labor force. Similarly, the final rule does not 
provide one specific set of data from which petitioners can draw to 
demonstrate their investment is being made in a TEA. Rather, the burden 
is on the petitioner to provide DHS with evidence documenting that the 
area in which the petitioner has invested is a high unemployment area, 
and such evidence should be reliable and verifiable. DHS believes that 
the unemployment data provided to the public by both ACS and BLS 
qualify as reliable and verifiable data for petitioners to reference in 
order to carry their evidentiary burden.
    Regardless of which reliable and verifiable data petitioners choose 
to present to DHS, the data should be internally consistent. For 
example, DHS notes that although both BLS and the Census Bureau rely on 
the concept of the civilian labor force in their unemployment rate 
calculations, they employ different methodologies. If petitioners rely 
on ACS data to determine the unemployment rate for the requested TEA, 
they should also rely on ACS data to determine the national 
unemployment area to which the TEA is compared.
    Finally, DHS opted to use the methodology in the final rule to 
ensure proper weight is given to the more heavily populated tracts. The 
method suggested by the commenter reduces the effect that a more 
densely populated area may have on the average.
    Comment: Several commenters suggested that USCIS should publish a 
single dataset covering the entire country that practitioners must use 
for TEA unemployment calculations to standardize the process and 
enhance predictability in designations.
    Response: DHS disagrees with these commenters, as DHS believes 
there is already data available to the public to use in calculating the 
unemployment rate for particular areas, such as the data provided by 
the U.S. Census Bureau in the American Community Survey. To invest at 
the reduced amount, petitioners will be required to demonstrate that 
their investment is within a TEA using reliable and verifiable data 
such as data from ACS or

[[Page 35779]]

BLS to qualify under the requirements of a high unemployment area.
    Comments: One commenter stated that the methodology presented for 
deriving the unemployment rate uses ACS data that is insufficiently 
current for EB-5 purposes, and asserted that all states properly use 
ACS data in conjunction with the latest available official county 
estimates in order to best reflect current economic status. One 
commenter stated that the proposed rule did not specify which dataset 
should be used for TEA calculations, recommending that USCIS follow the 
guidance given by the BLS Local Area Unemployment Statistics (LAUS) 
branch in their Technical Memo S-10-20. Another commenter presumed that 
USCIS would utilize the most current unemployment datasets and the 
census-share methodology--ACS and BLS--to create a mapping system that 
would enable the user to readily determine whether a project location 
qualifies as a TEA. A commenter urged the selection of a single dataset 
from which the unemployment statistics are obtained, recommending the 
ACS 5-year estimates.
    Response: DHS appreciates these suggestions. DHS recognizes that 
ACS data for census tracts is currently provided in five-year estimates 
and that states may have more recent data at the census tract level. 
However, given that--as the commenter acknowledged--states utilize 
different methodologies than ACS and BLS, petitioners may not be able 
to compare the state census tract data to a national unemployment rate 
that utilizes the same methodology. Although DHS recognizes that there 
are benefits to limiting the unemployment statistics to a single 
dataset, the final rule does not provide one specific set of data from 
which petitioners can draw to demonstrate their investment is being 
made into a TEA because currently no one dataset is perfect for every 
scenario. Thus, the burden is on the petitioner to provide DHS with 
evidence documenting that the area in which the petitioner has invested 
is a high unemployment area, and such evidence should be reliable and 
verifiable. DHS believes that the unemployment data provided to the 
public by the U.S. Census Bureau's American Community Survey as well as 
data available from the Bureau of Labor Statistics qualify as reliable 
and verifiable data for petitioners to reference in order to carry 
their evidentiary burden, though, as noted above, the data relied upon 
should be internally consistent. For instance, if petitioners rely on 
ACS data to determine the unemployment rate for the requested TEA, they 
should also rely on ACS data to determine the national unemployment 
area to which the TEA is compared.
    Comments: Some commenters asserted that there is limited or no 
evidence that even the most egregious gerrymanders have done anything 
less than create needed jobs for high unemployment regions. One 
commenter wrote that ``Manhattan for instance, a big area of 
controversy for TEA critics, has in fact had projects with 
gerrymandered TEAs. Even the most luxurious developments in Manhattan 
that boast condos with no less than $3 million price tag per unit, have 
created much needed jobs for construction workers in the Bronx, Queens, 
Brooklyn, Harlem, and Long Island. If the agency can find any research 
out there that shows otherwise, please provide that research before any 
final rule on the TEA issue.''
    Response: DHS appreciates these comments regarding gerrymandering 
concerns. In addition to the DHS data analysis detailed in the NPRM, 
the Government Accountability Office (GAO) completed an audit of EB-5 
TEA data in 2016.\86\ GAO's review determined that approximately 90 
percent of petitioners from the fourth quarter of FY 2015 who elected 
to invest in a high unemployment TEA did so in an area not consisting 
of a single census tract, census block group, or county. Of those 
petitioners, 38 percent combined 11 or more tracts in order to 
demonstrate the project was in a high unemployment area, with 12 
percent utilizing more than 100 census tracts. DHS believes the high 
percentage of petitioners utilizing so many census tracts gives rise to 
a significant concern that congressional intent relating to TEA 
investments is too often not being met. DHS believes this is because 
the percentages likely reflect efforts to artificially construct areas 
that meet the unemployment threshold requirement to qualify for the 
reduced investment amount incentive rather than an intention to locate 
the investment in the area actually experiencing high unemployment. DHS 
recognizes that many investment projects regardless of location will 
create jobs, some of which might even be filled by individuals from 
outlying areas experiencing high unemployment (though verifying whether 
jobs are being created for such individuals would be a significant 
challenge). Still, DHS continues to believe that congressional intent 
for the reduced investment amount incentive is best served by locating 
investment into areas actually experiencing high unemployment rather 
than other locations strung together to such areas and to which 
individuals from such areas could potentially commute for employment. 
In order to best assist in the revitalization of those areas, the 
actual development must be located there. The final rule provides clear 
criteria for the designation and eliminates state involvement to ensure 
that the TEA incentive is not afforded to gerrymandered areas where 
high unemployment may not truly exist.
---------------------------------------------------------------------------

    \86\ GAO, Immigrant Investor Program: Proposed Project 
Investments in Targeted Employment Areas, GAO-16-749R, Published 
Sept. 19, 2016, available at http://www.gao.gov/products/GAO-16-749R.
---------------------------------------------------------------------------

    Comments: A few commenters said the proposed revisions to the 
method of determining a high unemployment area would disproportionately 
favor rural areas over urban areas and even further disadvantage the 
more densely populated urban areas. One commenter stated that the 
approach in the rule skews in favor of certain American towns and 
cities while disfavoring other urban markets simply because they vary 
in population density, arguing that population density does not provide 
a rational basis to prefer certain urban TEAs to the detriment of 
others.
    Another commenter cited Census Tract 99 in New York County--a tract 
that is the site of some EB-5 projects--to illustrate some of the 
commenter's key concerns about DHS's TEA proposal in the NPRM. The 
commenter argued that BLS and ACS data, as well as data made available 
through the U.S. Census Bureau's Longitudinal Employer-Household 
Dynamics (LEHD) tool, show that high unemployment tracts within New 
York County are well within standard commuting distances to Census 
Tract 99. The commenter stated that ``[a]ccording to the NYC MTA, a 
person could board the subway at the north end of Manhattan Island and 
travel to a subway station in the middle of Census Tract 99 in 30-50 
minutes for $2.75 or less one-way. The DHS proposal should recognize 
that an unemployed person is unlikely to object to that kind of 
commute.'' The commenter also pointed out that a focus on unemployment 
rates in a particular area, rather than total numbers of unemployed 
persons, potentially obscures the impact that DHS's proposal could have 
on economically distressed urban areas. The commenter stated that in 
2014, New York County had on average 55,387 unemployed workers, as 
compared to 75,259 unemployed workers statewide for Iowa, and 14,302 
for Vermont. The commenter concluded that any proposal should not seek 
to ``fix'' the lack of rural and highly

[[Page 35780]]

distressed urban project deal flow in the EB-5 program by establishing 
rules that discourage investment in some urban areas. Rather, TEA 
designations should encourage new investment and new job creation under 
the EB-5 program in a fair and predictable way, with positive 
inducements for projects to locate in rural or distressed urban areas. 
The commenter ultimately supported the ``New Markets Tax Credit''-like 
approach that DHS has addressed elsewhere in this preamble.
    Another commenter stated that DHS should strive to ensure that both 
urban and rural projects have ``equal opportunity'' to improve their 
respective communities.
    Response: DHS believes the final rule does ensure that both urban 
and rural projects have equal opportunity to improve their respective 
communities. Petitioners have overwhelmingly obtained TEA designation 
in urban (i.e., non-rural) areas in recent years.\87\ Although projects 
in more affluent urban areas may have created employment for employees 
living in high unemployment areas within a reasonable commuting 
distance, DHS notes that it is challenging to verify this, and would 
require the provision of W-2 forms or other sufficient documentation 
for direct jobs. In addition, allowing such areas to qualify as a TEA 
may have deterred direct EB-5 funding in areas truly experiencing high 
unemployment and in dire need of revitalization. Also, developers of 
projects in affluent urban areas may be able to market the projects to 
potential EB-5 investors as more likely to (1) result in the investors 
receiving green cards because the projects are less likely to fail, (2) 
result in the investors seeing their capital returned because they are 
less likely to fail, and (3) deliver a higher rate of return on the 
investors' investments.\88\ These factors could more than compensate 
for the higher required investment amount. In fact, to the extent that 
a higher rate of return and more safety for invested capital are 
expected, foreign investors might actually prefer to increase the 
amount of capital they invest in these projects above the minimums 
required. Foreign investors may also see investments in projects in 
affluent urban areas to be more prestigious. In addition, to the extent 
that projects in affluent areas that can no longer attract EB-5 capital 
still proceed with other sources of capital, while more projects in 
poor or rural areas receive EB-5 capital without which they could not 
proceed, overall investment in the U.S. economy may increase.
---------------------------------------------------------------------------

    \87\ See GAO, Immigrant Investor Program: Proposed Project 
Investments in Targeted Employment Areas, GAO-16-749R, Published 
Sept. 19, 2016, available at http://www.gao.gov/products/GAO-16-749R 
(showing that approximately 97% of petitioners from the fourth 
quarter of fiscal year 2015 were estimated to have invested into a 
high unemployment TEA).
    \88\ ``Foreign investors see glitzy projects in gateway cities 
as more secure investments, both for getting their money back and 
for getting their green cards.'' Jeff Collins, ``Need a Fast Track 
to Citizenship? Invest in These Orange County Luxury Hotels,'' 
Orange County Register, (Oct. 13, 2015) (quoting Pat Hogan, 
president of CMB Regional Centers).
---------------------------------------------------------------------------

    The final rule clarifies the requirements for TEA designation in 
high unemployment areas and also eliminates state involvement in the 
high unemployment area designation process to better ensure consistent, 
equitable adjudications across the country. DHS is bound by the 
statutory framework defining rural areas and areas of high unemployment 
(based on unemployment rate greater than 150 percent of the national 
average rather than total number of unemployed individuals). By 
utilizing the census tract (and/or adjacent tract(s)) in which the new 
commercial enterprise is principally doing business, DHS is regulating 
consistent with the statutory framework to ensure that the area most 
directly affected by the investment and in which jobs are created is 
the focus regardless of population size or density.
5. Other Comments on the TEA Designation Process
    Multiple commenters provided other input on the TEA designation 
process.
    Comments: Numerous commenters recommended grandfathering the 
existing TEA methodology, including suggestions to allow for a 
``meaningful'' transition period, or at least allow petitioners who 
properly filed prior to the change to continue to qualify. Several of 
these commenters asserted that the rule should include a transition or 
phase-in period or delayed effective date to enable projects that are 
presently in the market to make the necessary changes in their 
operations going forward. One commenter expressed uncertainty in how 
the revised TEA designation process would be implemented, particularly 
with respect to its effect on current projects and conditional 
permanent residents, pending Form I-526 and Form I-829 petitions, and 
exemplars approved by DHS prior to the effective date of the rule.
    Response: DHS believes that an extension to the transition period 
is appropriate, given the potential impacts of the TEA designation 
changes on current projects and investors. DHS is therefore is 
providing for an effective date that is 120 days after publication of 
this rule, i.e., 90 days beyond the minimum implementation period 
required by 5 U.S.C. 553(d), and 60 days beyond the minimum 
implementation period required for major rules under 5 U.S.C. 
801(a)(3). The implementation period is intended to provide additional 
time for EB-5 petitioners and the EB-5 market to adjust investment 
plans. Even those commenters that requested specific implementation 
periods longer than 120 days (e.g., six months or one year) did not 
provide clear, actionable data underlying such recommendations. An 
implementation period longer than 120 days would likely place an 
additional burden on agency operations and potential petitioners, 
because it would likely result in an influx of new petitions prior to 
the effective date that could lengthen adjudication delays and visa 
backlogs. Such an influx would generally be consistent with past 
experience during times when petitioners anticipate significant changes 
to the program.
    DHS has detailed how it will implement the rule in Sections I.E and 
I.F of this preamble, and elsewhere in this rule. As explained 
elsewhere, the changes in this rule will apply to all Form I-526 
petitions filed on or after the effective date of the final rule. 
Petitions filed before the effective date will be adjudicated under the 
regulations in place at the time of filing. DHS disagrees with the 
commenter's request that TEA designations be available prior to Form I-
924 and Form I-526 filings. In accordance with the statutory framework, 
under which TEA designation must be determined ``at the time of the 
investment,'' INA section 203(b)(5)(B)(ii), 8 U.S.C. 1153(b)(5)(B)(ii), 
and consistent with longstanding policy, a TEA determination is made at 
the time the Form I-526 petitioner makes his or her investment or at 
the time the Form I-526 petition is filed for petitioners who are 
actively in the process of investing. As with the existing process, DHS 
will review the TEA designation evidence with the Form I-526 
petitioner's filing to determine eligibility at that time. For 
petitioners who have a pending or approved Form I-526, already received 
conditional permanent resident status, or a pending Form I-829 petition 
based on a previously approved Form I-526, a TEA determination will 
have already been made or will be made based on the regulations in 
place at the time of filing of those Form I-526 petitions.
    Comments: A few commenters said the final rule should clarify that 
the TEA designation is honored from when the funds are actually 
invested, not

[[Page 35781]]

when the funds are placed in escrow, because a location's TEA 
designation is subject to change based on changed circumstances.
    Response: DHS disagrees with the commenters. Section 
203(b)(5)(B)(ii) of the INA provides that the area must qualify as a 
TEA at the time of investment. However, section 203(b)(5)(A)(i) of the 
INA also provides that to be eligible for an EB-5 visa, a petitioner 
may either have invested or be actively in the process of investing 
capital into an NCE. Applicable administrative precedent decisions have 
further clarified that petitioners must demonstrate that the NCE into 
which they have invested or are actively in the process of investing is 
principally doing business in a TEA at the time of filing the 
petition.\89\ To make the TEA determination in a manner consistent with 
the statutory provisions and the precedent decisions, and promote 
predictability in the capital investment process, DHS has implemented a 
policy of making the TEA determination as follows:
---------------------------------------------------------------------------

    \89\ See Matter of Soffici, 22 I&N Dec. 158, 159 (Assoc. Comm. 
1998) (``A petitioner has the burden to establish that his 
enterprise does business in an area that is considered `targeted' as 
of the date he files his petition.''); see also Matter of Izummi, 22 
I&N Dec. 169, 173 n. 3 (Assoc. Comm. 1998) (``A petitioner must 
establish that certain areas are targeted employment areas as of the 
date he files his petition; just because a particular area used to 
be rural many years ago, for example, does not mean that it still 
is.'').
---------------------------------------------------------------------------

     If the petitioner has invested capital into the NCE, and 
the capital has been made available to the job-creating entity (JCE) in 
the case of investment through a regional center, prior to the filing 
of the Form I-526 petition, then the TEA analysis focuses on whether 
the NCE, or JCE in the case of an investment through a regional center, 
is principally doing business in a TEA at the time of investment.
     If, at the time of filing the Form I-526 petition, the 
petitioner is actively in the process of investing capital into the NCE 
but the capital has not been made available to the JCE in the case of 
investment through a regional center, then the TEA analysis focuses on 
whether the NCE, or JCE in the case of investment through a regional 
center, is principally doing business in a TEA at the time of filing 
the Form I-526 petition.\90\
---------------------------------------------------------------------------

    \90\ USCIS Policy Manual, 6 USCIS-PM G, Chapter 2.
---------------------------------------------------------------------------

    The final rule does not change this policy. DHS believes that this 
policy is consistent with the relevant statutory provisions and 
precedent decisions and is the most fair to individual investors 
because it provides predictability for the capital investment process. 
If the commenters' suggestion was followed, it would be unclear at what 
point the area in which the NCE is principally doing business needs to 
qualify as a TEA. The moment at which the investor who was actively in 
the process of investing at time of filing has completed that process 
can vary depending on a number of factors--including at some point 
after the adjudication of the Form I-526 petition. In other words, 
because investments need to be structured prior to filing the Form I-
526 petition but may continue after the adjudication of the Form I-526 
petition, the commenters' proposed policy would lead to circumstances 
where it could not be known whether the area would qualify as a TEA 
until after the Form I-526 petition has been adjudicated. This would 
create an untenable degree of uncertainty in the capital investment 
process. Furthermore, DHS would have no basis for determining TEA 
eligibility at either the time of filing or at the time of adjudication 
because the petitioner would have no basis to demonstrate TEA 
eligibility at such times. DHS recognizes the commenters' concern that 
it is possible that some project tracts that qualify as a TEA at the 
time of filing of the petition might not qualify as a TEA when a 
petitioner who was actively in the process of investing at time of 
filing has completed that process. The change in policy suggested by 
the commenters would create uncertainty and unpredictability in the 
capital investment process; and would render DHS incapable of 
determining TEA eligibility in cases where the petitioner is actively 
in the process of investing at the time of filing the petition.
    Comments: Some commenters said the TEA process should be 
eliminated, along with the increased minimum investment at the two-tier 
level, and instead should be replaced by a set-aside of visas for the 
desired targets (rural, high unemployment, infrastructure, and 
manufacturing). One commenter suggested that DHS incentivize the 
creation of direct jobs by allowing projects that do so to be exempt 
from the necessity of being in a TEA to be subject to the lower minimum 
investment amount.
    Response: DHS declines to adopt the commenters' suggestions 
regarding TEAs. DHS lacks the authority to make some of the changes 
requested by these commenters given the current statutory framework of 
the EB-5 program. DHS cannot completely eliminate TEA designations 
because 3,000 visas are statutorily set aside for investment in TEAs 
(rural and high unemployment areas).
    DHS could eliminate the differential between the standard minimum 
investment amount and the TEA minimum investment amount, thereby 
eliminating the two-tier investment amount system currently in place, 
leaving the visa set aside as the only incentive for investment in 
TEAs. However, DHS declines to do so and has decided to maintain the 50 
percent differential to continue to incentivize investment in rural and 
high unemployment areas. Removing the differential and leaving in place 
only the visa set aside as an incentive would not leave a sufficient 
incentive in place for investment in TEAs. Congress permitted DHS to 
offer a two-tier investment system, with reduced minimum investment 
amounts in TEAs relative to outside of TEAs. DHS is addressing the 
current imbalance in which almost all investments are made in 
potentially gerrymandered TEAs by revising the designation of areas of 
high unemployment that may qualify as a TEA. This change, in 
combination with maintaining the 50 percent differential, will maintain 
a sufficient incentive for investment in TEAs while ensuring that the 
TEAs benefiting from the incentives align with congressional intent.
    Finally, DHS does not have the statutory authority to reduce the 
minimum investment amount for investments in a new commercial 
enterprise that creates direct jobs. The statute only authorizes a 
lower minimum investment amount for investments made in a TEA.

E. Technical Changes

1. Separate Filings for Derivatives
    Comments: Many commenters supported the proposal that derivatives 
file their own separate Form I-829 petitions if not included in the 
principal's Form I-829 petition for reasons other than the death of the 
principal. The commenters stated this would protect derivatives against 
termination of their conditional permanent residence when the principal 
investor's conditional permanent residence is abandoned. One commenter 
disagreed with the proposal, recommending that USCIS retain what the 
commenter believed to be the current practice of allowing the spouse's 
or child's biographical documents to be ``interfiled'' when a family 
member is not included in the investor's Form I-829 petition. The 
commenter stated that because the filings would be identical to the 
investor's filing, USCIS would not need to review project documents 
filed

[[Page 35782]]

with the spouse or child's petition and USCIS should not charge a 
filing fee since it will not be re-adjudicating the I-829 project 
documents.
    Response: DHS believes the commenter who disagreed with the 
proposal misunderstands the proposed change. DHS did not propose to 
change the current process, under which derivatives may still request 
to be added to a principal's pending Form I-829 if they pay the 
biometric fee, and are otherwise eligible to be classified as the 
principal's derivatives. Such derivatives may be added to the pending 
Form I-829 even in case of divorce during the conditional residence 
period. Instead, DHS proposed to standardize the process for those 
derivatives who file an individual Form I-829 petition and cannot be 
included on the principal's Form I-829, generally because the principal 
fails or refuses to file a Form I-829. Under these circumstances, the 
final rule clarifies the current DHS practice of requiring all 
derivatives connected to a single principal investor to file 
separately. Thus, for example, if there are two derivatives (either a 
spouse and child, or two children) and the principal refuses to file a 
Form I-829 petition, each derivative is required to file a separate 
Form I-829 petition. This final rule only allows derivatives to apply 
together on a single Form I-829 petition when the principal is 
deceased, because INA 204(l) directs DHS to adjudicate 
``notwithstanding the death of the qualifying relative.'' Because the 
principal would have had the option to file a single Form I-829 on 
behalf of the whole family, the option remains even though the 
principal is deceased. This rule does not change the current DHS 
practice, and DHS is simply clarifying the language in 8 CFR 
216.6(a)(1) to avoid a situation where derivatives filing separately do 
so incorrectly, causing their petition to be rejected.
2. Equity Holders
    Comment: DHS received one comment on the proposal to consider 
equity holders in a new commercial enterprise as sufficiently engaged 
in policymaking if the equity holder is provided with the rights, 
duties, and powers normally provided to equity holders in those types 
of entities. This commenter indicated there is a difference between 
equity holders that manage the company and third party managers that 
manage the company, which should be clarified in the rule. The 
commenter asserted that this clarification is important in the context 
of limited liability companies (LLCs), which, unlike limited 
partnerships, do not have a General Partner and Limited Partners; or a 
corporation, which has officers and directors. The commenter stated 
that an LLC will either be member managed or manager managed.
    Response: DHS believes the language in the rule at final 8 CFR 
204.6(j)(5)(iii) is broad enough to encompass a variety of different 
possible ownership and management structures, including members of both 
member-managed LLCs and manager-managed LLCs because each of those 
types of LLCs normally provide their respective members (equity 
holders) with different rights, duties, and powers. In the future, DHS 
may consider issuing policy guidance to provide additional 
clarification if deemed necessary.

F. Other Comments on the Rule

1. Processing Times
    Comments: Multiple commenters discussed current USCIS processing 
times or the impact the proposed rule would have on processing times. 
Many commenters expressed frustration with USCIS processing times, 
stating that current wait times are harming investors. Commenters 
recommended electronic submissions and premium processing to decrease 
delays.
    Response: DHS appreciates the concerns raised by these comments 
regarding USCIS processing times. DHS is considering ways to improve 
the EB-5 program to decrease processing times. However, DHS does not 
believe that the changes made by this rule will have an adverse effect 
on processing times. With respect to Form I-526 petitions, this rule 
only raises the investment amounts and provides more specific 
requirements for petitioners investing in targeted employment areas. 
These changes should not increase adjudication times. With respect to 
Form I-829 petitions, this rule clarifies when derivative family 
members must file their own petition and seeks to improve the 
adjudication process by providing flexibility in interview locations. 
DHS does not anticipate this will adversely affect Form I-829 
processing times because the adjudication standards remain the same. 
The recommendation regarding electronic submissions and premium 
processing to decrease delays is outside the scope of this rulemaking.
    Comments: Numerous commenters expressed concerns about processing 
times in TEA designations as DHS takes over the designation process 
from the states.
    Response: DHS is committed to providing timely TEA decisions as 
part of the adjudication process. DHS does not foresee an increase in 
petition backlogs based on handling TEA designations, because the 
agency currently reviews the TEA designation evidence provided by 
petitioners to determine TEA statutory eligibility. The framework 
detailed in the NPRM and finalized in this rule should not increase the 
burden to petitioners or to DHS in the adjudication process. As in the 
current process, EB-5 petitioners will be required to provide evidence 
to demonstrate the area in which the new commercial enterprise into 
which they are investing is principally doing business is a TEA. The 
new framework requires petitioners to identify the census tract(s) in 
which the NCE is doing business and provide population and unemployment 
statistics for that tract and any other adjacent tracts that are 
relevant to the determination. USCIS will review this data in a manner 
similar to how USCIS currently reviews high unemployment area 
designation letters from states; it will review the proposed area to 
confirm it is the area in which the NCE is principally doing business 
and review the underlying data and methodology associated with the 
statistics provided.\91\ In fact, the use of a uniform methodology for 
all TEA designations could improve the efficiency of these 
determinations as adjudicators will be more familiar with the new 
framework. As such, DHS does not anticipate a negative impact to the 
overall timing of the adjudication process.
---------------------------------------------------------------------------

    \91\ USCIS Policy Manual, 6 USCIS-PM G, Chapter 2.
---------------------------------------------------------------------------

2. Visa Backlogs
    Comments: Many commenters discussed visa backlogs in the EB-5 
program. Multiple commenters stated that the current visa backlog was 
negatively affecting participation in the EB-5 program. Several 
commenters argued that if DHS intends to increase the minimum 
investment amount, it should focus on fixing the visa backlog first or 
at the same time.
    Response: Congress, not DHS, has set the annual visa allocation for 
the EB-5 program. These concerns should more properly be addressed to 
Congress.
3. Timing of the Rule
    Comments: Most commenters were concerned about the implementation 
and timing of the rule and its impact on previously filed EB-5 
petitions and current projects. Many commenters argued that the 
proposed rule, if finalized, should not apply retroactively, and USCIS 
should grandfather currently approved and pending petitions and 
applications, or

[[Page 35783]]

grandfather in entire projects such that future EB-5 petitioners in 
grandfathered projects would only need to invest at the lowered 
investment thresholds in place prior to the effective date. Several 
commenters requested a transition period before the rule's effective 
date to provide a grace period for the change and prevent a chilling 
effect on the EB-5 investment market, and one commenter suggested 
twelve months to allow certain projects additional time to complete 
fundraising. Some commenters requested clarification on how the rule 
would affect current projects. One commenter stated that the petitions 
filed up to the date of promulgation of the rule should only be subject 
to the new requirements if they are denied by USCIS because of project 
discrepancies, when adjudicated after the date of enactment. 
Conversely, another commenter stated that due to the current visa 
backlog, DHS should apply the rule to pending EB-5 applications because 
otherwise changes would not affect the EB-5 program for several years.
    Response: This final rule will become effective 120 days after 
publication, as outlined earlier in this preamble. Specifically, the 
provisions of this final rule will apply to Form I-526 petitions filed 
on or after that effective date. Form I-526 petitions filed prior to 
the effective date of the rule will be allowed to demonstrate 
eligibility based on the regulatory requirements in place at the time 
of filing of the petition.
    With respect to the commenter suggesting this rule be applied only 
to denied petitions that fail to remedy project discrepancies prior to 
the effective date of the rule, any petition filed on or after the date 
of this implementation will be required to establish eligibility under 
the new rules. This seems to reflect the commenter's suggested 
approach.
    DHS disagrees with the comments suggesting grandfathering approved 
projects under the current rules. Grandfathering of approved projects 
would result in unequal treatment of petitions filed after the rule is 
in effect and would be overly burdensome operationally. Further, 
grandfathering approved projects would have the effect of delaying the 
application of this rule for a substantial number of petitioners, which 
would tend to undermine the immediate effectiveness of the policy aims 
of this rule. It would grant existing projects in affluent urban areas 
that have been marketed as TEAs an unfair competitive advantage against 
new projects in such areas, which will need to attract investors at the 
higher minimum investment amount. It would also thwart congressional 
intent by allowing such projects to continue to attract investors using 
the incentives that Congress intended for high unemployment and rural 
areas only, potentially reducing the amount of EB-5 capital going to 
those areas. While DHS appreciates the comment suggesting that pending 
petitions be subject to this rule due to the current backlog, 
implementation would be difficult because petitioners for each pending 
petition would have to make material changes to their petitions to meet 
the new standards, including by investing additional amounts that they 
did not anticipate. DHS believes this would unfairly harm investors 
that filed based on the eligibility requirements in place at that time 
and invested in projects that had been planned and initiated with the 
investment amounts in place at the time. For example, in addition to 
the fact that resulting project changes would likely be considered 
material changes, requiring pending petitions to increase their 
investment could provide a project with too much capital, and in turn 
potentially precipitate a misappropriation of excess funds. DHS 
believes applying the new rules to petitions filed on or after the 
effective date is the best way to implement this rule. As such, and as 
mentioned above, DHS will apply the regulatory scheme in place at the 
time of filing when adjudicating Form I-526 petitions, which means that 
this final rule will apply to Form I-526 petitions filed on or after 
the effective date.
    While DHS is declining commenters' suggestion to grandfather 
approved projects, DHS has considered how pending petitions associated 
with existing projects could be affected and is making one revision to 
the regulations in this final rule to address a problem that could 
affect some pending petitions as a result of this regulatory change. 
DHS is adding one regulatory text clarification at 8 CFR 204.6(n) 
regarding how this rule will be implemented with respect to petitioners 
with pending or approved petitions who filed prior to the effective 
date of the final rule. Investment offering documents are typically 
associated with a particular number of investors investing a specific 
dollar amount. Projects that are still accepting new investors after 
the effective date of this rule may have to change their offering 
documents to account for the new minimum investment amounts, or to 
maintain compliance with other securities regulations. The change in 
offering documents also could provide existing investors with pending 
petitions with an option to withdraw their investment as a result of 
applicable securities laws. Accordingly, the offering documents 
associated with a Form I-526 petition filed before the effective date 
of this rule may be affected, and such modifications normally would 
likely result in a denial of the petition based on a material change. 
The regulatory text at final 8 CFR 204.6(n) provides that amendments or 
supplements to offerings made to maintain compliance with applicable 
securities laws, based solely upon this rule's effectiveness, will not 
independently result in ineligibility of petitioners with pending or 
approved Form I-526 petitions who filed prior to this rule's effective 
date and who remain invested, or who are actively in the process of 
investing, and who have no right to withdraw or rescind their 
investment or commitment to invest into such offering when their 
petition is adjudicated. This addition clarifies that petitioners will 
not be adversely affected by a change to offering documents, 
necessitated by this final rule's changes, so long as the petitioner's 
investment remains at risk through adjudication and the petitioner 
continues to meet program requirements. Additionally, the provision 
that changes to offering documents should not include a right to 
withdraw or rescind at the time of adjudication allows petitioners to 
remove or reject such provisions because of changes necessitated by 
this regulation without penalty, in accordance with the existing 
material change policy.
4. Material Change
    Comment: One commenter recommended expanding the NPRM to 
incorporate the material change portion of the policy memorandum (PM-
602-0083) issued May 30, 2013, to avoid confusion and codify the 
material change policy. The commenter asserted that this change would 
make clear that an investor who obtained conditional LPR status may 
proceed with the I-829 petition, and provide evidence that the 
requirements for the removal of conditions have been satisfied, without 
the need to file a new Form I-526 petition if there have been changes 
to the business plan since the Form I-526 was filed. The same commenter 
suggested that DHS expand its material change policy to allow those 
with approved Form I-526 petitioners to remain eligible for adjustment 
of status even if material changes occur in the interim.
    Response: DHS believes existing policy guidance on material change 
is sufficiently clear, specifically that

[[Page 35784]]

USCIS does not deny Form I-829 petitions based solely on the failure to 
adhere to the business plan contained in the Form I-526 petition,\92\ 
and thus will not codify the policy into regulation at this time. DHS 
also does not intend to change its material change policy through this 
final rule, but did solicit public feedback on potential changes to the 
policy in the EB-5 Immigrant Investor Regional Center Program 
ANPRM.\93\
---------------------------------------------------------------------------

    \92\ USCIS Policy Manual, 6 USCIS-PM G (Aug. 23, 2017).
    \93\ 82 FR 3211 (Jan. 11, 2017).
---------------------------------------------------------------------------

5. Comments Outside the Scope of This Rulemaking
    DHS received many comments outside the scope of this rulemaking. 
For instance, some comments suggested potential ways to improve the EB-
5 program as a whole or sought guidance regarding existing requirements 
that would have been unaffected by the proposed rule. Because these 
comments are outside the scope of this rulemaking, DHS is not providing 
responses to these comments. To the extent that the suggestions for 
program improvements do not require congressional action to change the 
statutory authority governing the EB-5 program, DHS may consider these 
suggestions when developing the proposed rule that DHS plans to issue 
following the ANPRM or in future guidance materials. With respect to 
comments requesting guidance on current requirements, DHS may consider 
including clarifications in future guidance materials.
    Comments from the public outside the scope of this rulemaking 
concerned the following issues:
     Allowing stand-alone program petitioners to count indirect 
jobs, as indirect jobs relate to the impact of the investment on the 
community where the project is located;
     Creating a more balanced and fair approach to counting 
direct job creation for stand-alone projects;
     Encouraging more stand-alone EB-5 investment projects 
``where actual, full-time, permanent jobs are more likely to be 
created,'' rather than regional center construction projects which 
frequently depend on indirect jobs to satisfy the job creation 
requirement;
     Requiring that investors show that jobs established 
through indirect modeling methodologies are full-time jobs and that the 
investors have actually created the requisite number of jobs;
     Eliminating projects that rely solely on ``tenant 
occupancy'' to fulfill the job creation requirements in which regional 
center funding is used to construct or renovate office or retail space;
     Placing meaningful limits on the number of jobs created by 
non-EB-5 capital that can be attributed to EB-5 investors;
     Setting different differentials for regional center 
petitioners investing in TEAs, and non-regional center investors 
investing in TEAs;
     Clarifying which indirect jobs may count towards the job 
creation requirement;
     Clarifying how the adjudications backlog affects the job 
creation requirement. The commenter stated that many construction jobs 
are temporary and disappear prior to the investor establishing 
conditional residency, putting many investors at risk of having their 
petitions denied for failing to create 10 jobs;
     Revamping or completely eliminating the job-creating 
entity process in favor of making qualified investments in individual 
state-approved infrastructure projects;
     Amending the regulations to clearly state that the I-924 
amendments are not necessary to amend the geography of a previously 
filed I-924, or that a Form I-526 petition may be filed subject to the 
expansion of a previously filed and pending Form I-924; \94\
---------------------------------------------------------------------------

    \94\ Please refer to existing DHS policy guidance addressing 
these commenters' concerns. See Form I-924 Instructions, available 
at http://www.uscis.gov/I-924; see also Update to March 3, 2017 
Stakeholder Engagement Remarks, available at https://www.uscis.gov/sites/default/files/USCIS/Working%20in%20the%20US/alert2017_march.pdf.
---------------------------------------------------------------------------

     Allowing Forms I-924 to be perfected after filing because, 
the commenter states, the critical point for demonstrating full 
eligibility is at time of adjudication;
     Authorizing expedited processing for Form I-526 petitions 
and Form I-924 applications;
     Allowing parole for all investors who have already 
invested and filed a Form I-526 petition;
     Allowing concurrent filing of the Form I-526 petition and 
the Form I-485, Application to Register Permanent Residence or Adjust 
Status;
     Requiring practitioners who prepare source of funds 
documents to file an attestation with the Form I-526 petition stating 
that they performed certain due diligence checks;
     Making regional center exemplar filings mandatory and 
prohibiting an investor from filing a Form I-526 petition in connection 
with a regional center until an exemplar is provisionally approved; 
\95\
---------------------------------------------------------------------------

    \95\ DHS solicited public comment on the issue of mandatory 
exemplar filings in the January 11, 2017 ANPRM (82 FR 3211).
---------------------------------------------------------------------------

     Encouraging more public infrastructure projects to 
participate in the EB-5 program to facilitate the flow of much-needed 
capital to public infrastructure projects nationally, in order to save 
taxpayer dollars and fuel improvement initiatives that might otherwise 
be delayed by funding challenges;
     Prohibiting the use of publicly tradeable securities, such 
as municipal bonds, to qualify as an eligible use of EB-5 capital;
     Allowing only investors who come from countries that 
enforce similar labor and financial laws as the United States;
     Precluding roll-over of the required 3,000 visas set aside 
for TEAs into the regular EB-5 visa pool and instead requiring the set-
aside to remain available only for investments in rural and depressed 
areas;
     Precluding reauthorization of the Regional Center Program 
because of its potential for fraud;
     Expanding the Regional Center Program to help spur the 
private market;
     Changing requirements to allow a petitioner to remain 
eligible despite regional center termination;
     Creating a mandatory administrative appeals process for 
the EB-5 program, requiring investors to exhaust their administrative 
remedies prior to going to the judicial system; \96\
---------------------------------------------------------------------------

    \96\ Note that EB-5 petitioners can appeal decisions related to 
their Form I-526 petitions to the Administrative Appeals Office 
(AAO) within USCIS. USCIS, When to Use Form I-290B, Notice of Appeal 
or Motion, available at https://www.uscis.gov/i-290b/jurisdiction 
(last visited June 22, 2018).
---------------------------------------------------------------------------

     To ensure transparency, requiring third-party 
administration of the investment funds that are being used in the EB-5 
projects to show the investor that there is compliance with the 
business plan;
     Prioritizing non-Chinese petitions because there is a low 
likelihood that any visas for Chinese investors will be available in 
the near future;
     Removing conditions on residence for investors with a visa 
backlog of more than two years;
     Modifying 8 CFR 204.6(j) to provide that the list of 
evidence of property transferred from abroad for use in a U.S. 
enterprise is a list of possible, but not required, evidence;
     Not counting 2,000 EB-5 cases that the commenter indicated 
were processed late due to USCIS oversight toward the visa quota 
because it would

[[Page 35785]]

unfairly penalize investors for USCIS's error;
     Modifying Department of State's Visa Bulletin;
     Reducing visa wait times for Chinese nationals;
     Increasing the number of EB-5 visas to 30,000 or 50,000, 
or modifying the number of visas through administrative remedies or 
legislation;
     Adjusting the EB-5 visa limit from 10,000 individuals to 
10,000 petitions, 30,000 individuals, or 10,000 families (excluding EB-
5 derivatives from the EB-5 visa quota);
     Increasing the number of visas allocated to TEAs;
     Allocating 10,000 EB-5 visas for rural areas, high 
unemployment urban areas, and manufacturing and infrastructure 
projects;
     Increasing administration fees;
     Allocating visas from other visa categories; and
     Recapturing unused visas in any given year.
    Approximately 20 commenters discussed fraud and integrity measures 
in the EB-5 program. Most of the commenters supported the proposed 
rule, but many urged USCIS to go further to prevent fraud in the 
program. Several commenters generally encouraged USCIS to take action 
to address fraud in the EB-5 program. Example areas of fraud identified 
by commenters include the following:
     Document fraud and money laundering;
     EB-5 applicants applying for federal public benefits; and
     Evasion of U.S. taxes through failure to disclose fully 
business profits earned overseas.
    Several commenters recommended additional measures USCIS could 
implement to address fraud in the EB-5 program, including the 
following:
     Audits and site visits not only for regional center 
projects, but for standalone projects as well; \97\
---------------------------------------------------------------------------

    \97\ DHS notes that site visits are currently conducted on both 
regional center and standalone projects.
---------------------------------------------------------------------------

     Securities and Exchange Commission oversight and 
regulation of broker/dealers and agent activities anywhere investors 
are being sought;
     Prohibit the sale or rental of regional centers;
     Mandatory interviews of immigrant investors within 90 days 
of filing their Form I-829;
     Disclosure and accounting of commissions paid by 
developers to raise capital on annual Form I-924A filings;
     Monitor and regulate regional centers; and
     Offer defrauded investors remedies, such as parole in 
place, employment authorization, and age-out protections for minors.
    DHS appreciates these proposals to improve program integrity and 
combat fraud. DHS, however, did not address these issues in the 
proposed rule, and therefore these suggestions fall outside of the 
scope of this rulemaking. As such, DHS will not address these 
suggestions in this final rule. DHS, however, is committed to 
strengthening the security and integrity of the immigration system 
through efficient and consistent adjudications of benefits and fraud 
detection.

G. Public Comments and Responses on Statutory and Regulatory 
Requirements 98
---------------------------------------------------------------------------

    \98\ As noted above, numerous commenters expressed concerns that 
the proposed investment amount increase and TEA reform would disrupt 
the program and reduce the number of projects and investments under 
the program. DHS has addressed these claims in the appropriate 
portions of the preamble above. DHS also addresses some of these 
comments in the following discussion, because the claims made by the 
commenters specifically allege potential economic impacts, such as 
effects on investment and job creation.
---------------------------------------------------------------------------

1. Data, Estimates, and Assumptions Used (Executive Orders 12866 and 
13563)
    Comments: Multiple commenters discussed the data, estimates, and 
assumptions utilized by USCIS to ascertain the costs of the rule. A 
commenter stated that stakeholders require additional time to provide 
data-based estimates regarding economic impacts of the new investment 
amounts and impacts on jobs. Some commenters suggested that until 
additional data collection and analysis is conducted, the rulemaking 
should not move forward. Likewise, several commenters recommended that 
DHS withdraw the proposed rule so that the impacts of the rule can be 
more thoroughly studied, including how the proposed rule might hinder 
the job benefits estimated by a study conducted by the Commerce 
Department. A commenter suggested that DHS did not calculate an 
expected cost to stakeholders or the EB-5 program goals based on the 
proposed investment level and TEA definition. The commenter concluded 
that, given enough time, it was willing to work with its members to 
quantify the impacts of the new investment levels on ongoing and 
proposed projects and associated projects.
    Response: DHS disagrees with commenters suggesting that either more 
time for comments is required or that it should withdraw the entire 
rule to allow further study of the effects of the rule. DHS recognizes 
that EB-5 investment structures are complex and typically involve 
multiple layers of investment, finance, development, and legal business 
entities. Further, DHS acknowledges that data limitations preclude a 
detailed analysis of the potential quantitative costs of this rule. 
However, DHS does not see how extending the timeline for implementing 
the rule would be beneficial. Additional time would not allow DHS to 
estimate with accuracy how many investors or projects might be affected 
by the proposal. When the NPRM was published, DHS invited public 
participation, in the form of comments, data, and other information, 
from EB-5 stakeholders. DHS specifically sought comments on all aspects 
of the NPRM, including the economic analysis included in the NPRM. DHS 
believes the 90-day comment period was an adequate amount of time 
during which stakeholders could have submitted data-based estimates and 
information on any or all proposals of the NPRM, as exemplified by the 
fact that some commenters submitted data-based comments. All 
stakeholders, however, had the same opportunity and nearly three months 
to provide data-based estimates of the potential effects of the rule. 
DHS notes that Section 6 of E.O. 12866 recommends that, in most cases, 
the comment period be not less than 60 days. In this case, DHS provided 
the public with approximately 30 more days than recommended, and more 
time than it has in recent years for other rules. Because DHS believes 
the changes to the EB-5 program made by this final rule are valuable 
for the reasons described above, it will not delay further the 
effectiveness of the rule in response to commenters' requests. DHS 
appreciates all stakeholder feedback it received on the NPRM.
2. Costs (Executive Orders 12866 and 13563)
2.1. General Economic Costs of the Rule
    Comments: Many commenters submitted comments concerning the 
economic costs of the rule, including loss of jobs and adverse economic 
impacts. Some commenters believed the rule's proposals would have a 
negative impact on industry, generally impairing the flow of EB-5 
capital to projects in the U.S. and hindering job creation and economic 
growth. A commenter anticipated the proposal would adversely affect 
current and future EB-5 projects, while other commenters generally 
lamented the potential loss of U.S. jobs. One commenter cited the

[[Page 35786]]

Commerce Department study that analyzed the job-creating impact of the 
investor visa program,\99\ noting the study found 11,000 immigrant 
investors provided $5.8 billion in capital for the FY 2012 and FY 2013, 
supporting an estimated 174,039 jobs in the United States. The 
commenter stated that these positive economic impacts of the EB-5 
program are threatened by the rule's proposal to increase the minimum 
investment amounts, because such increases would ``discourage 
investment in American job markets that need it most. Investors will 
have the option of going to Australia, or Canada--high income countries 
with lower visa monetary requirements.'' The commenter stated that 
``USCIS has been unable to determine the possible impact of the new 
rules.'' One commenter stated that the proposed increase to the minimum 
investment amount was too high and would effectively stop the flow of 
$2.5 billion in foreign direct investments to the United States.
---------------------------------------------------------------------------

    \99\ Estimating the Investment and Job Creation Impact of the 
EB-5 Program, Economics & Statistics Administration, Office of the 
Chief Economist, U.S. Department of Commerce (2017), available at 
https://www.commerce.gov/sites/commerce.gov/files/migrated/reports/estimating-the-investment-and-job-creation-impact-of-the-eb-5-program_0.pdf.
---------------------------------------------------------------------------

    Response: DHS believes it is reasonable to increase the minimum 
investment amount to account for inflation to ensure the required 
minimum investment amounts reflect the present-day dollar value of the 
investment amounts established by Congress. Given that the minimum 
investment amounts have not been increased since the program's 
inception, and multiple factors have contributed to increased or 
decreased utilization of the program in the past, DHS cannot accurately 
predict how the increase to the minimum investment amounts will affect 
demand on the program. DHS acknowledges that it is reasonable to assume 
some number of investors will be unwilling or unable to invest at the 
increased investment amount. However, their capital contributions may 
very well be more than replaced by other investors investing at the 
higher minimum investment levels. In addition, given the 
oversubscription of the program--as long as a sufficient number of 
investors file petitions each year to account for the allotment of 
visas provided by Congress, the program's overall contribution of 
capital to the U.S. economy will increase. However, commenters who 
claim that the increases to investment amounts will have a significant 
negative impact (e.g., the claim that the investment increase would 
stop $2.5 billion in foreign direct investments into the U.S.) provided 
no objective data to support those claims. Like DHS, commenters can 
only speculate as to precisely how the increases will affect the EB-5 
market. DHS believes factors other than the investment amount 
significantly contribute to the program's utilization. Though the 
precise impact of the increases on the EB-5 market is unknowable, DHS 
believes it is reasonable to increase the investment amounts based on 
the CPI-U to reflect the present-day value of the amounts set by 
Congress in 1990 for the reasons discussed earlier in this preamble.
    In addition, DHS acknowledges the Commerce Department study cited 
by one commenter that analyzed the job-creating impact of the investor 
visa program. The study did estimate that for FY 2012 and FY 2013, 
11,000 immigrant investors provided $5.8 billion in capital that was 
``expected to create an estimated 174,039 jobs,'' \100\ but the study 
was based on forecasts made in economic impact analyses provided by 
petitioners, and not verification of jobs actually created.\101\ DHS 
notes that the majority of EB-5 investments have been made through 
regional centers (approximately 92 percent, as discussed below). 
Regional center investments use methodologies that rely on indirect job 
creation. Such indirect job creation estimates accrue to numerous 
downstream industries, and therefore, it is not possible to verify 
exactly how many new jobs could be attributed to a specific EB-5 
investment once it is made (it is also possible that indirect job 
forecasts may overstate actual job creation linked to any specific 
investment). The study also includes jobs associated with non-EB-5 
investor sources of capital, which is allowed under current 
regulations.\102\ Relatedly, the GAO's audit of EB-5 TEA data in 2016 
revealed that in the GAO's sampling from the fourth quarter of fiscal 
year 2015, the median percentage of total potential EB-5 investment in 
petitioner projects was only 29 percent of the total estimated project 
cost, and the estimated mean percentage was 40 percent.\103\ Because 
jobs created by non-EB-5 funding can be credited to EB-5 investors, and 
many projects could still be viable without EB-5 funding given that 
such funding makes up only a portion of overall funding, DHS does not 
believe it is reasonable to assume that a certain loss of EB-5 
investment necessarily translates to a commensurate loss of jobs. 
Notably, the Commerce Study does not conclude that the predicted number 
of jobs expected to be created through EB-5 funding would not be 
created but for the EB-5 funding. Thus, the Commerce Department study 
was not helpful in evaluating the impacts of the final rule.
---------------------------------------------------------------------------

    \100\ Id. at 1-2.
    \101\ Id. at 7.
    \102\ 8 CFR 204.6(g)(2).
    \103\ GAO, Immigrant Investor Program: Proposed Project 
Investments in Targeted Employment Areas, GAO-16-749R, Published 
Sept. 19, 2016, available at http://www.gao.gov/products/GAO-16-749R.
---------------------------------------------------------------------------

2.2. Costs to Investors, Regional Centers and New Commercial 
Enterprises
    Comments: Multiple commenters discussed costs to investors, 
regional centers, and NCEs, generally expressing concern regarding the 
impacts the proposed changes would have on various aspects of the EB-5 
program and ability of investors to participate in the program. A 
commenter warned that the proposed changes to the minimum investment 
amounts would create an influx of investment at the current lower 
minimum investment level (in the hope of filing prior to the effective 
date of the increase). The commenter asserted that this rush to invest 
at the current minimum investment levels would be costly to investors, 
giving them less time to evaluate projects and trapping the investors 
in underperforming projects. Relatedly, some commenters expressed 
concern that changes to the program would increase both the petition 
processing times and the financial burden of obtaining visas, which 
will further discourage investment in American job markets as investors 
look to other options.
    Response: DHS appreciates the comments, but notes that it is an 
individual investor's decision as to the appropriate timing for his or 
her investment and the individual's responsibility to evaluate and 
decide whether to invest in specific projects. No provision in this 
rule requires investors to make anything less than fully considered and 
informed investment decisions based on individual circumstances at the 
time of the investment. DHS also disagrees that the provisions in this 
rule will increase processing times. USCIS works diligently to 
adjudicate and process EB-5 petitions in a timely manner and will 
continue to do so following the changes made in this final rule. In 
addition, USCIS has considered its staffing needs following the 
promulgation this rule, and will remain attentive to such needs in the 
course of implementation of this rule.\104\ Finally, as mentioned in 
several

[[Page 35787]]

earlier instances, DHS believes the increase in the investment amount 
is appropriate and that the EB-5 program will remain competitive 
relative to other countries' immigrant investor programs.
---------------------------------------------------------------------------

    \104\ See USCIS, EB-5 National Stakeholder Engagement Talking 
Points by IPO Acting Chief Julia Harrison (hereinafter ``Harrison 
Talking Points'') (Nov. 7, 2017), available at http://ilw.com/immigrationdaily/news/20171206.pdf (``[w]e had just created a 
division of Adjudicators and Economists who would focus on the I-829 
adjudications and customer service inquiries. I am happy to share 
that this restructuring has paid off. The collaboration and cross 
training of the Adjudications Officer and Economist have contributed 
to a reduction in the I-829 processing time. It's just one month so 
far but I expect that trend to continue in FY2018 . . . A year ago 
it took us on average 20 days to resolve a customer inquiry. Now it 
takes us about 5 days to respond to inquiries, some of which are 
resolved within that time frame . . . Building on the success of the 
I-829/Customer Service team, during the last half of FY2017, IPO 
launched a multidisciplinary team made up of Economists and 
Adjudications Officers to focus on the Form I-526 adjudication . . . 
Some of the near term benefits gained from the new team include: The 
potential for an increase in staffing capacity and knowledge gained 
through training and the expansion of current employees' skill sets. 
This will allow IPO to better meet our mission.'').
---------------------------------------------------------------------------

    Comments: Several commenters stated that they anticipated that a 
reduction in investors caused by the increased investment amount would 
ultimately put several of the regional centers out of business, noting 
that one of the costs laid out by DHS in the NPRM is that some 
investors may not be able or willing to invest at the proposed higher 
investment level. Similarly, one commenter suggested that raising the 
investment amount increases an investor's perception of risk in the 
investment, which would reduce interest in the program, therefore 
forcing regional centers out of business. However, the commenters did 
not provide verifiable evidence or data to support the claims.
    Response: In the NPRM, DHS discussed the difficulties of 
quantifying the impacts of the rule's provisions on EB-5 entities due 
to the absence of data, such as data on regional center operating 
revenues. DHS wrote that it is reasonable to assume that the changes in 
the investment amounts may affect some regional centers, but that it 
was not possible to predict the extent of those impacts. In the Final 
Regulatory Flexibility Analysis (FRFA) accompanying this final rule, 
DHS again discusses the rule's potential impacts on regional centers, 
albeit mainly in the context of whether or not regional centers can be 
classified as small entities. That discussion, however, is relevant to 
the commenter's concerns. In that section, DHS recognizes that the 
increase in the investment amount could deter some investors, but 
asserts that it cannot determine with accuracy the quantitative effects 
of the rule, because it is not possible to know exactly how many 
potential investors may be deterred from the program due to the rule's 
provisions or how regional centers may respond if some investors may be 
unable or unwilling to invest at the higher minimum investment amounts.
2.3. Costs of Increasing the Investment Amounts
    Comments: Many commenters discussed the costs of increasing the 
investment amounts. Overall, the majority of commenters suggested that 
changing the investment amounts would result in a contraction of the 
EB-5 program and lead to job loss, with commenters writing that the 
future marketability of the program is in jeopardy. A commenter noted 
that raising minimum investment amounts could possibly result in lower 
investment levels in absolute terms depending on how much demand is 
reduced by raising the minimum investment amount. The same commenter 
noted giving the largest price hike to investors in targeted employment 
areas may not be wise from an economic perspective, as those are likely 
to be the more price-sensitive investors.
    Response: DHS recognizes that it is possible that the absolute 
amount of investment could decrease if the proportionate decline in 
investments outweighs the proportionate increase from the higher 
investment amount. Of course, it could also increase. For example, 
there were an average of 9,238 approved Form I-526 petitions annually 
from 2015-2017. If the 80 percent higher levels of required investment 
do not lead to a reduction in the number of EB-5 investments, the 
absolute amount of investment would increase by 80 percent.\105\ As is 
described in the preamble above, DHS considered the public comments and 
as a result, this final rule will retain the 50 percent differential 
between the general and reduced investment amount and set the latter at 
$900,000. In response to the comment, a general analysis conducted by 
DHS reveals that it would take a substantial reduction in the number of 
investors in order for TEA investment to decline taken in total. 
Adjusting the 9,238 investments total from above for the TEA portion of 
all investments, 96 percent (discussed below), yields 8,868 annual TEA 
investments amounting to $4.43 billion in investment. At the TEA 
investment amount of $900,000 in this final rule, this same level of 
total TEA investment would be achieved with 4,927 investors, which 
represents 44 percent fewer investors. Furthermore, small and even 
moderate reductions in investors actually stand to generate growth in 
total investment. For example, investor declines of 10, 20, and 30 
percent would grow aggregate TEA investment 62, 44, and 26 percent, 
respectively. Investor declines would however result in reductions in 
the total numbers of jobs required to be created. We emphasize that 
this analysis does not reflect DHS predictions about what will happen 
to investment levels or job creation, but is intended to convey, 
generally, that based on the number of investors alone, it would take a 
substantial reduction to actually reduce TEA total investment from 
recent levels.
---------------------------------------------------------------------------

    \105\ This calculation assumes that the proportion of TEA and 
non-TEA investments will be the same going forward. Based on an 
average of 9,238 annual investments, with 96 percent in TEAs and 4 
percent not in TEAs yields 8,868 investments made at $500,000 and 
370 made at $1,000,000, for a total of $4.80 billion. Taking these 
same numbers of investments made at the new amounts, 900,0000 and 
1,800,000, respectively, yields a new amount of $8.65 billion in 
investment, which is an 80 percent increase (calculation: (8.65/
4.80)-1). There could be variation to these amounts. If, for 
example, a higher percentage of investments were in non-TEA projects 
(since fewer projects would qualify for TEA status under the new 
standard), the increase in total investment would be even higher. 
If, due to this rule or other circumstances, a higher proportion of 
investments are made into TEAs, then total investment could decline, 
although more investment would flow to targeted areas. Since DHS 
cannot accurately forecast the ultimate effects on projects or their 
composition in terms of targeted areas, both possibilities exist.
---------------------------------------------------------------------------

    Thus, while DHS believes it is possible that some investors may be 
deterred from investing at the higher amount, evidence or data has not 
been provided by commenters to suggest that the decrease in demand 
would be as significant as claimed. In the absence of data indicating 
whether the final rule will lead to a decrease in overall investment, 
and by how much, DHS believes it is reasonable to raise the minimum 
investment amounts, which have remained unchanged for decades, for the 
reasons already addressed.
    Finally, as it pertains to the reduced investment amount of $1.35 
million in the proposed rule and the $900,000 amount contained in this 
final rule, DHS does not have enough information or data to predict the 
likely difference in aggregate investment as a result of DHS's 
determination to use the $900,000 amount. Total TEA investment at the 
$900,000 level this rule finalizes could be greater or smaller than at 
the initially proposed $1.35 million.
    Comments: One commenter cites to a specific report, the 2016 World 
Wealth Report, and stated that 90 percent of high net worth individuals 
globally have a net worth of $5 million or less. The commenter further 
stated that such individuals will allocate up to 25

[[Page 35788]]

percent of their net worth to ``long term, low yield'' investment. The 
commenter recognized that EB-5 investors do not necessarily have the 
same investment preferences (e.g., EB-5 investors ``may well commit a 
significantly higher amount just to reach their goal of U.S. permanent 
residence''). The commenter estimated based on the above, and practical 
experience, that investors with a net worth as low as $1.5 million have 
been willing to commit $500,000 in support of their immigration goals. 
The commenter suggested that if DHS increases the minimum investment 
amounts as proposed, ``most in this category will not be willing to 
participate in the program.''
    Response: DHS disagrees that the commenter's assumptions about the 
willingness of investors to invest at the increased investment amounts 
is sufficiently supported by the source cited. The comment relies on 
the report for the finding that 90 percent of high net-worth 
individuals have a net worth of $5 million or less, and states, without 
support, that the majority of EB-5 investors fall into this category. 
The commenter also relies on either the report or unnamed studies for 
the assertion that such investors will allocate up to 25 percent of 
their net worth to ``this type of investment (long-term, low-yield)'', 
and states, without accompanying citations or other support, that EB-5 
investors would be willing to invest up to one-third of their total net 
worth. DHS believes the commenter's assumptions are inadequately 
supported. In addition, the commenter does not explain why EB-5 
investments can be accurately described as long-term \106\ and low 
yield or how EB-5 investments are comparable to other types of 
investments, and also fails to quantify the other factors that may 
motivate an EB-5 investment based on objective data. Thus, the comment 
does not establish a clear relationship between the report cited and 
the quantitative estimates provided in the comment.
---------------------------------------------------------------------------

    \106\ In fact, to be eligible for removal of conditions on their 
permanent residence status, EB-5 investors need only sustain their 
investment for the two-year period of conditional residence 
beginning on the date they obtain that status.
---------------------------------------------------------------------------

    Comments: Some commenters contended that DHS's proposed increases 
to the minimum investment amounts would cause the number of EB-5 
investors interested in participating in the program to return to the 
levels from the 1990s. These commenters pointed to low utilization of 
the program during that time and stated that even the reduced minimum 
investment amount of $500,000 was too high for investors. Based on 
those assumptions, the commenters estimated that the number of 
petitions would drop by 88 percent when compared to the number of 
petitions filed in 2011 and 97 percent when compared to the number of 
petitions filed in 2016. The commenters concluded that the reduced 
interest would be damaging to the U.S. economy and reduce the number of 
jobs created by the EB-5 program.
    In addition, one commenter stated that it had asked ``many 
potential investors and others about the impact of [the proposed] 
investment amounts on their interest and/or ability to invest in the 
[United States].'' The commenter reported that ``[t]he proposed 
increase would drastically reduce potential investors' interest and 
ability to invest.'' DHS notes that the commenter referenced the 
specific proposed investment level of $1.35 million, but our response 
is not different in the context of finalizing the reduced investment 
level of $900,000.
    Response: DHS disagrees with the commenters' basic premise that 
lower utilization of the program in the 1990s was solely because even 
the reduced minimum investment amount was too high for investors. 
Rather, as discussed in previous sections, DHS has reason to believe 
use of the program over time has been affected by a range of factors, 
including administration of the program, stakeholder confidence, and 
changes in the U.S. economy. For example, the CIS Ombudsman concluded 
in 2009 that the lower utilization level was ``principally caused by 
significant regulatory and administrative obstacles, as well as 
uncertainties that undermine investor and stakeholder confidence.'' 
\107\ In addition, Congress never chose to decrease the minimum 
required investment amounts during the years in which the program was 
undersubscribed for any reason, including in order to specifically 
encourage more utilization of the program. And as the minimum 
investment amounts have not changed since the program's inception, DHS 
cannot predict with certainty what the impacts of the changes will be, 
with respect to both the number of investors willing to participate in 
the program and any changes in potential job creation. DHS acknowledges 
that the higher investment amounts could deter some portion of 
investors. However, commenters do not support their assertions that 
demand would fall to a specific historical level based on price alone 
with a valid methodological approach.
---------------------------------------------------------------------------

    \107\ CIS Ombudsman, Employment Creation Immigrant Visa (EB-5) 
Program Recommendations, March 18, 2009, at *17, available at 
https://www.dhs.gov/xlibrary/assets/CIS_Ombudsman_EB-5_Recommendation_3_18_09.pdf.
---------------------------------------------------------------------------

    Similarly, a commenter reported that, based on an informal survey 
of potential investors, the proposed increases would reduce investors' 
ability and willingness to participate in the program. Although the 
commenter does not provide substantive data or analysis to support 
their claim, DHS recognizes that many potential EB-5 investors may 
prefer to have as small a required investment amount as possible, but 
may be prepared to invest more if necessitated by law. DHS also 
acknowledges that there could be a decline in investors. However, in 
the absence of objective evidence on the impacts of the proposed 
increases on demand, DHS believes that it is reasonable to increase the 
minimum investment amounts to account for inflation for the reasons 
stated elsewhere, and to make future inflation adjustments based on the 
initial amount set by Congress in 1990.
2.4. Costs of Shifting the TEA Designation Responsibility From States 
to USCIS
    Comment: One commenter suggested that the proposal to eliminate 
state involvement in the TEA designations has the potential to reduce 
costs for the industry. The same commenter, however, wrote that USCIS 
should consider some process for local involvement in unusual 
circumstances.
    Response: DHS agrees that the change in the process for TEA 
designation has the potential to reduce costs for the industry. DHS, 
however, rejects the commenter's suggestion that there should continue 
to be local involvement in TEA designation. As discussed in earlier 
comment responses, congressional intent of the TEA provision was to 
incentivize EB-5 investment in areas of actual high unemployment. 
Currently, the states' dual role in both TEA designation and promoting 
investment within their borders incentivizes states to secure TEA 
designations through ``gerrymandering'' without due regard for whether 
the designated area truly is experiencing high unemployment. For these 
reasons, DHS has determined that it is necessary to shift the TEA 
designation mechanism from the states to DHS.
2.5. Costs to USCIS
    Comments: A few commenters provided input on potential costs to 
USCIS. One commenter noted that the rulemaking would extend processing 
times, requiring an increase in USCIS

[[Page 35789]]

adjudicator staffing. Similarly, another commenter wrote the rule would 
add TEA designation to an already overwhelmed and short-staffed 
adjudications team. Conversely, a few commenters suggested that the 
increased investment amounts will drastically reduce the number of 
investors, which would in turn reduce the workload for USCIS 
adjudicators. Regarding the proposal to eliminate state involvement in 
the designation of high unemployment areas, a commenter suggested DHS 
consider the increase in USCIS workload that would result. The 
commenter stated that USCIS should publish a ``census tract-based 
depiction of the entire U.S, so regional centers and developers can 
begin planning for the implementation of the new regulation.'' The 
commenter suggested that USCIS should consider the resources required 
to produce such a publication.
    Response: DHS appreciates commenters' concerns over USCIS staffing 
issues, but conveys to the public that at a very broad level, staffing 
and adjudication time were considered when the rule was proposed. 
Additionally, USCIS conducts a fee study on a biennial basis which 
takes into consideration volume projections of forms and staffing 
levels, among other things.\108\ USCIS staffing level plans are, in 
part, based on these studies in conjunction with anticipated regulatory 
changes. Further, as noted above, USCIS' Immigrant Investor Program 
Office (IPO) has restructured into multidisciplinary teams, which 
reduced Form I-829 adjudication times, and launched a similar 
initiative for Form I-526 adjudications in late 2017.\109\ Finally, DHS 
rejects the commenter's suggestion that USCIS create and publish a 
census tract-based depiction of the entire United States. Foremost, 
census tract maps and unemployment data are otherwise publicly 
available, and it will be up to the petitioner to submit reliable and 
verifiable evidence to demonstrate that his or her investment is within 
a TEA. See final 8 CFR 204.6(j)(6)(ii)(B). In addition, the commenter 
raises concerns over the increased workload to DHS involved in taking 
over TEA designations from states, but does not say how publishing a 
map would increase or decrease the workload. DHS therefore believes the 
operational burden for USCIS to create and publish a census tract-based 
map of the United States would be prohibitive and redundant given that 
this type of data is publicly available to use in calculating the 
unemployment rate for a particular area.
---------------------------------------------------------------------------

    \108\ In accordance with the requirements and principles of the 
Chief Financial Officers Act of 1990, 31 U.S.C. 901-03, (CFO Act), 
and Office of Management and Budget (OMB) Circular A-25, USCIS 
reviews the fees deposited into the Immigration Examinations Fee 
Account (IEFA) biennially.
    \109\ See Harrison Talking Points, available at http://ilw.com/immigrationdaily/news/20171206.pdf.
---------------------------------------------------------------------------

3. Other Impacts (Executive Orders 12866 and 13563)
3.1. Impacts on the Number of Projects Receiving EB-5 Capital
    Comments: Some commenters discussed impacts the proposed regulation 
would have on the number of projects receiving EB-5 capital. 
Commenters, including regional centers and individuals, expressed 
general concern that the increase in minimum investment amount would 
adversely affect current and future EB-5 projects by decreasing capital 
available to the EB-5 program participants. A couple of other 
commenters expressed concern that the lack of EB-5 investors would 
prevent projects from moving forward due to the lack of needed capital.
    Response: As mentioned in the NPRM, due to the absence of data, DHS 
is unable to determine the number of current or future projects that 
may be negatively affected by the rule's provisions. This is in large 
part because DHS does not have data to estimate how this rulemaking or 
other factors may influence potential future investors' behavior. In 
the NPRM, DHS acknowledges that it is reasonable to suggest that some 
individuals may be deterred from investing at the increased investment 
amounts, and therefore some projects may be affected. DHS notes, 
however, that at the increased investment amounts projects will have to 
recruit fewer EB-5 investors to meet the same capital funding needs. 
DHS also notes that, even where a project may not be able to obtain the 
full amount of EB-5 capital originally contemplated, there may be other 
sources of potential capital that could be drawn upon to satisfy a 
given project's capital needs (for example, bank financing, non-EB-5 
equity investment, etc.), although the financing from other sources 
could be costlier in terms of interest and other fees. One of the prime 
advantages of EB-5 capital for developers is that it can entail a low 
cost of capital. ``Many of such projects could easily have been 
financed on the private market, according to [New York University Stern 
School of Business scholar-in-residence] Gary Friedland. . . . `It's a 
profit enhancement. . . .' ''\110\ EB-5 capital has also been 
characterized as ``lower-cost capital with favorable terms.''\111\ 
Further, DHS has no way to estimate when and how such other sources of 
capital may be used to offset any potential loss of EB-5 capital 
investment. DHS further believes the increases in the investment amount 
will bring the investment amounts from 1990 in line with their real 
values today and EB-5 capital will continue to be an important source 
of investment for projects.
---------------------------------------------------------------------------

    \110\ Eliot Brown, ``How a U.S. Visa-for-Cash Plan Funds Luxury 
Apartment Buildings; Program Meant to Spur Jobs in Poor Areas 
Largely Financed Developments in Affluent Neighborhoods,'' Wall St. 
J., Sept. 9, 2015, available at https://www.wsj.com/articles/how-immigrants-cash-funds-luxury-towers-in-the-u-s-1441848965 (last 
visited Dec. 17, 2018).
    \111\ Id.
---------------------------------------------------------------------------

3.2. Impacts on Particular Sectors of the Economy and Geographic Areas
    Comments: Some commenters discussed sectors of the economy and 
geographic areas that may be disproportionately affected by the 
proposed rule. One commenter worried that certain industries, such as 
transportation and non-profit industries, ``where conventional capital 
is almost impossible,'' have utilized EB-5 capital in order to survive 
and create jobs. Some commenters expressed concern that the proposed 
rulemaking (specifically, removing the ability for states to designate 
TEAs) would negatively affect job growth and wellbeing of areas that 
need economic development the most, notably rural areas and high 
unemployment areas. Another commenter suggested that the proposed 
increase for TEA projects would unfairly affect the ability of rural 
projects to compete with projects in wealthy census blocks of the U.S. 
cities, as well as other countries, and proposed that the TEA 
investment amount increase to no more than $800,000, and be maintained 
at 50% of the standard investment amount.
    Response: Business plans and economic analyses submitted to DHS 
associated with EB-5 petitions involve many industries and project 
types, and DHS does not dispute the commenter's claim that conventional 
financing may be difficult to obtain in some sectors. However, the 
commenter submitted no credible information or data to support the 
claim that the proposed changes to the program would cause a 
significant reduction in investment and job creation to a particular 
industry or the economy overall. DHS reiterates that the popularity and 
growth of the EB-5 program has likely been driven by

[[Page 35790]]

numerous factors, including but not limited to, its sourcing of capital 
funding for projects across U.S. industries. GAO's analysis--taken from 
a random sample of 200 of the 6,652 petitions submitted by petitioners 
to participate in the EB-5 program in the fourth quarter of fiscal year 
2015--estimated that of the 99% of EB-5 petitioners who elected to 
invest in a TEA, about 3% chose to invest in rural areas and about 97% 
chose to invest in a high unemployment area (GAO noted that the 
percentages do not add up to 99 due to rounding), and of the EB-5 
petitioners who elected to invest in high unemployment areas, only 12% 
invested in projects actually located in census tracts where the 
unemployment rate was over 8%.\112\ Thus, given that only a small 
minority of investments are currently being made in either a rural area 
or a project located in census tracts with an unemployment rate of over 
8%, even though over 30% of visas (3,000 out of 9,940) are statutorily 
reserved for investments in TEAs, it is very possible that the reforms 
contained in this rule will increase the percentage of EB-5 capital 
going towards rural areas and areas of true high unemployment.
---------------------------------------------------------------------------

    \112\ GAO, Immigrant Investor Program: Proposed Project 
Investments in Targeted Employment Areas, GAO-17-487T, at 4-5, 8 
(table 1) (Mar. 8, 2017).
---------------------------------------------------------------------------

    Additionally, and as discussed in earlier comment responses, DHS 
agrees that not enough EB-5 investment has gone to rural areas and 
areas of truly high unemployment. The changes made in this rule to the 
TEA designation process, and DHS's decision to maintain the 
differential between the investment tiers at 50% (as one commenter 
suggested), or $900,000, were intended to better reflect Congressional 
intent with respect to incentivizing investments in these areas.. In 
addition, the higher minimum investment amount will mean that more 
capital per investor is being infused into those areas, and with the 
changes to the TEA designation process, DHS expects that more capital 
overall will be infused in areas of truly high unemployment.
3.3. Impacts of Change in the TEA Designation Standard
    Comments: Several commenters addressed impacts of the proposed 
changes to the TEA designation standard. A commenter stated that the 
proposed TEA requirement would arbitrarily exclude lower unemployment 
areas that would otherwise attract a significant number, if not the 
majority, of their workers from nearby higher unemployment areas. The 
commenter stated that the proposed designation requirements lacked a 
sound economic or labor market rationale or basis, and would result in 
loss of economic projects, investment, and potential job creation 
opportunities. Some commenters stated that the increased investments 
and designation for TEAs would ``destroy'' the EB-5 program. Another 
commenter proposed that the TEA designation requirements should ensure 
that urban and rural projects are provided equal opportunity to improve 
their communities through job creation.
    Response: DHS disagrees with the commenter that the new TEA 
requirements are arbitrary or would randomly exclude high unemployment 
areas. On the contrary, DHS believes the new high unemployment area 
designation standard brings clarity and consistency to a process that 
lacked uniformity nationwide. In developing the proposed high 
unemployment area standard, DHS sought to ensure the designation is 
made in a transparent and objectively defined manner, and not one in 
which the rules are subject to shifting applications by the states or 
other interested entities based on economic, political, or other 
rationales, some of which may be unrelated to incentivizing EB-5 
investment in areas of true high unemployment. DHS disagrees that the 
new TEA designation standard, as it applies to either or both the TEA 
geography reform or the TEA investment amount increase, will destroy 
the EB-5 program, and notes that the commenter provides no credible 
evidence or information to support their assertion. As noted in other 
instances in the preamble, we believe there will continue to be 
sufficient interest in the EB-5 program notwithstanding the changes. 
Additionally, DHS adopts the new requirements to better align TEA 
designation requirements with Congressional intent and to ensure both 
urban and rural areas are provided appropriate opportunity to be 
designated as TEAs (and qualify for the reduced minimum investment 
amount incentive) in order to attract EB-5 capital funding.
3.4. Other Comments on Impacts
    Comments: One commenter stated that increasing the investment 
amounts would negatively affect the ability of mid-career professionals 
and entrepreneurs to participate in the EB-5 program and this impact 
would deprive the economy of potential contributions of these younger 
investors. The commenter presented anecdotal evidence to support the 
claim that investors would be less interested and less able to invest 
at the higher investment amounts.
    Response: As noted above, Congress enacted the investor visa 
program to attract entrepreneurs and job-creators into the U.S. economy 
\113\ and infuse new capital into the country.\114\ Congress did not 
specify any particular type of investor it was seeking.\115\ As 
discussed previously, DHS believes that the increase to the minimum 
investment amount is appropriate because inflation has eroded the 
present-day value of the minimum investment required to participate in 
the EB-5 program since Congress set the initial investment amounts in 
1990, and this final rule is an effort at remedying that erosion. In 
addition, DHS believes the increased amount will attract the same type 
of investment levels that Congress intended to attract in 1990.
---------------------------------------------------------------------------

    \113\ 136 Cong. Rec. 35,615 (Oct. 26, 1990).
    \114\ S. Rept. 101-55, p. 21 (1989).
    \115\ 136 Cong. Rec. 35,615.
---------------------------------------------------------------------------

    DHS recognizes that many EB-5 petitioners do not necessarily take 
an entrepreneurial role in the operations of their new commercial 
enterprise; however, the EB-5 program has been and may continue to be 
used by petitioners who do take an entrepreneurial role in the 
operations of their new commercial enterprise. Moreover, under the 
current regulatory and statutory regime, the EB-5 program contains no 
specific entrepreneurship requirements. DHS does not differentiate 
between and collects no data on petitioners who take an entrepreneurial 
role in the operations of their new commercial enterprise relative to 
those who do not. Accordingly, DHS has no data to support and there is 
no persuasive reason to believe that raising the minimum investment 
amount would disproportionately decrease the number of petitioners who 
take an entrepreneurial role in their new commercial enterprise 
relative to those who do not.
4. Other Comments on the Regulatory Impact Analysis (Executive Orders 
12866 and 13563)
    Comments: Approximately 10 commenters provided other input on the 
Regulatory Impact Analysis. One commenter asserted that DHS has not 
fulfilled its obligation, under Executive Orders 12866 and 13563, to 
share how it weighed the option to pursue regulatory action as opposed 
to not taking action while Congress works to pursue partial reforms 
using the legislative process. According to the commenter, it is 
counterproductive to revise vital components of the program while 
Congress is debating possible program reforms. Another commenter

[[Page 35791]]

said the impact analysis should be rejected as being an incomplete and 
not fully-considered analysis of the implications of the proposed 
increases in the proposed minimum investment amounts.
    Response: The commenters appear to misunderstand the requirements 
of the Executive Orders. Executive Order 12866 is an exercise of the 
President's authority to manage the Executive Branch of the United 
States under Article II of the Constitution. The implementation of the 
Executive Orders and OMB Circulars, and other internal guidance, is a 
matter of Executive Branch consideration and discretion.
    The fact that preparation of a regulatory impact analysis (RIA) 
under Executive Order 12866 is a matter of Executive Branch discretion 
is underscored by the terms of Executive Order 12866, section 10, which 
provides that nothing in the Executive order shall affect any otherwise 
available judicial review of agency action. The Executive Order is 
intended only to improve the internal management of the Federal 
Government and does not create any right or benefit, substantive or 
procedural, enforceable at law or equity by a party against the United 
States, its agencies or instrumentalities, its officers or employees, 
or any other person.
    The internal, managerial nature of this and other similarly worded 
Executive Orders has been recognized by the courts, and actions taken 
by an agency to comply with the Executive Order are not subject to 
judicial review. Cal-Almond, Inc. v. USDA, 14F.3d 429, 445 (9th Cir. 
1993) (citing Michigan v. Thomas, 805 F.2d 176,187 (6th Cir. 1986)).
    DHS made a good faith effort to analyze the impacts of this rule. 
DHS reviewed numerous studies and requested comment from the public but 
received no credible data or information that would provide a more 
accurate estimate of the impacts.
    DHS also disagrees that the current rulemaking is counterproductive 
when legislative reforms are under consideration. As mentioned in an 
earlier comment response, some members of Congress, commenting on this 
rule, requested that DHS take this regulatory action in part because of 
Congress' inability to enact legislative reforms over the 114th and 
115th Congresses. In fact, the Chairs of the House and Senate Judiciary 
Committees noted that ``Congress has failed to reform'' the EB-5 
program.\116\ DHS is finalizing this NPRM to implement needed reforms 
in a timely manner. Promulgation of these regulatory change does not 
preclude legislative changes by Congress.
---------------------------------------------------------------------------

    \116\ U.S. Senator Charles Grassley, U.S. Representative Bob 
Goodlatte, Press Release: Grassley, Goodlatte Call on DHS to 
Finalize EB-5 Regulations, End Unacceptable Status Quo, (March 22, 
2018) available at https://judiciary.house.gov/press-release/goodlatte-grassley-call-dhs-finalize-eb-5-regulations-end-unacceptable-status-quo/. Senator Grassley had noted a few days 
earlier that members of Congress had been working on reform 
aggressively for years, but to no avail. See 164 Cong. Rec. S1778 
(March 19, 2018).
---------------------------------------------------------------------------

5. Comment on Unfunded Mandates Reform Act (UMRA)
    Comment: One commenter disagreed with DHS that no unfunded mandates 
exist in the proposed rule. According to the commenter, states have 
developed systems to track and review portions of the EB-5 program as 
it relates to their state. The commenter provided background regarding 
the State of California's process for analyzing regional center 
information and determining census tracts that would qualify as areas 
of high unemployment. The commenter suggested that the proposed 
federalization of the designation of high unemployment areas would 
eliminate the state-based processes. The commenter urged DHS to consult 
with California and other states with unique regulatory frameworks 
prior to transitioning, and suggested governors and mayors also be 
consulted to determine the needs of their respective states and cities.
    Response: DHS disagrees with the commenter that unfunded mandates 
are imposed by this final rule. The UMRA's written statement 
requirements apply when a Federal mandate is likely to result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100,000,000 or more (adjusted annually 
for inflation) in any 1 year. 2 U.S.C. 1532(a). A federal 
intergovernmental mandate means any provision in legislation, statute, 
or regulation that would impose an enforceable duty upon State, local, 
or tribal governments (except certain conditions of Federal assistance 
or duties arising from participation in a voluntary Federal programs). 
2 U.S.C. 658(5)(A). While one state might have voluntarily developed a 
system to track and review portions of the EB-5 program, this rule does 
not create any enforceable duties. See id.; 2 U.S.C. 1555. Furthermore, 
by eliminating state designation of high unemployment areas, DHS is 
assuming the administrative burden (and relieving states of the burden) 
of determining which areas qualify as TEAs, rather than relying on 
state designations. Additionally, for the purposes of the UMRA of 1995, 
this rule does not impose costs exceeding the threshold of $100 million 
(or the inflation-adjusted value equivalent of $100 million in 1995 
dollars).

IV. Statutory and Regulatory Requirements

A. Executive Orders 12866 (Regulatory Planning and Review), 13563 
(Improving Regulation and Regulatory Review), and 13771 (Reducing 
Regulation and Controlling Regulatory Costs)

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. Executive Order 13771 (``Reducing Regulation and 
Controlling Regulatory Costs'') directs agencies to reduce regulation 
and control regulatory costs.
    This rule has been designated a ``significant regulatory action''--
although not an economically significant regulatory action--under 
section 3(f) of Executive Order 12866. Accordingly, the rule has been 
reviewed by the Office of Management and Budget. This rule is a 
regulatory action under Executive Order 13771.
(1) Summary
    This final rule changes certain aspects of the EB-5 program that 
are in need of reform and updates the regulations to reflect statutory 
changes and codify existing policies. This final rule makes five major 
categories of revisions to the existing EB-5 program regulations. Three 
of these categories, which involve (i) priority date retention; (ii) 
increasing the investment amounts; and (iii) reforming the TEA 
designations, are substantive. The two other major categories focused 
on (iv) procedures for removal of conditions on lawful permanent 
residence; and (v) miscellaneous changes, involve generally technical 
adjustments to the EB-5 program. Details concerning these three major 
substantive and two major technical categories of changes are provided 
in above sections, and in Table 2 in terms of benefit-cost 
considerations.
    Within the five major categories of revisions to existing 
regulations, this

[[Page 35792]]

final rule also makes some changes from the NPRM. Most importantly, the 
reduced investment amount for TEAs will be raised to $900,000 instead 
of the proposed $1.35 million, in order that the 50 percent 
differential between investment tiers be maintained. The other 
nonsubstantive changes between this final rule and the NPRM are listed 
here:
     Clarification that the priority date of a petition for 
classification as an investor is the date the petition is properly 
filed;
     Clarification that a petitioner with multiple approved 
immigrant petitions for classification as an investor is entitled to 
the earliest qualifying priority date;
     Modifying the original proposal that any city or town with 
a population of 20,000 or more may qualify as a TEA, to provide that 
only cities and towns with a population of 20,000 or more outside of 
metropolitan statistical areas (MSAs) may qualify as a TEA;
     Adding that amendments or supplements to any offering 
necessary to maintain compliance with applicable securities laws based 
upon the changes in this rulemaking will not independently result in 
denial or revocation of a petition, provided the petition meets certain 
criteria; and
     Additional minor non-substantive and clarifying changes.
    DHS analyzed the five major categories of revisions carefully. EB-5 
investment structures are complex, and typically involve multiple 
layers of investment, finance, development, and legal business 
entities. The interconnectedness and complexity of such relationships 
make it very difficult to quantify and monetize the costs and benefits. 
Furthermore, since demand for EB-5 investments incorporate many factors 
related to international and U.S. specific immigration and business, 
DHS cannot predict with accuracy changes in demand for the program 
germane to the major categories of revisions that increase the 
investment amounts and reform the TEA designation process. DHS has no 
way to assess the potential increase or reduction in investments either 
in terms of past activity or forecasted activity, and cannot therefore 
quantitatively estimate any impacts concerning job creation, losses or 
other downstream economic impacts driven by these major provisions.
    There are several costs involved in the final rule for which DHS 
has conducted quantitative estimates. For the technical revision that 
clarifies that derivative family members must file their own petitions 
to remove conditions on their permanent residence when they are not 
included in the principal investor's petition, we estimate costs to be 
approximately $91,023 annually for those derivatives. Familiarization 
costs to review the rule are estimated to be $629,758 annually.
    In addition, DHS has prepared a Final Regulatory Flexibility 
Analysis (FRFA) under the Regulatory Flexibility Act (RFA) to discuss 
potential impacts to small entities. As discussed further in the FRFA, 
DHS cannot estimate the exact impact to small entities. DHS, however, 
does expect some impact to regional centers and non-regional center 
projects. As it relates to the FRFA, each of 1,570 business entities 
involved in familiarization of the rule would incur costs of about 
$401.

                        Table 2--Summary of Changes and Impact of the Adopted Provisions
----------------------------------------------------------------------------------------------------------------
              Current policy                            Adopted change                          Impact
----------------------------------------------------------------------------------------------------------------
                                             Priority Date Retention
----------------------------------------------------------------------------------------------------------------
Current DHS regulations do not permit      DHS will allow an EB-5 immigrant          Benefits:
 investors to use the priority date of an   petitioner to use the priority date of    Makes visa
 immigrant petition approved for            an immigrant petition approved for        allocation more
 classification as an investor for a        classification as an investor for a       predictable for investors
 subsequently filed immigrant petition      subsequently filed immigrant petition     with less possibility for
 for the same classification.               for the same classification for which     large fluctuations in visa
                                            the petitioner qualifies, unless DHS      availability dates due to
                                            revokes the petition's approval for       regional center
                                            fraud or willful misrepresentation by     termination.
                                            the petitioner, or revokes the petition   Provides greater
                                            for a material error.                     certainty and stability
                                                                                      regarding the timing of
                                                                                      eligibility for investors
                                                                                      pursuing permanent
                                                                                      residence in the U.S. and
                                                                                      thus lessens the burden of
                                                                                      unexpected changes in the
                                                                                      underlying investment.
                                                                                      Provides more
                                                                                      flexibility to investors
                                                                                      to contribute to more
                                                                                      viable investments,
                                                                                      potentially reducing fraud
                                                                                      and improving potential
                                                                                      for job creation.
                                                                                     Costs:
                                                                                      None anticipated.

[[Page 35793]]

 
                                         Increases to Investment Amounts
----------------------------------------------------------------------------------------------------------------
The standard minimum investment amount     DHS will account for inflation in the     Benefits:
 has been $1 million since 1990 and has     investment amount since the inception     Increases in
 not kept pace with inflation--losing       of the program. DHS will raise the        investment amounts are
 almost half its real value.                minimum investment amount to $1.8         necessary to keep pace
Further, the statute authorizes a           million to account for inflation          with inflation and real
 reduction in the minimum investment        through 2015, and includes a mechanism    value of investments;
 amount when such investment is made in a   to automatically adjust the minimum       Raising the
 TEA by up to 50 percent of the standard    investment amount based on the            investment amounts
 minimum investment amount. Since 1991,     unadjusted CPI-U every 5 years.           increases the amount
 DHS regulations have set the TEA          DHS will retain the TEA minimum            invested by each investor
 investment threshold at 50 percent of      investment amount at 50 percent of the    and potentially increases
 the minimum investment amount.             standard amount. The minimum investment   the total amount invested
Similarly, DHS has not increased the        amount in a TEA will initially increase   under this program.
 minimum investment amount for              to $900,000.                              For regional
 investments made in a high employment     DHS is not changing the equivalency        centers, the higher
 area beyond the standard amount.           between the standard minimum investment   investment amounts per
                                            amount and those made in high             investor will mean that
                                            employment areas. As such, DHS will set   fewer investors will have
                                            the minimum investment amounts in high    to be recruited to pool
                                            employment areas to be $1.8 million,      the requisite amount of
                                            and follow the same mechanism for         capital for the project,
                                            future inflationary adjustments.          so that searching and
                                                                                      matching of investors to
                                                                                      projects could be less
                                                                                      costly.
                                                                                     Costs:
                                                                                      Some investors may
                                                                                      be unable or unwilling to
                                                                                      invest at the higher
                                                                                      levels of investment.
                                                                                      There may be fewer
                                                                                      jobs created if fewer
                                                                                      investors invest at the
                                                                                      higher investment amounts.
                                                                                      For regional
                                                                                      centers, the higher
                                                                                      amounts could reduce the
                                                                                      number of investors in the
                                                                                      global pool and result in
                                                                                      fewer investors, thus
                                                                                      potentially making the
                                                                                      search and matching of
                                                                                      investors to projects more
                                                                                      costly.
                                                                                      Potential reduced
                                                                                      numbers of EB-5 investors
                                                                                      could prevent certain
                                                                                      projects from moving
                                                                                      forward due to lack of
                                                                                      requisite capital.
                                           ........................................      An increase in
                                                                                         the investment amount
                                                                                         could make foreign
                                                                                         investor visa programs
                                                                                         offered by other
                                                                                         countries more
                                                                                         attractive.
----------------------------------------------------------------------------------------------------------------
                                                TEA Designations
----------------------------------------------------------------------------------------------------------------
A TEA is defined by statute as a rural     DHS will eliminate state designation of   Benefits:
 area or an area that has experienced       high unemployment areas. DHS also         Rules out TEA
 high unemployment (of at least 150         amends the manner in which investors      configurations that rely
 percent of the national average rate).     can demonstrate that their investments    on a large number of
 Currently, investors demonstrate that      are in a high unemployment area.          census tracts indirectly
 their investments are in a high           (1) DHS will add cities and towns with a   linked to the actual
 unemployment area in two ways:             population of 20,000 or more outside of   project tract by numerous
(1) providing evidence that the             MSAs as a specific and separate area      degrees of separation.
 Metropolitan Statistical Area (MSA), the   that may qualify as a TEA based on high   Potential to
 specific county within the MSA, or the     unemployment.                             better stimulate job
 county in which a city or town with a     (2) DHS will amend its regulations so      growth in areas where
 population of 20,000 or more is located,   that a TEA may consist of a census        unemployment rates are the
 in which the new commercial enterprise     tract or contiguous census tracts in      highest, consistent with
 is principally doing business, has         which the new commercial enterprise is    congressional intent.
 experienced an average unemployment rate   principally doing business if            Costs:
 of at least 150 percent of the national    the new commercial enterprise     This TEA provision
 average rate; or                           is located in more than one census        could cause some projects
(2) submitting a letter from an             tract; and                                and investments to no
 authorized body of the government of the   the weighted average of the       longer qualify as being in
 state in which the new commercial          unemployment rate for the tract or        high unemployment areas.
 enterprise is located, which certifies     tracts is at least 150 percent of the     DHS presents the potential
 that the geographic or political           national average.                         number of projects and
 subdivision of the metropolitan           (3) DHS will also amend its regulations    investments that could be
 statistical area or of the city or town    so that a TEA may consist of an area      affected in Table 5.
 with a population of 20,000 or more in     comprising the census tract(s) in which
 which the enterprise is principally        the new commercial enterprise is
 doing business has been designated a       principally doing business, including
 high unemployment area.                    any and all adjacent tracts, if the
                                            weighted average of the unemployment
                                            rate for all included tracts is at
                                            least 150 percent of the national
                                            average.

[[Page 35794]]

 
Current technical issues:                  DHS will amend its regulations to         Conditions of Filing:
 The current regulation does not    include the following technical          Benefits:
 clearly define the process by which        changes:                                  Adds clarity and
 derivatives may file a Form I-829          Clarify the filing process for    eliminates confusion for
 petition when they are not included on     derivatives who are filing a Form I-829   the process of derivatives
 the principal's petition.                  petition separately from the immigrant    who file separately from
 Interviews for Form I-829          investor.                                 the principal immigrant
 petitions are generally scheduled at the   Provide flexibility in            investor.
 location of the new commercial             determining the interview location       Costs:
 enterprise.                                related to the Form I-829 petition.       Total cost to
 The current regulations require    Amend the regulation by which     applicants filing
 an immigrant investor and his or her       the immigrant investor obtains the new    separately will be $91,023
 derivatives to report to a district        permanent resident card after the         annually.
 office for processing of their permanent   approval of his or her Form I-829        Conditions of Interview:
 resident cards.                            petition because DHS captures biometric  Benefits:
                                            data at the time the immigrant investor   Interviews may be
                                            and derivatives appear at an ASC for      scheduled at the USCIS
                                            fingerprinting.                           office having jurisdiction
                                            Add 8 CFR 204.6(n) to allow       over either the immigrant
                                            certain investors to remain eligible      investor's commercial
                                            for the EB-5 classification if a          enterprise, the immigrant
                                            project's offering is amended or          investor's residence, or
                                            supplemented based upon the final         the location where the
                                            rule's effectiveness.                     Form I-829 petition is
                                                                                      being adjudicated, thus
                                                                                      making the interview
                                                                                      program more effective and
                                                                                      reducing burdens on the
                                                                                      immigrant investor.
                                                                                      Some petitioners
                                                                                      will benefit by traveling
                                                                                      shorter distances for
                                                                                      interviews and thus see a
                                                                                      cost savings in travel
                                                                                      costs and opportunity
                                                                                      costs of time for travel
                                                                                      and interview time.
                                           ........................................     Costs:
                                                                                      None anticipated.
                                                                                     Investors obtaining a
                                                                                      permanent resident card:
                                                                                     Benefits:
                                                                                      Cost and time
                                                                                      savings for applicants for
                                                                                      biometrics data.
                                                                                     Costs:
                                                                                      None anticipated.
                                                                                     Eligibility Following
                                                                                      Changes to Offering:
                                                                                     Benefits:
                                                                                      An amendment to a
                                                                                      project's offering based
                                                                                      on the final rule's
                                                                                      provisions might not
                                                                                      result in the denial or
                                                                                      revocation of a petition.
                                                                                     Costs:
                                                                                      None anticipated.
----------------------------------------------------------------------------------------------------------------
                                              Miscellaneous Changes
----------------------------------------------------------------------------------------------------------------
Current miscellaneous items:               DHS will amend its regulations to make    These provisions are
 8 CFR 204.6(j)(2)(iii) refers to   the following miscellaneous changes:      technical changes and will
 the former U.S. Customs Service.           DHS is updating references at 8   have no impact on
 Public Law 107-273 eliminated      CFR 204.6(j)(2)(iii) from U.S. Customs    investors or the
 the requirement that alien entrepreneurs   Service to U.S. Customs and Border        government.
 establish a new commercial enterprise      Protection.
 from both INA section 203(b)(5) and INA    Removing references to
 section 216A.                              requirements that alien entrepreneurs
 8 CFR 204.6(j)(5) introductory     establish a new commercial enterprise
 text and (j)(5)(iii) reference             in 8 CFR 216.6.
 ``management'';                            Removing references to
 Current regulation at 8 CFR        ``management'' at 8 CFR 204.6(j)(5)
 204.6(j)(5) has the phrase ``as opposed    introductory text and (j)(5)(iii);
 to maintain a purely passive role in       Removing the phrase ``as
 regard to the investment'';                opposed to maintain a purely passive
 Public Law 107-273 allows          role in regard to the investment'' from
 limited partnerships to serve as new       8 CFR 204.6(j)(5);
 commercial enterprises;                    Clarifies that any type of
 Current regulation references      entity can serve as a new commercial
 the former Associate Commissioner for      enterprise;
 Examinations.                              Replacing the reference to the
 8 CFR 204.6(k) requires USCIS to   former Associate Commission for
 specify in its Form I-526 decision         Examinations with a reference to the
 whether the new commercial enterprise is   USCIS AAO.
 principally doing business in a targeted   Amending 8 CFR 204.6(k) to
 employment area.                           specify how USCIS will issue a
 Sections 204.6 and 216.6 use the   decision.
 term ``entrepreneur'' and                  Revising sections 8 CFR 204.6
 ``deportation.'' These sections also       and 216.6 to use the term ``investor''
 refer to Forms I-526 and I-829.            instead of ``entrepreneur'' and to use
 8 CFR 204.6(i) and (j)(6)(ii)(B)   the term ``removal'' instead of
 use the phrase ``geographic or political   ``deportation.''
 subdivision'' in describing state          Removing references to
 designations of high unemployment areas    ``geographic or political subdivision''
 for TEA purposes.                          in 8 CFR 204.6(i) and (j)(6)(ii)(B).
 The priority date of a petition    Providing clarification in 8
 for classification as an investor is the   CFR 204.6(d) that the petitioner of
 date the petition is properly filed.       multiple immigrant petitions approved
                                            for classification as an investor
                                            generally is entitled to the earliest
                                            qualifying priority date.
----------------------------------------------------------------------------------------------------------------
In addition to the above, applicants will need to read and review the rule to become familiar with the final
  rule provisions. Familiarization costs to read and review the rule are estimated at $629,758 annually.


[[Page 35795]]

(2) Background and Purpose of the Final Rule
    The preceding sections of the preamble review key historical 
aspects and goals of the program, and specific justifications for the 
particular provisions in the final rule. This section supplements and 
provides additional points of analysis that are pertinent to this 
regulatory impact assessment.
    A person wishing to immigrate to the United States under the EB-5 
program must file an Immigrant Petition by Alien Investor (Form I-526). 
Each individual immigrant investor files a Form I-526 petition 
containing information about their investment.\117\ The investment must 
be made into either an NCE within a designated regional center in 
accordance with the Regional Center Program or a standalone NCE outside 
of the Regional Center Program (``non-regional center'' investment). 
The NCE may create jobs directly (required for non-regional center 
investments), or pool immigrant investors' funds into associated NCEs 
that in turn undertake job-creating activities directly or, more 
typically, indirectly through JCEs which receive EB-5 capital from the 
regional center (RC)-associated NCEs. With respect to regional center 
investors, once a regional center has been designated, affiliated 
investors can submit Form I-526 petitions in the concurrent year and in 
future years, provided the regional center maintains its designation. 
Each year, the stock of approved regional centers represents the 
previous year's approved total, plus new regional centers approved 
during the current year, minus regional centers that are terminated in 
the concurrent year.\118\
---------------------------------------------------------------------------

    \117\ To be eligible at the time of the Form I-526 petition's 
filing, investors must demonstrate either that they have already 
invested their funds into the NCE or that they are actively in the 
process of investing. Some investors choose to demonstrate 
commitment of funds by placing their capital contribution in an 
escrow account, to be released irrevocably to the NCE upon a certain 
trigger date or event, such as approval of the Form I-526 petition.
    \118\ Between May 2008 and July 2017, 128 regional centers have 
been terminated. USCIS, Immigrant Investor Regional Centers, 
available at http://www.uscis.gov/working-united-states/permanent-workers/employment-based-immigration-fifth-preference-eb-5/immigrant-investor-regional-centers.
---------------------------------------------------------------------------

    DHS analysis of Form I-526 filing data for FY 2014-2016 indicates 
that on average, 13,103 Form I-526 petitions were filed annually. 
Investments in regional centers accounted for an average of 12,042 such 
petitions annually, or 92 percent of all submitted Form I-526 
petitions, while non-regional center investments accounted for an 
average of 1,062 Form I-526 petitions annually, or about 8 percent.
    EB-5 filings grew rapidly starting in 2008, when the U.S. financial 
crisis reduced available U.S.-based commercial lending funds and 
alternative funding sources, such as the EB-5 program, were sought. 
Based on the type of projects that Form I-526 petitions describe, it 
appears that EB-5 capital has been used as a source of financing for a 
variety of projects, including a large number of commercial real estate 
development projects to develop hotels, assisted living facilities, and 
office buildings.
    In general, DHS databases do not track the total number of 
investment projects associated with each individual EB-5 investment by 
petitioners, but rather track the NCE associated with each individual 
investment. Any given NCE could fund multiple projects. DHS analysis of 
filing data reveals that for FY 2014-2016, on average per year, 1,461 
unique NCEs were referenced in the Form I-526 petitions submitted. On 
average 51 percent of the overall number of unique NCEs were found in 
petitions associated with regional centers, and 49 percent of the 
overall number of NCEs, were found in non-regional center-associated 
petitions. This suggests that on average, unique NCEs are more common 
in non-regional center filings, as 92 percent of individual petitioner 
filings are associated with regional centers.\119\
---------------------------------------------------------------------------

    \119\ IPO NCE data records indicate that the disparity in the 
regional center petitioner filings compared to unique NCEs--92 
percent of total petitioner filings compared to 49 percent of unique 
NCEs--exists because regional center projects include 18 investors 
on average, while non-regional center investments include only 1.5 
investors on average.
---------------------------------------------------------------------------

    DHS obtained and analyzed a random sample of Form I-526 petitions 
that were submitted in FY 2016. The files in the sample were pending 
adjudicative review at IPO in May 2016.\120\ As the results obtained 
from analysis of this random sample are utilized in forthcoming 
sections of this regulatory analysis, it henceforth will be referred to 
as the ``2016 NCE sample'' for brevity. A key takeaway from the review 
of the sample is that a majority of all NCEs (80 percent) blended 
program capital with capital from other sources. For regional center 
NCEs sourced with blended capital, the EB-5 portion comprised 40 
percent of the total capital outlay, while for non-regional center NCEs 
sourced with blended capital, the EB-5 portion comprised 50 percent of 
the total capital outlay.
---------------------------------------------------------------------------

    \120\ The figures for yearly volumes of Form I-526 filings are 
publicly available under DHS performance data: USCIS, Number of Form 
I-526 Immigrant Petitions by Alien Entrepreneurs by Fiscal Year, 
Quarter, and Case Status 2008-2016, available at https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/Immigration%20Forms%20Data/Employment-based/I526_performancedata_fy2017_qtr2.pdf. The NCE data were obtained 
from file tracking data supplied by IPO. Because the NCE file 
submissions contain detailed business plan and investor information, 
the NCE data are not captured in formal DHS databases that are 
provided publicly, but rather in internal program office and 
adjudication records.
---------------------------------------------------------------------------

(3) Baseline Program Forecasts
    DHS produced a baseline forecast of the total number of Form I-526 
receipts, beginning in the first year the rule will take effect and 
extending for 10 years for the period FY 2017-2026.\121\ This Form I-
526 forecast includes the historical trend of Form I-526 receipts from 
FY 2005 to FY 2015, the filing projections from the USCIS Volume 
Projections Committee (VPC), and input from IPO. The VPC projects that 
the high rate of growth in EB-5 investment filings, which averaged 39 
percent annually since FY 2008, will slow to about 3.3 percent over the 
next 3 years and will subsequently level off. The program grew 
exponentially starting in 2008 with the economic downturn. At that 
time, commercial lending was extremely difficult to obtain. As the U.S. 
economy has improved, commercial lending is now more viable, resulting 
in fewer overall petitions. In addition, in the past, USCIS has 
experienced significant spikes in filings in anticipation of the 
possibility that Congress would either allow the Regional Center 
Program to sunset or implement new legislative reforms that would 
increase the required minimum investment amounts, as investors sought 
to ``beat'' the new levels. These spikes have occurred around the 
program's anticipated sunset (e.g., September 2015, December 2015, and 
September 2016). USCIS believes that the filing growth rate will level 
off once the program is extended for longer than one year at a time. 
DHS used this information to inform a forecasting model based on a 
logistic function that captures the past increase in receipts from a 
low baseline, the exponential growth that the program experienced from 
FY 2008-2015, and a very small rate of growth anticipated for the next 
3 years leading to a leveling off of future growth. The technical 
details are provided in the accompanying footnote, and as can be seen 
in the graph, the DHS estimation technique closely fits past

[[Page 35796]]

filings and captures the expected trends alluded to earlier.\122\
---------------------------------------------------------------------------

    \121\ DHS did not attempt a similar forecast for Form I-924 
receipts, because DHS does not have a sound basis for predicting how 
the rule will affect such receipts.
    \122\ DHS utilized a logistic function of the format, (C/
([lambda] + [beta]e-rt)) where input t is the 
time year code (starting with zero), e is the base of the natural 
logarithm, and C, [lambda], [beta], and [rho] are parameters such 
that C/[lambda] asymptotically approaches the maximum level of the 
predicted variable, the Form I-526 receipts. The parameters [beta] 
and [rho] jointly impact the inflection and elongation of the 
sigmoidal curve. DHS did not attempt an estimation procedure focused 
on minimizing the sum of squared errors (such as least squares 
regression) or other fitting technique, and instead chose the 
parameters to reflect the past trend of actual receipts and the 
expected leveling off in their growth rate. For the final forecast 
run, the specific calibration was C = 17,000, [lambda] = 1.05, 
[beta] = 180, and [rho] = .66. The maximum expected level of 
receipts (equal to 17,000/1.05 which is approximately 16,200) was 
determined via input from EB-5 program management.
---------------------------------------------------------------------------

    Figure 1 graphs the volume of ``past'' actual Form I-526 filings 
from 2005 to 2016, compared with the past receipts for the same period 
estimated by our forecasting function, plus the forecasts thereafter 
for future filings. Additionally, changes in receipts driven by this 
rule could cause variations in the future receipts that are not 
reflected in the present forecasts.
[GRAPHIC] [TIFF OMITTED] TR24JY19.012

    The forecast values are listed in Table 3:

    Table 3--DHS Forecasts for Investor Form I-526 Receipts and NCEs
------------------------------------------------------------------------
                       FY                          Investors     NCEs
------------------------------------------------------------------------
2017............................................      15,241       1,481
2018............................................      15,685       1,524
2019............................................      15,925       1,547
2020............................................      16,052       1,560
2021............................................      16,119       1,566
2022............................................      16,153       1,570
2023............................................      16,171       1,571
2024............................................      16,181       1,572
2025............................................      16,185       1,573
2026............................................      16,188       1,573
                                                 -----------------------
    10-year total...............................     159,900      15,538
                                                 -----------------------
    Annual Average..............................      15,990       1,554
------------------------------------------------------------------------

    The last column of Table 3 provides estimates of the total number 
of NCEs. An assumption of the NCE forecasts is that there is no change 
in the relationship between the number of NCEs and the number of Form 
I-526 filings over time.\123\ The impact of these provisions on the 
forecasts will be described in the relevant sections of this analysis.
---------------------------------------------------------------------------

    \123\ In other words, the assumption is that the current number 
of investors per NCE holds in the future. For the NCE projections, 
the 2016 value is set at the 2014-2016 average of 1,404. For each 
year thereafter, the figure is based on the growth rate of predicted 
Form I-526 receipts.
---------------------------------------------------------------------------

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

[[Page 35797]]

by allowing priority date retention, investors obtain greater 
flexibility in moving their investment funds out of potentially risky 
projects, thereby potentially reducing fraud and improving the 
potential for job creation in the United States. DHS cannot quantify or 
monetize the net benefits of the priority date retention provision or 
assess how many past or future investors might be affected.
b. Investment Amount Increase
    DHS will raise the standard minimum investment amount from the 
current $1 million to $1.8 million to account for the rate of inflation 
from the program's inception in 1990 until the time of the proposed 
rule. DHS will also raise the reduced investment amount for TEA 
projects to $900,000, which is 50 percent of the general investment 
amount.\124\ DHS will further adjust the minimum investment amounts 
every 5 years. The standard level will be adjusted for inflation based 
on the 1990 level and the reduced amount will be adjusted to maintain 
50 percent of the standard minimum investment amount. These increases 
are needed because the investment amounts have never been adjusted to 
keep pace with inflation, thereby eroding the real value of the 
investments.
---------------------------------------------------------------------------

    \124\ The adjustment to the standard minimum investment amount 
is based on the CPI-U, which, as compared to a base date of 1982-
1984, was 130.7 in 1990 and 237.017 in 2015. The actual increase in 
prices for the period was approximately 81.34 percent, obtained as 
((CPI-U2015/CPI-U1990)-1)). The $1.8 million 
investment amount is rounded. See generally Bureau of Labor 
Statistics, Inflation & Prices, available at http://www.bls.gov/data/#prices.
---------------------------------------------------------------------------

    DHS believes it is reasonable to assume that some prospective 
investors under the current rule may be unable or unwilling to invest 
at either of the higher levels of investment under the new rule. 
However, DHS is unable to estimate the potential reduction in 
investments either in terms of past activity or forecasted activity, 
and cannot therefore estimate any impacts concerning job creation, 
losses or other downstream economic impacts driven by the investment 
amount increases. DHS evaluates the source of investor funds for 
legitimacy but not for information on investor income, wealth, or 
investment preferences. DHS therefore cannot estimate how many past 
investors would have been unable or unwilling to have invested at the 
new amounts, and hence cannot make extrapolations to potential future 
investors and projects. However, as noted earlier, it would take a 
substantial reduction in investors to actually reduce total investment 
below current levels. If the 80 percent higher levels of required 
investment do not lead to a reduction in the number of EB-5 
investments, the absolute amount of investment would increase by 80 
percent. There is currently about $4.43 billion in annual TEA 
investment under the program. At the TEA investment amount of $900,000 
in this final rule, this same level of total TEA investment would be 
achieved with 44 percent fewer investors. Furthermore, small and even 
moderate reductions in investors actually stand to generate growth in 
total investment. It is entirely possible that total investment will 
actually increase, even if the number of investors were to decrease.
    In addition to the effect on investors, it is reasonable to assume 
that the changes to the investment amounts will also affect regional 
centers. If the higher amounts reduce the number of investors in the 
global pool, competition for fewer investors may make it more costly 
for regional centers to identify and match with investors. However, the 
net effect on regional center costs is not something DHS can forecast 
with accuracy.
    DHS also believes that for both regional center and non-regional 
center investments, the projects and the businesses involved could be 
affected. A reduced number of EB-5 investors could preclude some 
projects from going forward due to outright lack of requisite capital. 
Other projects will likely see an increase in the share of non-EB-5 
capital, such as capital sourced to domestic or other foreign sources. 
As alluded to in Section Two of this analysis, analysis of the 2016 NCE 
sample reveals that 80 percent of NCEs blend EB-5 capital with other 
sources of capital. DHS believes that the costs of capital and return 
to capital could be different depending on the source of the capital. 
As a result, a change in the composition of capital could change the 
overall profitability for one or more of the parties involved; however, 
if the project on the whole promises net profitability, taking into 
account risk and potential returns from other investments, it may 
proceed as planned. The specific impact on each party for each project 
will vary on a case-by-case basis, and will be dependent on, among 
other things, the particular financial structures and agreements 
between the regional center, investors, NCE, and project developer. It 
will also be determined by local and regional investment supply and 
demand, lending conditions, and general business and economic factors.
    DHS also considers that an increase in the investment amount could 
make other countries' foreign investor visa programs more attractive 
and therefore there could be some substitution into such programs. The 
decision to invest in another country's program will depend in part on 
the investment and country-specific risk preferences of each investor. 
While DHS has no means of ascertaining such preferences, it is possible 
that some substitution into non-U.S. investor visa programs could occur 
as a result of the higher required investment amounts. However, 
according to DHS research, substitution into another country's 
immigrant investor program will likely be more costly for investors 
than investing in the EB-5 program even with increases in the EB-5 
investment amounts. DHS has laid out some of the comparisons to other 
countries' immigrant investor programs earlier in the preamble.
    There are numerous ancillary services and activities linked to both 
regional center and direct investments, such as, but not limited to, 
business consulting and advising, finance, legal services, and 
immigration services. However, DHS is not certain how the rule will 
affect these services. Similarly, DHS does not have information on how 
the revenues collected from these types of activities contribute to the 
overall revenue of the regional centers or direct investments.

[[Page 35798]]

    In summary, DHS believes that the increase in the minimum 
investment amount will bring the investment amounts in line with real 
values. DHS recognizes that some of the investment increase benefits 
could be offset if some investors are deterred from investing at the 
higher amounts. DHS does not have the data or information necessary to 
attempt to estimate such mitigating effects. It is possible that the 
higher investment amounts could deter some investors from EB-5 activity 
and therefore negatively affect regional center revenue in some cases, 
although the magnitudes and net effects of these impacts cannot be 
estimated. It is also possible that the higher investment amounts could 
attract additional capital overall and stimulate projects to get off 
the ground that otherwise might not. Due to the complexity of EB-5 
financial arrangements and unpredictability of market conditions, DHS 
cannot forecast with confidence how many projects would be affected by 
the increased investment amounts through a change in the number of 
individuals investing through the EB-5 program. Some projects could be 
forgone while others will proceed with a higher composition of non-EB-5 
capital, with resultant changes in profitability and rates of return to 
the parties involved. An overall decrease in investments and projects 
will potentially reduce some job creation and result in other 
downstream effects.
c. Periodic Adjustments to the Investment Amounts
    In addition to initially raising the investment thresholds to 
account for inflation, DHS will adjust the standard investment 
threshold every 5 years (as compared to $1,000,000 in January 1990 at 
the program's inception) to account for future inflation, and to adjust 
the reduced investment threshold for TEAs to keep pace with the 
standard amount. DHS projected the effects of this methodology using a 
relatively low, recent inflation index (1.5 percent) and a more 
moderate inflation index (3.2 percent). DHS made two separate 
projections based on two different indexes because DHS cannot predict 
with certainty what the future inflation index will be. The 1.5 percent 
estimate is based on the average rate of inflation for the period 2009-
2017, which economists generally consider to be relatively low compared 
to earlier periods. The 3.2 percent estimate used for the higher-end 
projection is based on the 3.2 percent inflation rate in 2011, which 
was the highest annual inflation rate observed from the 2009 to 2017 
period. DHS believes it is appropriate to characterize the 3.2 percent 
rate as a ``moderate'' inflation baseline, because although it is 
higher than the average annual rate since 2009, it is not considered by 
economists to be high as compared to other historical periods.\125\
---------------------------------------------------------------------------

    \125\ Allan Meltzer, ``A Slow Recovery with Low Inflation,'' 
Hoover Inst., Econ. Working Paper No. 13,110 (2013), available at 
http://www.hoover.org/sites/default/files/13110_-_meltzer_-_a_slow_recovery_with_low_inflation.pdf; see also Michael T. Kiley, 
Low Inflation in the United States: A Summary of Recent Research, 
FEDS Notes, Board of Governors of the Federal Reserve System (Nov. 
23, 2015), available at http://www.federalreserve.gov/econresdata/notes/feds-notes/2015/low-inflation-in-the-united-states-a-summary-of-recent-research-20151123.html; Mary C. Daly and Bart Hobijn, 
Downward Nominal Wage Rigidities Bend the Phillips Curve, Fed. 
Reserve Bank S.F., Working Paper No. 2013-08 (2014), available at 
http://www.frbsf.org/economic-research/files/wp2013-08.pdf. The 
inflation rates reflect the yearly seasonally adjusted average for 
the consumer price index for all urban consumers (CPI-U) and are 
found at: https://www.bls.gov/cpi/tables/supplemental-files/historical-cpi-u-201808.pdf.
---------------------------------------------------------------------------

    Table 4 lists the general minimum investment amounts and reduced 
investment amounts after 5 and 10 years if the amounts are raised 
initially as finalized in this rule. The figures are in millions of 
U.S. dollars and are rounded to the nearest fifty-thousandth. DHS notes 
that estimates are slightly different than those provided in the 
proposed rule due to the modification to the inflation adjustment.

                            Table 4--Projected Investment Amounts at 5-Year Revisions
                                         [Figures are in millions of $]
----------------------------------------------------------------------------------------------------------------
                                                                                    Projected investment amount
                                                                                 -------------------------------
                                                                                     Based on        Based on
                   Provision: Initial increase                       Revision         average        moderate
                                                                      (year)         inflation       inflation
                                                                                   scenario, 1.5   scenario, 3.2
                                                                                      percent         percent
----------------------------------------------------------------------------------------------------------------
Standard Investment Amount = $1.8 Million in 2018...............               5            1.95            2.12
                                                                              10            2.10            2.48
Minimum Investment Amount = $900,000 in 2018....................               5             .98            1.06
                                                                              10            1.05            1.24
----------------------------------------------------------------------------------------------------------------

    DHS attempted to assess the costs of these changes. As described 
earlier, the potential cost of the higher amounts may result in a 
reduction in the number of investors and projects and a lower share of 
EB-5 capital for some projects, which could result in capital losses, 
fewer jobs created, and other reductions in economic activity. Or, 
there could be an increase in overall EB-5 capital flowing into the 
economy, which could result in more jobs created and increases in 
economic activity. DHS is not able to predict how many investors and 
projects will be affected, nor can we predict the impact to the capital 
available for projects.
d. Targeted Employment Areas
    Under the current regulations, a state may designate an area in 
which the enterprise is principally doing business as a high 
unemployment TEA if that area is a geographic or political subdivision 
of a metropolitan statistical area (MSA) or of a city or town with a 
population of 20,000 or more. As is the current practice, state 
determinations for TEAs define the appropriate boundaries of a 
geographic or political subdivision that constitutes the TEA, although 
it is the responsibility of the petitioner to provide the supporting 
data and methodology involved in the state TEA determination. DHS 
ensures state designations comply with the statutory requirement that 
the proposed area designated by the state has an unemployment rate of 
at least 150 percent above the national average by reviewing state 
determinations of the unemployment rate and assessing the method or 
methods by which the state authority obtained the unemployment 
statistics.\126\ Currently DHS does not

[[Page 35799]]

limit the number of census tracts that a state can aggregate as part of 
a high unemployment TEA designation. TEA configurations that DHS has 
evaluated from state designations have included the census tract or 
tracts where the NCE is principally doing business (``project 
tract(s)''), one or more directly adjacent tracts, and others that are 
further removed, resulting in configurations resembling a chain-shape 
or other contorted shape. This final rule will remove states from the 
high unemployment area designation process; instead, investors will be 
required to provide sufficient evidence to DHS in order to qualify for 
the reduced investment threshold. Under this final rule, DHS will 
generally limit the number of census tracts that could be combined for 
this purpose.\127\ Specifically, DHS will allow for a high unemployment 
area to consist of an area comprised of the census tract(s) in which 
the new commercial enterprise is principally doing business, including 
any and all adjacent tracts, if the weighted average of the 
unemployment rate for all included tracts is at least 150 percent of 
the national average. Additionally, DHS will allow cities and towns 
with a population of 20,000 or more outside of MSAs to qualify as a TEA 
based on high unemployment. See final 8 CFR 204.6(j)(6)(ii)(A).
---------------------------------------------------------------------------

    \126\ USCIS Policy Manual, 6 USCIS-PM G, Chapter 2.A(5).
    \127\ According to USCIS policy in effect at the time of 
issuance of this rulemaking:
    A new commercial enterprise is principally doing business in the 
location where it regularly, systematically, and continuously 
provides goods or services that support job creation. If the new 
commercial enterprise provides such goods or services in more than 
one location, it will be principally doing business in the location 
most significantly related to the job creation.
    Factors considered in determining where a new commercial 
enterprise is principally doing business include, but are not 
limited to, the location of:
     Any jobs directly created by the new commercial 
enterprise;
     Any expenditure of capital related to the creation of 
jobs;
     The new commercial enterprise's day-to-day operation; 
and
     The new commercial enterprise's assets used in the 
creation of jobs.
    USCIS Policy Manual, 6 USCIS-PM G (Nov. 30, 2016).
---------------------------------------------------------------------------

    In order to assess the impacts of the changes to the TEA 
designation requirements, DHS performed further analysis on the 2016 
NCE sample. First, DHS determined, based on the sample, that 98 percent 
of regional center investments and 68 percent of non-regional center 
investments are made into TEAs. Because the 2016 sample significantly 
over-represents non-regional center investments, DHS also determined 
the percentage of investments overall that were applied to TEAs. DHS 
found that 96 percent of investments and 83 percent of NCEs were 
applied to TEAs.\128\ About 9 percent of investments that were made 
into TEAs were made into rural TEAs. The non-regional center share of 
rural TEA investments was slightly higher than that of regional 
centers, at 9 and 11 percent, in order.
---------------------------------------------------------------------------

    \128\ To account for the over-representation on non-regional 
center investments, DHS uses a weighted average approach to increase 
precision in the estimates. In the 2016 NCE sample non-regional 
center NCE investments constitute exactly half, but more broadly 
they account for less than a tenth (8 percent) of submitted 
investments. This bias is not a feature of the sampling methodology 
but rather an inherent feature of the population, because non-
regional center investments comprise almost half, 49 percent, of all 
NCEs. Note that there is a slight sampling discrepancy in NCEs as 
well but it is very slight, at 1 percent. The weighted average for 
TEA investments is the sum of the regional center share of 
investments (.92) multiplied by the TEA share found in the sample 
(.98), and the non-regional share of investments (.08) multiplied by 
the TEA share in the sample (.68). The resulting weighting equation 
is .90 + .06 = .96 or 96 percent. The weighted average for TEA NCEs 
is the sum of the regional center share of NCEs (.51) multiplied by 
the TEA share found in the sample (.98), and the non-regional share 
of NCEs (.49) multiplied by the TEA share in the sample (.68). The 
resulting weighting equation is .50 + .33 = .83.
---------------------------------------------------------------------------

    DHS then parsed the TEA filings comprising the 2016 NCE sample into 
specific cohorts. Specifically, DHS is interested in the number and 
share of projects and NCEs that would likely be affected by the rule. 
DHS thus split the sample of NCEs into regional center and non-regional 
center groups, and then broke these into two subgroups each. The first 
subgroup is the number of filings that comprised rural, and then high 
unemployment TEA filings that did not rely on state designations to 
qualify. The TEAs in this cohort did not require state designations 
because the project was located in a specific geographical unit that 
met the unemployment threshold.\129\ These TEAs would be unaffected by 
the changes being finalized in this rule as they pertain to TEA reform. 
This first subgroup also adds the filings that relied on one or two 
census tracts, respectively. These too will be unaffected by the 
specific TEA changes proposed in this rule. Hence the first subgroup 
represents filings that would not be affected by the rule. The second 
subgroup is the remainder--those filings into high unemployment TEAs 
that relied on three or more census tracts. This final rule will 
potentially affect some of the designations in this second subgroup.
---------------------------------------------------------------------------

    \129\ For the TEA geographies that met the high unemployment 
threshold in the sample analyzed, 90 percent utilized MSAs and the 
remaining 10 percent utilized counties.
---------------------------------------------------------------------------

    Having broken out the filings to identify the segment that would 
potentially be affected, DHS proceeded to estimate the shares of 
investments and NCEs potentially impacted, as well as the actual 
numbers, on an annual basis. There are two caveats to our analysis. 
Foremost, we emphasize that the figures presented represent potential 
and likely maximum impacts for the following reason. Some of the group 
that relied on three or more tracts may have been configured in a 
manner that could meet the new provision. The data that DHS analyzed 
only contained the number of tracts, not the raw data to evaluate the 
actual geographical configuration and to determine if it would meet the 
provision in the final rule. Second, the figures for investments and 
NCEs apply to petitions filed and thus not to actual approvals or 
investments actually made. The weighted percentages and figures 
applicable are summarized in the Table 5 below, noting that the amounts 
are based on the average of filings for FY 2014-2016; potential changes 
in future filing patterns are discussed later.

                                              Table 5--TEA Metrics
----------------------------------------------------------------------------------------------------------------
                                                            Investments                        NCEs
                                                 ---------------------------------------------------------------
                   TEA cohort                                          Share                           Share
                                                      Amount         (percent)        Amount         (percent)
----------------------------------------------------------------------------------------------------------------
Not affected by the rule........................           6,207              46             832              57
Potentially affected by the rule................           7,075              54             628              43
----------------------------------------------------------------------------------------------------------------


[[Page 35800]]

    As the table reveals, just over half (54 percent) of investments, 
or about 7,075 annually, could potentially be affected, though we 
stress again that this is an upper bound estimate. In reality, some 
portion of the maximum cohort for projects and NCEs will have continued 
to qualify for TEA designation under the changes by this rule. However, 
currently DHS does not have reliable, statistically valid information 
from which DHS can more accurately estimate the share and number of 
projects and NCEs likely to be affected by the rule. Slightly under 
half, 43 percent, of NCEs could be impacted.
    DHS obtained Census Bureau data on adjacent tracts that were 
utilized in studies unrelated to the current rulemaking provision.\130\ 
From the population of 74,001 tracts provided in the Census dataset, 
DHS randomly sampled 390 tracts, which is slightly more than the 383 
needed for 95 percent confidence and a 5 percent margin of error. The 
average number of adjacent tracts was 6.4 and the median was 6, with a 
maximum of 11, a minimum of 3, and a range of 8. Since ``partial'' 
tracts are not viable under the EB-5 program, the average was rounded 
to the nearest whole number and 1 tract was added to account for the 
primary tract for which the adjacencies were counted, to yield an 
average of 7 total tracts. This suggests that it may not be unusual for 
a TEA designation of three or more tracts to satisfy the adjacency 
requirements of this final rule.
---------------------------------------------------------------------------

    \130\ As of 2016, the Census Bureau records show 73,057 Tracts 
in the United States, including the District of Columbia but not 
counting U.S. Territories. U.S. Census Bureau, 2010 Census Tallies 
of Census Tracts, Block Groups and Blocks, available at https://www.Census.gov/geo/maps-data/data/tallies/tractblock.html. The data 
utilized in this analysis is currently available publicly from Brown 
University's (Providence, RI) American Communities Project website 
at http://www.s4.brown.edu/us2010/Researcher/Pooling.htm.
---------------------------------------------------------------------------

    The benefit of this aspect of the final rule is that it will 
prevent certain TEA configurations that rely on a large number of 
census tracts indirectly linked to the actual project tract(s) by 
multiple degrees of separation. As a result, some investments may be 
re-directed to areas where unemployment rates are truly high, according 
to the 150 percent threshold, and therefore may stimulate job creation 
where it is most needed.
    DHS also considered an alternative provision, under which TEA 
designations would be subject to a twelve-tract limit. This limit is 
used by the State of California in its TEA certifications. DHS 
considered this limit as an alternative approach because it is the only 
case in which a state limits the number of census tracts to a specific 
number. Analysis of the NCE sample revealed that for tract 
configurations with two or more tracts, the average number of tracts 
aggregated was 16, but the median was 7. The figures are slightly 
higher at 17 and 8, respectively, when the cohort is isolated to three 
or more multiple tract configurations. The difference in the mean and 
median indicates that the distribution is right-skewed, characterized 
by a small number of very large-tract number compilations, evidenced by 
a sample range of 198 tracts. DHS notes that there is sufficient 
variation in the data to preclude state locational bias, as 21 states 
and the District of Columbia were represented in the 2016 NCE sample. 
Ultimately, DHS did not choose this alternative option because it is 
not necessarily appropriate for nationwide application, as the 
limitation to 12 census tracts may be justifiable for reasons specific 
to California but may not be apt on a national scale.
    DHS stresses that the maximum cohorts presented in Table 5 
overstate the number and shares of future investments and NCEs that 
will be affected by the TEA reform provision because some of the 
configurations that relied on multiple tracts (3 or more) may be able 
to meet the requirements of the rule. Furthermore, the number of 
affected investments and NCEs is also likely to be lower because 
regional centers may be able to replace forgone projects in places that 
will not meet the high unemployment criteria under the final rule with 
other projects that will in fact qualify. For example, a regional 
center seeking to locate a project on one city block that will no 
longer qualify as a TEA may opt to locate the project on another block 
that could qualify as a TEA under the new rule. In that sense, the 
final rule may provide additional incentive for investments in rural 
areas, because such investments will be unaffected by this rule, or in 
areas that are more closely associated with high unemployment. DHS 
believes that some regional centers will not be able to make such a 
substitution and that there may be costs in the forms of forgone 
investments and projects, and accompanying reductions in job creation 
and other economic activity (unless other investments and projects 
create compensatory or more than compensatory economic activity).
    DHS has described some of the possible negative consequences of a 
reduced number of investors. A decrease in investments and projects may 
potentially reduce some job creation and have other downstream effects.
    In addition to the amendments examined in the preceding analysis, 
DHS will allow cities and towns with a population of 20,000 or more 
outside of MSAs as a specific and separate area that may qualify as a 
TEA based on high unemployment. This is a narrower change than was 
introduced in the NPRM, where it was proposed to allow any city or town 
with a population of 20,000 to qualify as a TEA based on high 
unemployment. DHS cannot estimate the additional number of NCEs that 
will qualify as principally doing business in and creating jobs in a 
TEA based on this amendment. However, DHS anticipates the change will 
provide benefits in that additional areas may qualify as a TEA based on 
high unemployment, potentially offering investors more opportunities to 
invest in a TEA at the reduced investment amount, and encouraging job 
creation in more areas of high unemployment.
e. Other Provisions
    DHS has also analyzed the other provisions in the rule:
    Removal of Conditions Filing. DHS is revising its regulations to 
clarify that, except in limited circumstances, derivative family 
members must file their own petitions to remove conditions from their 
permanent residence when they are not included in a petition to remove 
conditions filed by the principal investor. Generally, an immigrant 
investor's derivatives are included in the principal immigrant 
investor's Form I-829 petition. However, there have been cases where 
the derivatives are not included in the principal's petition but 
instead file one or more separate Form I-829 petitions. This final rule 
clarifies that, except in the case of a deceased principal, derivatives 
not included in the principal's Form I-829 petition cannot use one 
petition for all the derivatives combined, but must each separately 
file his or her own Form I-829 petition. Based on IPO review of 
historical filings for this group, on average over a 3-year period 
about 24 cases per year involved such circumstances. Biometrics are 
currently required for the joint Form I-829 petition submissions, so 
the provision requiring separate filings will not impose any additional 
biometric, travel, or associated opportunity costs. The only costs 
expected from this specific provision in the final rule will be the 
separate filing fee and associated opportunity cost. DHS has attempted 
to quantify these new costs as follows. The filing fee for a Form I-829 
petition is $3,750. DHS estimates that the form

[[Page 35801]]

takes 4 hours to complete. DHS recognizes that many dependent spouses 
and children do not currently participate in the U.S. labor market, and 
as a result, are not represented in national average wage calculations. 
In order to provide a reasonable proxy of time valuation, DHS has to 
assume some value of time above zero and therefore uses an hourly cost 
burdened minimum wage rate of $10.66 to estimate the opportunity cost 
of time for dependent spouses. The value of $10.66 per hour represents 
the Federal minimum wage with an upward adjustment multiple of 1.47 for 
benefits.\131\ Each applicant will face a time cost burden of $42.64, 
which when added to the filing fee, is $3,792.64. Extrapolating the 
past number of average annual filings of 24 going forward, total 
applicant costs will total $91,023.36 annually.\132\
---------------------------------------------------------------------------

    \131\ Minimum Wage, U.S. DOL, available at http://www.dol.gov/dol/topic/wages/minimumwage.htm (indicating the Federal Minimum Wage 
is $7.25 per hour). The benefits-to-wage multiplier is calculated as 
follows: (Total Employee Compensation per hour)/(Wages and Salaries 
per hour). See Economic News Release, U.S. Department of Labor, 
Bureau of Labor Statistics, Table 1. Employer costs per hour worked 
for employee compensation and costs as a percent of total 
compensation: Civilian workers, by major occupational and industry 
group (June 2018), available at https://www.bls.gov/news.release/archives/ecec_06082018.pdf.
    \132\ Calculation: The burdened wage of $10.66 per hour 
multiplied by 4 hours.
---------------------------------------------------------------------------

    Removal of Conditions Interview. In addition to the separate filing 
requirement discussed earlier, DHS is improving the adjudication 
process relevant to the investor's Form I-829 interview process by 
providing flexibility in interview scheduling and location. Section 
216A(c)(1)(B) of the INA, 8 U.S.C. 1186b(c)(1)(B), generally requires 
Form I-829 petitioners to be interviewed prior to final adjudication of 
the petition, although DHS may waive the interview requirement at its 
discretion. See INA section 216A(d)(3), 8 U.S.C. 1186b(d)(3). Under 
this rule, DHS is giving USCIS greater flexibility to require Form I-
829 interviews and determine the appropriate location for such an 
interview. Additionally, current DHS regulations allow for Form I-829 
petitioners to be interviewed prior to final adjudication of a Form I-
829 petition, but require the interview to be conducted at the USCIS 
District Office holding jurisdiction over the immigrant investor's new 
commercial enterprise. However, there is no requirement that the 
immigrant investor reside in the same location as the new commercial 
enterprise, and DHS has determined through some preliminary surveys 
conducted by IPO that many immigrant investors are located a 
considerable distance from the new commercial enterprise. Therefore, 
DHS clarifies that USCIS has authority to schedule an interview at the 
USCIS office holding jurisdiction over either the immigrant investor's 
commercial enterprise, the immigrant investor's residence, or the 
location in which the Form I-829 petition is being adjudicated. DHS 
cannot currently determine how many petitioners will potentially be 
affected by these changes. From fiscal years 2012 to 2016, DHS received 
an average of 2,137 Form I-829 petitions. While not all of these 
petitioners will require an interview or face hardship to travel for an 
interview, some of this maximum population may be affected.\133\ Some 
petitioners will benefit by traveling shorter distances for interviews 
and thus see a cost savings in travel costs and opportunity costs of 
time for travel and interview time.
---------------------------------------------------------------------------

    \133\ USCIS, Number of I-829 Petitions by Entrepreneurs to 
Remove Conditions by Fiscal Year, Quarter, and Case Status 2008-
2016, available at https://www.uscis.gov/sites/default/files/USCIS/Resources/Reports%20and%20Studies/Immigration%20Forms%20Data/Employment-based/I829_performancedata_fy2017_qtr2.pdf.
---------------------------------------------------------------------------

    Process for Issuing Permanent Resident Cards. DHS also amends 
regulations governing the process by which immigrant investors obtain 
their new permanent resident cards after the approval of their Form I-
829 petitions. Current regulations require the immigrant investor and 
his or her derivatives to report to a district office for processing of 
their permanent resident cards after approval of the Form I-829 
petition. This process is no longer necessary in light of intervening 
improvements in DHS's biometric data collection program.\134\ DHS now 
captures the required biometric data while the Form I-829 petition is 
pending, at the time the immigrant investor and his or her derivatives 
appear at an Application Support Center for fingerprinting, as required 
for the Form I-829 background and security checks. DHS then mails the 
permanent resident card directly to the immigrant investor by U.S. 
Postal Service registered mail after the Form I-829 petition is 
approved. Accordingly, there is generally no need for the immigrant 
investor and his or her derivatives to appear at a district office 
after approval of the Form I-829 petition.
---------------------------------------------------------------------------

    \134\ DHS already has authority to collect this information 
under 8 CFR part 103.
---------------------------------------------------------------------------

    DHS does not estimate any additional costs for this provision. This 
provision will likely benefit immigrant investors and any derivatives, 
including by providing savings in cost, travel, and time, since this 
regulation will no longer require them to report to a district office 
for processing of their permanent resident cards. DHS also benefits by 
removing a process that is no longer necessary.
    Petitioner Eligibility Following a Change in a Project's Offering. 
DHS also modifies its regulations to indicate that amendments or 
supplements made to an EB-5 project's offering in order to maintain 
compliance with securities laws based upon the final rule's changes to 
8 CFR 204.6 shall not independently result in denial or revocation of 
an investor's petition. DHS does not estimate any additional costs for 
this provision. This allowance will likely benefit certain investors 
whose eligibility for the EB-5 classification may have been at risk, 
absent this provision, because of an amendment to offering documents 
based on the changes made in this final rule. The petitions for this 
narrowly defined population of investors will not be denied or revoked 
under the circumstances put forth at new 8 CFR 204.6(n), provided the 
investors were eligible at the time of filing their petitions and 
remain eligible at the time of adjudication.
    Miscellaneous Other Changes. DHS is also making a number of other 
technical changes to the EB-5 regulations. First, DHS is updating a 
reference to the former United States Customs Service, so that it will 
now refer to U.S. Customs and Border Protection. Second, DHS is 
conforming DHS regulations to Public Law 107-273, which eliminated the 
requirement that immigrant entrepreneurs establish a new commercial 
enterprise from both section 203(b)(5) and section 216A of the INA. 
Accordingly, DHS removes references to this requirement in 8 CFR 216.6. 
Third, DHS is further conforming DHS regulations to Public Law 107-273 
by removing the references to ``management'' at 8 CFR 204.6(j)(5) 
introductory text and (j)(5)(iii). Fourth, DHS is removing the phrase 
``as opposed to maintaining a purely passive role in regard to the 
investment'' from 8 CFR 204.6(j)(5). Fifth, DHS is allowing any type of 
entity to serve as a new commercial enterprise. Sixth, DHS is amending 
8 CFR 204.6(k) to remove the requirement on USCIS to specify in the 
decision on the EB-5 petition whether the new commercial enterprise is 
principally doing business in a TEA. Finally, DHS is making revisions 
to otherwise unaffected sections of section 204.6 and 216.6 to replace 
the term ``entrepreneur'' with the term ``investor.''
    Since the NPRM, DHS is making six additional miscellaneous changes 
to (1)

[[Page 35802]]

remove references to ``geographic or political subdivision'' in 8 CFR 
204.6(i) and (j)(6)(ii)(B), (2) provide clarification in 8 CFR 204.6(d) 
that the petitioner of multiple immigrant petitions approved for 
classification as an investor is entitled to the earliest qualifying 
priority date, (3) changing ``approved EB-5 immigrant petition'' to 
``immigrant petition approved for classification as an investor, 
including immigrant petitions whose approval was revoked on grounds 
other than those set forth below,'' and ``approved petition'' to 
``immigrant petition approved for classification as an investor,'' (4) 
changing ``based upon that approved petition'' to ``using the priority 
date of the earlier-approved petition'' in final 8 CFR 204.6(d), (5) 
clarifying that a TEA may include census tracts directly adjacent to 
the census tract(s) in which the NCE is primarily engaged in business, 
and (6) making a technical correction to the inflation adjustment 
formula for the standard minimum investment amount and the high 
employment area investment amount, such that future inflation 
adjustments will be based on the initial investment amount set by 
Congress in 1990, rather than on the most recent inflation adjustment. 
All of these provisions are technical changes and will have no impact 
on investors or the government. Therefore, the benefits and costs for 
these changes were not estimated.
    Miscellaneous Costs. Familiarization costs: DHS assumes that there 
will be familiarization costs associated with this rule. To estimate 
these costs, DHS relied on several assumptions. First, DHS believes 
that each approved regional center will need to review the rule. Other 
than regional centers, the NCEs will also need to be familiar with the 
final rule. Based on the 851 regional centers as having approved Forms 
I-924 and 719 non-regional center NCEs when this analysis was conducted 
(July 3, 2017), a total of at least 1,570 identified entities will 
likely need to review the rule. DHS believes that lawyers will likely 
review the rule and that it will take about 4 hours to review and 
inform any additional parties of the changes in this final rule. Based 
on the BLS ``Occupational Employment Statistics (OES)'' dataset, the 
current mean hourly wage for a lawyer was $68.22.\135\ DHS burdens this 
rate by a multiple of 1.47 to account for other compensation and 
benefits, to arrive at an hourly cost of $100.28. The total cost of 
familiarization is $629,758.4 annually based on the current number of 
approved regional centers and non-regional center NCEs in the recent 
past.\136\
---------------------------------------------------------------------------

    \135\ The wage figure reflects the May 2017 update from Bureau 
of Labor Statistics, Occupational Employment Statistics (OES) data 
set, provided in HTML format available at https://www.bls.gov/oes/2017/may/oes_nat.htm#23-0000.
    \136\ Calculation: 1,570 entities x 4 hours each x burdened 
hourly wage of $100.28.
---------------------------------------------------------------------------

B. 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 Fairness 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 companies to compete 
with foreign-based companies in domestic and export markets. However, 
as some small businesses may be affected under this regulation, DHS has 
prepared a Final Regulatory Flexibility Analysis under the Regulatory 
Flexibility Act.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as 
amended by the Small Business Regulatory Enforcement Fairness Act of 
1996, Public Law 104-121, 5 U.S.C. 601-612, requires Federal agencies 
to consider the potential impact of regulations on small entities 
during the development of their rules. The term ``small entities'' 
comprises small businesses, not-for-profit organizations that are not 
dominant in their fields, and governmental jurisdictions with 
populations of less than 50,000. An ``individual'' is not defined by 
the RFA as a small entity, and costs to an individual from a rule are 
not considered for RFA purposes. In addition, the courts have held that 
the RFA requires an agency to perform a regulatory flexibility analysis 
of small entity impacts only when a rule directly regulates small 
entities.\137\ Consequently, any indirect impacts from a rule to a 
small entity are not costs for RFA purposes.
---------------------------------------------------------------------------

    \137\ A Guide for Government Agencies How to Comply with the 
Regulatory Flexibility Act, May 2012 page 22. See Direct versus 
indirect impact discussion, available at https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------

    However, the changes proposed by DHS to modernize and improve the 
EB-5 program may have the potential to affect several types of business 
entities involved in EB-5 projects. Therefore, DHS prepared an Initial 
Regulatory Flexibility Analysis (IRFA) under the RFA in the proposed 
rule because some of the entities involved may be considered small 
entities.
    In the IRFA of the NPRM, DHS explained that there were four main 
types of business entities involved in EB-5 that could be affected by 
the proposed rule changes: Immigrant Investors, Regional Centers (RCs), 
New Commercial Enterprises (NCEs), and Job-Creating Entities (JCEs). 
DHS explained that the investors who invest funds and file Form I-526 
petitions are individuals who voluntarily apply for immigration 
benefits on their own behalf and thus do not meet the definition of a 
small entity. Therefore, the EB-5 investors were not considered further 
for purposes of the RFA.
    DHS also explained in the IRFA that the complex, multi-layered 
structure of most EB-5 investments, coupled with a lack of data 
concerning revenue and employment, made it impossible for DHS to 
determine if NCEs and JCEs were small entities. These constraints still 
apply and DHS cannot determine if these entities are small in terms of 
the RFA. DHS sought public feedback on the topic but did not receive 
data or information that could facilitate an appropriate small entity 
analysis for this final rule.
    In the IRFA, DHS explained that RCs were difficult to analyze 
because of the lack of official data concerning employment, income, and 
industry classification of the regional center itself. First, DHS 
explained that the bundled investments that RCs typically pool and 
structure as loans do not constitute revenue. Second, RCs typically 
report the North American Industry Classification (NAICS) codes 
associated with the sectors they plan to direct investor funds toward, 
but these codes do not generally apply to the RCs business themselves. 
In addition, information provided to DHS concerning RCs generally does 
not explicitly include revenues or employment.\138\ As a result, DHS 
was unable to make a determination concerning the small entity status 
of RCs in the IRFA.
---------------------------------------------------------------------------

    \138\ DHS conducted a small entity analysis on EB-5 regional 
centers for the 2016 comprehensive fee rule, which went into effect 
on December 23, 2016. See 81 FR 73292. However, the same data 
constraints as described in the NPRM of this rule made it impossible 
to draw any conclusions.
---------------------------------------------------------------------------

    Since the IRFA, DHS was able, despite data constraints, to obtain 
some information under some specific assumptions to develop a 
methodology to analyze the small entity status of RCs, as will be 
explained in detail under section D. Therefore, DHS presents this Final 
Regulatory Flexibility Analysis (FRFA), which includes this additional

[[Page 35803]]

analysis. In summary, DHS was able to determine that a significant 
number of RCs may be small entities. However, DHS was still not able to 
conclusively determine the impact of this final rule on those small 
entities.
Final Regulatory Flexibility Analysis
    Small entities that may incur additional indirect costs by this 
rule are the RCs that pool immigrant investors' funds into associated 
NCEs that in turn undertake job-creating activities directly or, more 
typically, indirectly through JCEs that receive EB-5 capital from the 
RC-associated NCEs (most often through loans). RC activity has grown 
substantially since 2008, and as of July 3, 2017, there were 851 
approved RCs. RC-affiliated Form I-526 petitions accounted for 13,103, 
or 92 percent, of Form I-526 petitions submitted annually from 2014-
2016. Since RCs, NCEs, and JCEs all have a role to play in the EB-5 
program, the regulatory changes promulgated in this final rule notice 
could affect all three types of entities. However, as was discussed in 
the IRFA of the NPRM, DHS does not have a way of knowing if NCEs and 
JCEs are small entities.
    1. A Statement of the Need for, and Objectives of, the Rule.
    DHS is updating its EB-5 regulations to modernize aspects of the 
EB-5 program and improve areas of the program in need of reform. The 
rule will also reflect statutory changes and codify existing policies. 
Elsewhere in this preamble, DHS provides further background and 
explanation for changes being made in this final rule.
    2. A Statement of the Significant Issues Raised by the Public 
Comments in Response to the Initial Regulatory Flexibility Analysis, A 
Statement of the Assessment of the Agency of Such Issues, and A 
Statement of Any Changes Made in the Proposed Rule as a Result of Such 
Comments.
    DHS received several comments on the IRFA analysis provided with 
the proposed rule. These comments are summarized and addressed as 
follows:
1. Industry Classifications/NAICS Codes To Classify Regional Centers
    A commenter that represents multiple regional centers stated that 
according to its members, RCs typically are classified under NAICS code 
523, Securities, Commodity Contracts, and Other Financial Investments 
and Related Activities. According to the commenter, subsector 523 is 
identified in the Small Business Administration's (SBA) size standard 
list as a small entity based on a revenue level of $38.5 million or 
less. See 13 CFR 121.201. The commenter suggested that DHS should 
review such data, and that if most regional centers are small 
businesses, additional analysis is needed to assess potential changes 
to the course of the regulatory process.
    DHS appreciates the commenter's suggestion on using the size 
standard revenue found in NAICS subsector 523 to determine the small 
entity status of RCs. However, DHS disagrees that subsector 523, and 
its corresponding size standard revenue, is the only appropriate 
industry in which to classify RCs. Subsector 523 primarily engages in 
underwriting, brokering, or providing other services related to 
securities, commodity contracts, and other financial investments and 
related activities.\139\ However, other NAICS categories might also 
apply to certain RCs. For instance, DHS determined that some RCs could 
be classified under NAICS code 522310, Mortgage and Nonmortgage Loan 
Brokers, given the prevalence of the NCE to JCE loan model and the role 
that RCs typically occupy in facilitating such loans. NAICS industry 
522310 is comprised of establishments primarily engaged in arranging 
loans by bringing borrowers and lenders together on a commission or fee 
basis.\140\ The small business size standard for NAICS industry 522310 
is based on a revenue level of $7.5 million or less. Regardless of 
which NAICS code applies to some RCs, however, DHS reiterates that the 
revenue of RCs is still difficult to determine because of the lack of 
official data concerning income and employment of the RC. Therefore, 
even if a NAICS code allows for industry classification of the RC 
itself, application of the size standard is more challenging. The 
information provided by RC applicants as part of the Form I-924 and I-
924A processes does not include RC revenues or employment, which would 
be necessary to compare against the SBA size standard.
---------------------------------------------------------------------------

    \139\ 2017 NAICS Definition of Subsector 523 Securities, 
Commodity Contracts, and Other Financial Investments and Related 
Activities, available at https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=523&search=2017 NAICS Search.
    \140\ 2017 NAICS Definition of 522310, Mortgage and Nonmortgage 
Loan Brokers, available at https://www.census.gov/cgi-bin/sssd/naics/naicsrch?code=522310&search=2017 NAICS Search.
---------------------------------------------------------------------------

2. Industry Classifications/NAICS Codes To Classify NCEs
    One commenter stated that if most NCEs and JCEs consider projects 
within a few industries, it would not be burdensome for DHS to review 
IPO annual reports to make the most economically sound conclusions as 
to the NAICS codes for most EB-5 program NCEs and JCEs.
    As described in the proposed rule and similar to challenges with 
identifying RCs as small entities, DHS had challenges in trying to 
identify NCEs and JCEs as small entities. The multiplicity of ways in 
which an NCE can engage in the job creating activity make it difficult 
to assign a NAICS code to any particular entity that constitutes or 
comprises part of what is considered the NCE. Additionally, DHS does 
not require RC applicants or petitioners to submit on their 
applications or petitions the type of revenue and employment data 
appropriate for analysis, regardless of the type of NCE or how it is 
structured. Also, due to data capture limitations, it is not feasible 
for DHS to reliably estimate the number of JCEs at this time. DHS 
anticipates forthcoming form revisions that may collect additional data 
on JCEs that receive EB-5 capital, and expects to be able to examine 
this more closely in the future.
3. Sources of Revenue for RCs and NCEs
    A commenter stated that although revenue and employee numbers for 
RCs and NCEs are not collected on the Form I-924A for Annual 
Certification, the revenue and employee numbers are contained in 
supplementary papers filed annually with the Form I-924A.
    DHS reiterates that the information provided by RC applicants as 
part of the Form I-924 and I-924A processes does not include adequate 
data to allow DHS to reliably identify the small entity status of 
individual RCs or businesses entities, such as NCEs and JCEs, under 
their purview. Information provided to DHS concerning RCs generally 
does not include RC revenues or employment of the RCs themselves.
4. Other Comments on the RFA
    There were several other comments concerning the RFA. One commenter 
claimed that individual investors should be considered small entities 
for purposes of this RFA. A second claimed that although DHS has 
acknowledged its responsibilities under the RFA, it is actually not 
compliant with the RFA because of the lack of detailed analysis. A 
third claimed that the rule would cause significant impacts on many 
small businesses, but that DHS did not seriously consider any 
alternative proposals. These commenters suggest that the rule should 
not be implemented until a more detailed analysis of small entity 
impacts can be undertaken and evaluated.
    DHS appreciates the commenters' concerns but disagrees with the 
premise that DHS did not comply with the RFA. DHS has fully complied 
with the requirements of the RFA, which are

[[Page 35804]]

procedural in nature. Sections 603 and 604 of the RFA describe what 
information needs to be included in an IRFA and FRFA. DHS has provided 
that information. DHS notes the RFA provides analytical flexibilities 
to agencies and does not contain a requirement for a detailed analysis; 
for instance, section 607 of the RFA states a quantitative analysis is 
not required to comply with the RFA's analytical requirements.\141\
---------------------------------------------------------------------------

    \141\ Section 607 of the RFA, Preparation of Analyses, states 
that in complying with the provisions of sections 603 and 604 of 
this title, an agency may provide either a quantifiable or numerical 
description of the effects of a proposed rule or alternatives to the 
proposed rule, or more general descriptive statements if 
quantification is not practicable or reliable.
---------------------------------------------------------------------------

    DHS explained in the proposed rule and in this final rule the 
reasons why this data is difficult to obtain and assess. Since the 
proposed rule, however, DHS has attempted to seek some additional data 
on RCs and has included that analysis in this final regulatory 
flexibility analysis. This additional analysis provides an estimated 
percentage of RCs that may be considered small entities. As DHS has 
described in this analysis and in the published NPRM, DHS was not able 
to obtain additional data on JCEs. Additionally, aside from the 
suggestion to review investor and RC filings (which, as described 
above, DHS has done), commenters did not provide any data sources that 
would allow small entity analysis for JCEs.
    DHS disagrees with the commenter that investors must be considered 
under the RFA. An investor who wishes to immigrate to the United States 
through the EB-5 program must file an Immigrant Petition by Alien 
Investor (Form I-526). Individuals who file Form I-526 petitions apply 
for immigration benefits on their own behalf and thus do not meet the 
definition of a small entity. Therefore, DHS reiterates that investors 
need not be considered further for purposes of regulatory flexibility 
analysis.
    Finally, although the commenters claimed that there would likely be 
significant costs to small entities, they did not provide credible data 
or analysis to support the claim. As it pertains to compliance with 
regulatory flexibility analysis requirements, DHS complied with such 
requirements. For instance, DHS considered several alternatives, and 
determined that a significant share of affected business entities could 
be small entities, as described below.
    3. The Response of the Agency to Any Comments Filed by the Chief 
Counsel for Advocacy of the Small Business Administration in Response 
to the Proposed Rule, and a Detailed Statement of Any Change Made to 
the Proposed Rule in the Final Rule as a Result of the Comments.
    No comments were filed by the Chief Counsel of Advocacy of the SBA.
    4. A Description of and an Estimate of the Number of Small Entities 
to Which the Rule Will Apply or an Explanation of Why No Such Estimate 
Is Available.
    As mentioned above, DHS was able to obtain some additional 
information on RCs since the publication of the NPRM. RCs file Form I-
924 with DHS that includes a plan of operations for the RC and 
information regarding fees and surcharges paid to the RC. Additionally, 
individuals investing through the RC program file Form I-526 with DHS 
based on a specific NCE, which are affiliated with a specific RC. For 
this analysis, DHS manually consulted internal file tracking datasets 
on Form I-526 and NCE submissions for RC investors. NCEs can have 
multiple investors, but each individual investor must file a unique 
Form I-526. DHS searched for filed Forms I-526 and grouped them 
according to NCE. Then, DHS connected the identified NCEs to the unique 
regional center. Through this process, DHS obtained the number of 
investors and year of each investment for each of the approved RCs.
    When reviewing Forms I-924 submitted by RCs to DHS, adjudicators 
and economists prepare economic due diligence reports (EDD) as part of 
the adjudication process. These EDDs are not captured in formal DHS 
databases. However, for this analysis, DHS manually obtained EDDs for 
574 regional centers with approved Forms I-924 in FY 2017. The EDDs 
contain data from the Form I-924 submission, such as the administrative 
fee that the RC may charge to investors as well as plans and 
projections concerning investors. DHS assumes that these administrative 
fees contribute to the revenues of RCs.\142\ While the RCs submit 
projections of anticipated numbers of investors, the actual investments 
and related Form I-526 filings submitted under the purview of RCs can 
only be determined after the Form I-924 is approved. Thus, DHS cannot 
rely on these early projections in determining RC revenue. But DHS can 
multiply the administrative fees by the number of associated EB-5 
investors. Therefore, in an effort to reach a more accurate count of RC 
revenue, DHS manually matched each RC EDD to the corresponding 
investors from the Form I-526.
---------------------------------------------------------------------------

    \142\ The administrative fees charged to the investor may cover 
various charges related to the economic impact analysis, legal fees, 
business plan development, and immigration services fees.
---------------------------------------------------------------------------

    Through the process described in the preceding paragraph, DHS 
obtained the number of investors per RC and proceeded to refine the RC 
cohort by removing RCs that did not have relevant data, RCs that have 
been terminated, and those RCs that had no affiliated Form I-526 
petitions associated with them (as those would present no information 
that could be used in the analysis). For those RCs included in the 
analysis, DHS notes that the numbers of Forms I-526 filed under a 
specific RC (and related administrative fee payments) are not spread 
evenly across years, as some years have more Form I-526 submissions 
than others. This posed substantial challenges for DHS analysis, 
because there is no natural cutoff (such as a fiscal year or calendar 
year) for analyzing the data and it does not allow DHS to capture the 
number of unique investors to each RC. If DHS were to extend the 
analytical cohort back to earlier approvals in order to capture the 
total number of investors unique to the RC, the timeframe for analysis 
would span multiple years.\143\ Therefore, this makes DHS' ability to 
accurately assess RC revenue against the SBA standards difficult.\144\
---------------------------------------------------------------------------

    \143\ See ``How to Comply with the Regulatory Flexibility Act,'' 
(2017) U.S. Small Business Administration, Office of Advocacy, 
available at page. 114, available at https://www.sba.gov/sites/default/files/advocacy/How-to-Comply-with-the-RFA-WEB.pdf.
    \144\ The SBA Table of Small Business Size Standards is found 
at: https://www.sba.gov/sites/default/files/files/Size.
---------------------------------------------------------------------------

    To address the timing issue, DHS analyzed the time-distribution of 
the filing of Form I-526 petitions associated with designated RCs and 
found that the clear bulk of filings--exactly four-fifths--were made in 
the first year and the second year after a RC was designated, while 
only 7 percent of filings were made in the same year the RC was 
designated. Moreover, a larger share, 13 percent, were made in the 
first half of 2017), as is reported in Figure 2:

[[Page 35805]]

[GRAPHIC] [TIFF OMITTED] TR24JY19.013

    For the purposes of this analysis, DHS assumes that each Form I-526 
filed under an RC represents an instance in which the RC will receive 
an administrative fee that will contribute to the RC's revenue. 
Although DHS cannot assume that administrative fees are paid when the 
forms are filed, this analysis assumes the fees will be paid 
eventually.
    DHS believes that the Form I-526 filings made through RCs that were 
designated in 2014 are a reasonable benchmark for analysis that 
mitigate the aforementioned constraints as best as possible.
    For the RCs approved in 2014 that had EDDs with viable information, 
and were non-terminated and ``active'' (meaning that they actually had 
Form I-526 filings in 2016), we obtained a cohort of 95 RCs that were 
associated with 6,308 individual investors. DHS analysis reveals that 
the number of investors per RC varies substantially, with a range of 
2,272. The distribution is highly right-skewed, with a mean of 85, a 
median of 39, and a skewness value of 8. These results indicate suggest 
that the median is a proper measure for central location. Next, DHS 
analyzed the administrative fees in the cohort. The distribution is 
tight (or clustered closely together) with both the mean and median at 
$50,000. Next DHS estimated revenues for each RC in the analytical 
cohort by multiplying the total number of investors who filed a Form I-
526 for each RC by its actual administrative fee reported on the EDD, 
which yielded a median revenue amount of $1,250,000 over the period 
considered. DHS recognizes that by using the total number of investors 
who filed a Form I-526 for each RC over the course of 2014, when the RC 
was designated, FYs years 2015 and 2016, and the first half of 2017 
does not exactly match the SBA size standard time-frame, which is based 
on a single calendar year. However, DHS believes that this is the best 
analysis that can be conducted given the uniqueness of regional 
centers. DHS believes that our modified methodology provides a 
reasonable estimate of RC revenue.\145\
---------------------------------------------------------------------------

    \145\ An additional assumption in this FRFA analysis is that the 
only source of regional center revenue is administrative fees 
charged to each investor. DHS believes that some regional centers 
may also obtain revenue from charges made to NCEs for management, 
consulting, or loan arrangements. DHS does not have data on these 
fees and thus relies on the aforementioned assumption of the single 
revenue stream accruing to administrative fees charged to investors.
---------------------------------------------------------------------------

    To determine the appropriate size standard for the RCs, DHS 
extensively reviewed various NAICS codes. DHS determined that NAICS 
code 522310, Mortgage and Nonmortgage Loan Brokers defined as an 
``industry [that] comprises establishments primarily engaged in 
arranging loans by bringing borrowers and lenders together on a 
commission or fee basis,'' may be an appropriate NAICS industry in 
which RCs might be found given the typical activities undertaken by RC-
associated NCEs (loaning EB-5 capital to the JCEs) and the role 
typically undertaken by RCs in facilitating those activities. The SBA 
size standard for the NAICS category chosen is based on a revenue of 
$7.5 million. DHS compared the revenues of the 95 RCs against this size 
standard and concludes that approximately 89 percent of RCs may be 
small entities for the purposes of this FRFA. Extrapolating this share 
to the 864 approved RCs would mean that approximately 769 RCs may be 
small entities.
    DHS evaluated the suggestion from a commenter that regional centers 
should be classified under NAICS code subsection 523, as either ``an 
entity engaged in miscellaneous investment activities'' or ``an entity 
engaged in miscellaneous intermediation.'' However, DHS believes that 
the coding we chose is the most appropriate to use in the analysis 
because it applies to the majority of regional center projects, and 
thus is a more accurate reflection of the regional center 
entities.\146\
---------------------------------------------------------------------------

    \146\ DHS points out for the administrative record that even 
though a large majority of regional centers would be small entities 
under the analysis undertaken, both classifications recommended by 
the commenter would involve revenue based size standards of $38.5 
million, which means that an even larger share of regional centers 
would be small entities.
---------------------------------------------------------------------------

    DHS again caveats that due to the uniqueness of the RC business 
operation system and constraints on data, this analysis incorporates 
some modifications to the typical methodology that DHS utilizes in its 
rulemakings. Namely, DHS had to use a three-and-a-half-year timeframe 
instead of the standard one-year timeframe and was compelled to assign 
an industry code based on a description of RCs that is our best 
knowledge of how RCs tend to function. Lastly, we note that the number 
of investors utilized likely understates the true time-independent 
revenue of RCs since there will generally be forthcoming investments 
(and associated fee payments) not measurable at the point in time when 
the analysis was conducted.
    While DHS believes the methodology described in this section can 
lead to reasonable assumptions on the number of small entities that may 
be RCs, DHS still cannot determine the exact impact of this rule on 
those small entities. Part of this issue is due to the fact that DHS is 
not sure how many, if any, investors will be deterred from the EB-5 
program

[[Page 35806]]

due to the increased investment amounts and the new TEA requirements. 
DHS cannot estimate the full potential impact of this rule on RC 
revenue.
    5. A Description of the Projected Reporting, Recordkeeping and 
Other Compliance Requirements of the Rule, Including an Estimate of the 
Classes of Small Entities Which Will Be Subject to the Requirement and 
the Type of Professional Skills Necessary for Preparation of the Report 
or Record.
    The final rule does not directly impose any new or additional 
``reporting'' or ``recordkeeping'' requirements on filers of Forms I-
526, I-829 or I-924. The rule does not require any new professional 
skills for reporting. However, the rule may create some additional time 
burden costs related to reviewing the proposed provisions, as is 
discussed earlier. As noted, DHS believes that lawyers would likely 
review the rule and that it would take about 4 hours to review and 
inform any additional parties of the changes in this rule. As was 
discussed above under ``Miscellaneous Costs,'' the current benefits-
burdened hourly wage of a lawyer is $100.28. At this rate each 
reviewing entity would face a familiarization cost of $401.12
    While DHS has estimated these costs, and assumes that they may 
affect some small entities, for reasons stated previously, data 
limitations prevent DHS from determining the extent of the impact to 
the small entities.
    6. A Description of the Steps the Agency Has Taken to Minimize the 
Significant Economic Impact on Small Entities Consistent with the 
Stated Objectives of Application Statutes, Including a Statement of the 
Factual, Policy, and Legal Reasons for Selecting the Alternative 
Adopted in the Final Rule and Why Each of the Other Significant 
Alternatives to the Rule Considered by the Agency Which Affect the 
Impact on Small Entities Was Rejected.
    While DHS has determined, via the preceding analysis, that a 
significant share of regional centers may be considered small entities, 
DHS does not have enough data to determine the impact that this rule 
may have on those entities. Therefore, while many regional centers may 
be small entities, DHS cannot determine whether this rule will have a 
substantial impact, positive or negative, on those small entities.
    DHS considered several alternatives to reform the TEA designation 
process, but found that they did not adequately accomplish the 
objective of INA section 203(b)(5)(B)(ii). One alternative DHS 
considered was limiting the geographic or political subdivision of TEA 
configurations to an area containing up to, but no more than, 12 
contiguous census tracts, an option currently used by the state of 
California in its TEA designation process.\147\ However, DHS is not 
confident that this option is necessarily appropriate for nationwide 
application, as the limitation to 12 census tracts may be justifiable 
for reasons specific to California but may not be practical on a 
national scale. Another significant alternative DHS considered that 
would be relatively straightforward to implement and understand would 
be to limit the geographic or political subdivision of the TEA to the 
actual project tract(s). While this option would be easy to put in 
practice for both stakeholders and the agency, it was considered too 
restrictive in that it would exclude immediately adjacent areas that 
would be affected by the investment.
---------------------------------------------------------------------------

    \147\ See Cal. Governor's Office of Bus. and Econ. Dev., EB-5 
Investor Visa Program, available at http://business.ca.gov/International/EB5Program.aspx.
---------------------------------------------------------------------------

    DHS also considered options based on a ``commuter pattern'' 
analysis, which focuses on defining a TEA as encompassing the area in 
which workers may live and be commuting from, rather than just where 
the investment is made and where the new commercial enterprise is 
principally doing business. The ``commuter pattern'' proposal was 
deemed too operationally burdensome to implement as it posed challenges 
in establishing standards to determine the relevant commuting area that 
would fairly account for variances across the country.\148\ In 
addition, DHS could not identify a commuting-pattern standard that 
would appropriately limit the geographic scope of a TEA designation 
consistent with the statute and the policy goals of this proposed 
regulation.
---------------------------------------------------------------------------

    \148\ In the NPRM and development of this final rule, DHS 
reviewed a proposed commuter pattern analysis incorporating the data 
table from the Federal Highway Administration, ``CTPP 2006-2010 
Census Tract Flows,'' available at (http://www.fhwa.dot.gov/planning/census_issues/ctpp/data_products/2006-2010_tract_flows/) 
(last updated Mar. 25, 2014). DHS also reviewed the CTTP updated 
status report (released in January 2018), entitled ``CTPP Oversight 
Board is Discontinuing Census TAZ for Small Geography Data Reporting 
and Urging the Transportation Planning Community to Engage in 2020 
Census Participant Statistical Areas Program (PSAP),'' available at 
https://www.fhwa.dot.gov/planning/census_issues/ctpp/status_report/sr0118/fhwahep18046.pdf, which will phase in slight methodological 
changes over the next year. DHS found that the required steps to 
properly manipulate the Census Transportation Planning Product 
(CTPP) database might prove overly burdensome for petitioners with 
insufficient economic and statistical analysis backgrounds. As an 
alternate methodology for TEA commuter pattern analysis, DHS 
reviewed data from the U.S. Census tool, On the Map, available at 
http://onthemap.ces.census.gov/, which is tied to the U.S. Census 
Bureau's American Community Survey. Although the interface appeared 
to be more user-friendly overall, using this data would be 
operationally burdensome, potentially requiring hours of review to 
obtain the appropriate unemployment rates for the commuting area.
---------------------------------------------------------------------------

    With respect to the minimum investment amount provision, DHS 
proposed an alternative to setting the reduced TEA investment amount to 
half of the standard minimum amount ($900,000 instead of $1,350,000), 
consistent with the existing regulatory framework.\149\ DHS initially 
proposed a reduction to 75 percent rather than 50 percent of the 
standard minimum amount to better balance the Congressional aim of 
incentivizing investment in TEAs with the goal of encouraging greater 
investment in the United States more generally. History suggests that a 
50 percent reduction coincides with an imbalance in favor of TEA 
investments. DHS continues to have some concern about the imbalance, 
though Congress granted DHS explicit authority to create this 
``imbalance'' to incentivize investments in targeted employment areas. 
8 U.S.C. 203(b)(5)(C)(ii). However, the reforms to the designation 
process for certain high unemployment TEAs finalized in this rule will 
ensure that, even if some imbalance remains, it is benefiting truly 
deserving communities as Congress intended. Ultimately, DHS believes in 
a meaningful incentive to invest in rural areas and areas of true high-
unemployment, and thus, upon careful consideration of the comments 
related to this issue, DHS opted to retain the differential between TEA 
and non-TEA investments at 50 percent.
---------------------------------------------------------------------------

    \149\ The current reduced minimum investment amount ($500,000) 
is 50 percent of the standard minimum investment amount 
($1,000,000).
---------------------------------------------------------------------------

D. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among 
other things, to curb the practice of imposing unfunded Federal 
mandates on State, local, and tribal governments. Title II of the UMRA 
requires each Federal agency to prepare a written statement assessing 
the effects of any Federal mandate in a proposed or final agency rule 
that may result in a $100 million or more expenditure (adjusted 
annually for inflation) in any one year by State, local, and tribal 
governments, in the aggregate, or by the private sector. The value 
equivalent of $100 million in 1995 adjusted for inflation to 2016 
levels by the Consumer Price Index for

[[Page 35807]]

All Urban Consumers (CPI-U) is $157 million.
    As noted above, this rule does not include any unfunded Federal 
mandates. The requirements of Title II of the UMRA, therefore, do not 
apply, and DHS has not prepared a statement under the UMRA.

E. Executive Order 13132

    This rule would not have substantial direct effects on the States, 
on the relationship between the National Government and the states, or 
on the distribution of power and responsibilities among the various 
levels of government. Therefore, in accordance with section 6 of 
Executive Order 13132, it is determined that this rule does not have 
sufficient federalism implications to warrant the preparation of a 
federalism summary impact statement.

F. Executive Order 12988

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

G. National Environmental Policy Act

    DHS Directive (Dir.) 023-01 Rev. 01 and Instruction (Inst.) 023-01-
001 Rev. 1 establish the policies and procedures that DHS and its 
components use to comply with NEPA and the Council on Environmental 
Quality (CEQ) regulations for implementing NEPA, 40 CFR parts 1500-
1508. The CEQ regulations allow federal agencies to establish, with CEQ 
review and concurrence, categories of actions which experience has 
shown do not individually or cumulatively have a significant effect on 
the human environment (``categorical exclusions'') and, therefore, do 
not require an Environmental Assessment (EA) or Environmental Impact 
Statement (EIS). 40 CFR 1507.3(b)(1)(iii), 1508.4.
    Inst. 023-01-001 Rev. 01 establishes Categorical Exclusions that 
DHS has found to have no such effect. Inst. 023-01-001 Rev. 01 Appendix 
A Table 1. Inst. 023-01 -001 Rev. 01 requires the action to satisfy 
each of the following three conditions: (1) The entire action clearly 
fits within one or more of the categorical exclusions; (2) the action 
is not a piece of a larger action; and (3) no extraordinary 
circumstances exist that create the potential for a significant 
environmental effect. Inst. 023-01-001 Rev. 01 section V.B (1)-(3).
    This final rule amends the regulations implementing the EB-5 
immigrant visa program. The final rule purely relates to the agency's 
administration of the EB-5 program. DHS does not believe that NEPA 
applies to this action as any attempt to analyze a potential 
environmental impact associated with changes to the agency's 
administration of the EB-5 program contemplated by this rule would be 
largely, if not completely, speculative. Specifically, this rule 
changes a number of eligibility requirements and introduces priority 
date retention for certain immigrant investor petitioners. It also 
amends existing regulations to reflect statutory changes and codifies 
existing EB-5 program policies and procedures. Additionally, the rule 
does not affect the number of visas which can be issued and for this 
reason as well would have no impact on the environment. DHS does not 
know where new commercial enterprises will be established, or where 
petitioners will invest or live. To the degree that it is possible to 
ascertain reasonably foreseeable impacts, DHS knows only that this rule 
does not change the number of visas Congress initially authorized in 
1990. Public Law 101-649. With a current population in excess of 323 
million and a land mass of 3.794 million square miles, an unchanged 
10,000 visas annually is insignificant by any measure.
    While DHS believes that NEPA frequently does not apply to USCIS 
rules, that analysis is unnecessary here because DHS has determined 
that if NEPA were to apply, this rule fits within categorical 
exclusions number A3(a) in Inst. 023-01-001 Rev. 01, Appendix A, Table 
1: ``Promulgation of rules . . . strictly of an administrative or 
procedural nature'' and A3(d) for rules that interpret or amend an 
existing regulation without changing its environmental effect.
    This rule is not part of a larger action and presents no 
extraordinary circumstances creating the potential for significant 
environmental effects. Therefore, this proposed rule is categorically 
excluded from further NEPA review.

H. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13, 
all Departments are required to submit to the Office of Management and 
Budget (OMB), for review and approval, any reporting requirements 
inherent in a rule. See Public Law 104-13, 109 Stat. 163 (May 22, 
1995). USCIS is revising one information collection in association with 
this rulemaking action: Immigrant Petition by Alien Entrepreneur (Form 
I-526), consistent with the changes proposed in the NPRM, and is making 
conforming changes to two information collections: Petition by 
Entrepreneur to Remove Conditions on Permanent Resident Status, Form I-
829, Application for Regional Center Designation Under the Immigrant 
Investor Program, approved OMB Control Number 1615-0045; and Form I-
924, Annual Certification of Regional Center, and Form I-924A, 
Supplement to Form I-924, approved under OMB Control Number 1615-0061.
    Specifically, the Form I-526 will collect additional information 
about the targeted employment area and the new commercial enterprise 
into which the petitioner is investing to determine the eligibility of 
qualified aliens to enter the United States to engage in commercial 
enterprises. In accordance with the final regulatory text, DHS is 
changing the title of Form I-526 to ``Immigrant Petition by Alien 
Investor'' from ``Immigrant Petition by Alien Entrepreneur.''
    DHS is also making two additional conforming changes. First, DHS 
will update the references to the Form I-526, which will now be 
entitled ``Immigrant Petition by Alien Investor'' in Forms I-829, I-
924, and I-924A. Second, as this final rule replaces references to 
``entrepreneur'' with ``investor,'' DHS will replace the references to 
``entrepreneur'' with ``investor'' in the Forms I-829, I-924, and I-
924A. Accordingly for Forms I-829, I-924, and I-924A, USCIS will submit 
a Form OMB 83-C, Correction Worksheet, and amended form and 
instructions to OMB for review and approval in accordance with the PRA.
Overview of Information Collection-Form I-526
    (1) Type of Information Collection: Revision to a currently 
approved information collection.
    (2) Title of the Form/Collection: Immigrant Petitioner by Alien 
Entrepreneur.
    (3) Agency form number, if any, and the applicable component of the 
DHS sponsoring the collection: Form I-526; USCIS.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract: Primary: Individuals. Form I-526 is used by 
the USCIS to determine if an alien can enter the U.S. to engage in 
commercial enterprise
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: The estimated 
total number of respondents for the information collection is 15,799 
and the estimated hour burden per response is 1hour and 50 minutes.
    (6) An estimate of the total public burden (in hours) associated 
with the collection: The total estimated annual hour burden associated 
with this collection is 28,912 hours.

[[Page 35808]]

    (7) An estimate of the total public burden (in cost) associated 
with the collection: The estimated total annual cost burden associated 
with this collection of information is $17,378,900.

List of Subjects

8 CFR Part 204

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

8 CFR Part 216

    Administrative practice and procedure, Aliens.

Regulatory Amendments

    Accordingly, DHS amends chapter I of title 8 of the Code of Federal 
Regulations as follows:

PART 204--IMMIGRANT PETITIONS

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

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


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


Sec.  204.6   Petitions for employment creation immigrants.

    (a) General. An EB-5 immigrant petition to classify an alien under 
section 203(b)(5) of the Act must be properly filed in accordance with 
the form instructions, with the appropriate fee(s), initial evidence, 
and any other supporting documentation.
* * * * *
    (c) Eligibility to file and continued eligibility. An alien may 
file a petition for classification as an investor on his or her own 
behalf.
    (d) Priority date. The priority date of a petition for 
classification as an investor is the date the completed, signed 
petition (including all initial evidence and the correct fee) is 
properly filed. The priority date of an immigrant petition approved for 
classification as an investor, including immigrant petitions whose 
approval was revoked on grounds other than those set forth below, will 
apply to any subsequently filed petition for classification under 
section 203(b)(5) of the Act for which the alien qualifies. A denied 
petition will not establish a priority date. A priority date is not 
transferable to another alien. In the event that the alien is the 
petitioner of multiple immigrant petitions approved for classification 
as an investor, the alien shall be entitled to the earliest qualifying 
priority date. The priority date of an immigrant petition approved for 
classification as an investor shall not be conferred to a subsequently 
filed petition if the alien was lawfully admitted to the United States 
for permanent residence under section 203(b)(5) of the Act using the 
priority date of the earlier-approved petition or if at any time USCIS 
revokes the approval of the petition based on:
    (1) Fraud or a willful misrepresentation of a material fact by the 
petitioner; or
    (2) A determination by USCIS that the petition approval was based 
on a material error.
    (e) * * *
    Regional Center Program means the program established by Public Law 
102-395, Section 610, as amended.
    Rural area means any area other than an area within a standard 
metropolitan statistical area (as designated by the Office of 
Management and Budget) or within the outer boundary of any city or town 
having a population of 20,000 or more based on the most recent 
decennial census of the United States.
    Targeted employment area means an area that, at the time of 
investment, is a rural area or is designated as an area that has 
experienced unemployment of at least 150 percent of the national 
average rate.
* * * * *
    (f) * * *
    (1) General. Unless otherwise specified, for EB-5 immigrant 
petitions filed on or after November 21, 2019, the amount of capital 
necessary to make a qualifying investment in the United States is one 
million eight hundred thousand United States dollars ($1,800,000). 
Beginning on October 1, 2024, and every five years thereafter, this 
amount will automatically adjust for petitions filed on or after each 
adjustment's effective date, based on the cumulative annual percentage 
change in the unadjusted All Items Consumer Price Index for All Urban 
Consumers (CPI-U) for the U.S. City Average reported by the Bureau of 
Labor Statistics, as compared to $1,000,000 in 1990. The qualifying 
investment amount will be rounded down to the nearest hundred thousand. 
DHS may update this figure by publication of a technical amendment in 
the Federal Register.
    (2) Targeted employment area. Unless otherwise specified, for EB-5 
immigrant petitions filed on or after November 21, 2019, the amount of 
capital necessary to make a qualifying investment in a targeted 
employment area in the United States is nine hundred thousand United 
States dollars ($900,000). Beginning on October 1, 2024, and every five 
years thereafter, this amount will automatically adjust for petitions 
filed on or after each adjustment's effective date, to be equal to 50 
percent of the standard minimum investment amount described in 
paragraph (f)(1) of this section. DHS may update this figure by 
publication of a technical amendment in the Federal Register.
    (3) High employment area. Unless otherwise specified, for EB-5 
immigrant petitions filed on or after November 21, 2019, the amount of 
capital necessary to make a qualifying investment in a high employment 
area in the United States is one million eight hundred thousand United 
States dollars ($1,800,000). Beginning on October 1, 2024, and every 
five years thereafter, this amount will automatically adjust for 
petitions filed on or after each adjustment's effective date, based on 
the cumulative annual percentage change in the unadjusted All Items 
Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City 
Average reported by the Bureau of Labor Statistics as compared to 
$1,000,000 in 1990. The qualifying investment amount will be rounded 
down to the nearest hundred thousand. DHS may update this figure by 
publication of a technical amendment in the Federal Register.
    (g) * * *
    (2) Employment creation allocation. The total number of full-time 
positions created for qualifying employees shall be allocated solely to 
those alien investors who have used the

[[Page 35809]]

establishment of the new commercial enterprise as the basis for a 
petition. No allocation must be made among persons not seeking 
classification under section 203(b)(5) of the Act or among non-natural 
persons, either foreign or domestic. USCIS will recognize any 
reasonable agreement made among the alien investors in regard to the 
identification and allocation of such qualifying positions.
* * * * *
    (i) Special designation of a high unemployment area. USCIS may 
designate as an area of high unemployment (at least 150 percent of the 
national average rate) a census tract or contiguous census tracts in 
which the new commercial enterprise is principally doing business, and 
may also include any or all census tracts directly adjacent to such 
census tract(s). The weighted average of the unemployment rate for the 
subdivision, based on the labor force employment measure for each 
census tract, must be at least 150 percent of the national average 
unemployment rate.
    (j) * * *
    (2) * * *
    (iii) Evidence of property transferred from abroad for use in the 
United States enterprise, including U.S. Customs and Border Protection 
commercial entry documents, bills of lading, and transit insurance 
policies containing ownership information and sufficient information to 
identify the property and to indicate the fair market value of such 
property;
* * * * *
    (5) Petitioner engagement. To show that the petitioner is or will 
be engaged in the new commercial enterprise, either through the 
exercise of day-to-day managerial control or through policy 
formulation, the petition must be accompanied by:
* * * * *
    (iii) Evidence that the petitioner is engaged in policy making 
activities. For purposes of this section, a petitioner will be 
considered sufficiently engaged in policy making activities if the 
petitioner is an equity holder in the new commercial enterprise and the 
organizational documents of the new commercial enterprise provide the 
petitioner with certain rights, powers, and duties normally granted to 
equity holders of the new commercial enterprise's type of entity in the 
jurisdiction in which the new commercial enterprise is organized.
    (6) * * *
    (i) In the case of a rural area, evidence that the new commercial 
enterprise is principally doing business within an area not located 
within any standard metropolitan statistical area as designated by the 
Office of Management and Budget, nor within any city or town having a 
population of 20,000 or more as based on the most recent decennial 
census of the United States; or
    (ii) In the case of a high unemployment area:
    (A) Evidence that the metropolitan statistical area, the specific 
county within a metropolitan statistical area, the county in which a 
city or town with a population of 20,000 or more is located, or the 
city or town with a population of 20,000 or more outside of a 
metropolitan statistical area, in which the new commercial enterprise 
is principally doing business has experienced an average unemployment 
rate of at least 150 percent of the national average rate; or
    (B) A description of the boundaries and the unemployment statistics 
for the area for which designation is sought as set forth in paragraph 
(i) of this section, and the reliable method or methods by which the 
unemployment statistics were obtained.
    (k) Decision. The petitioner will be notified of the decision, and, 
if the petition is denied, of the reasons for the denial. The 
petitioner has the right to appeal the denial to the Administrative 
Appeals Office in accordance with the provisions of part 103 of this 
chapter.
* * * * *
    (n) Offering amendments or supplements. Amendments or supplements 
to any offering necessary to maintain compliance with applicable 
securities laws based upon changes to this section effective on 
November 21, 2019 shall not independently result in denial or 
revocation of a petition for classification under section 203(b)(5) of 
the Act, provided that the petitioner:
    (1) Filed the petition for classification under section 203(b)(5) 
of the Act prior to November 21, 2019;
    (2) Was eligible for classification under 203(b)(5) of the Act at 
the time the petition was filed; and
    (3) Is eligible for classification under 203(b)(5) of the Act, 
including having no right to withdraw or rescind the investment or 
commitment to invest into such offering, at the time of adjudication of 
the petition.

PART 216--CONDITIONAL BASIS OF LAWFUL PERMANENT RESIDENCE STATUS

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

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

0
4. Amend Sec.  216.6 by:
0
a. Revising the section and paragraph (a)(1);
0
b. Removing and reserving paragraph (a)(4)(i);
0
c. Removing ``entrepreneur'' and adding in its place ``investor'' in 
paragraph (a)(4)(iv);
0
d. Revising paragraphs (a)(5) and (6) and (b);
0
e. Removing and reserving paragraph (c)(1)(i); and
0
f. Revising paragraphs (c)(2) and (d).
    The revisions read as follows:


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

    (a) * * *
    (1) General procedures. (i) A petition to remove the conditional 
basis of the permanent resident status of an investor accorded 
conditional permanent residence pursuant to section 203(b)(5) of the 
Act must be filed by the investor with the appropriate fee. The 
investor must file within the 90-day period preceding the second 
anniversary of the date on which the investor acquired conditional 
permanent residence. Before the petition may be considered as properly 
filed, it must be accompanied by the fee required under 8 CFR 
103.7(b)(1), and by documentation as described in paragraph (a)(4) of 
this section, and it must be properly signed by the investor. Upon 
receipt of a properly filed petition, the investor's conditional 
permanent resident status shall be extended automatically, if 
necessary, until such time as USCIS has adjudicated the petition.
    (ii) The investor's spouse and children may be included in the 
investor's petition to remove conditions. Where the investor's spouse 
and children are not included in the investor's petition to remove 
conditions, the spouse and each child must each file his or her own 
petition to remove the conditions on their permanent resident status, 
unless the investor is deceased. If the investor is deceased, the 
spouse and children may file separate petitions or may be included in 
one petition. A child who reached the age of 21 or who married during 
the period of conditional permanent residence, or a former spouse who 
became divorced from the investor during the period of conditional 
permanent residence, may be included in the investor's petition or must 
each file a separate petition.
* * * * *
    (5) Termination of status for failure to file petition. Failure to 
properly file the petition to remove conditions within the 90-day 
period immediately preceding the second anniversary of the date on 
which the investor obtained lawful

[[Page 35810]]

permanent residence on a conditional basis shall result in the 
automatic termination of the investor's permanent resident status and 
the initiation of removal proceedings. USCIS shall send a written 
notice of termination and a notice to appear to an investor who fails 
to timely file a petition for removal of conditions. No appeal shall 
lie from this decision; however, the investor may request a review of 
the determination during removal proceedings. In proceedings, the 
burden of proof shall rest with the investor to show by a preponderance 
of the evidence that he or she complied with the requirement to file 
the petition within the designated period. USCIS may deem the petition 
to have been filed prior to the second anniversary of the investor's 
obtaining conditional permanent resident status and accept and consider 
a late petition if the investor demonstrates to USCIS' satisfaction 
that failure to file a timely petition was for good cause and due to 
extenuating circumstances. If the late petition is filed prior to 
jurisdiction vesting with the immigration judge in proceedings and 
USCIS excuses the late filing and approves the petition, USCIS shall 
restore the investor's permanent resident status, remove the 
conditional basis of such status, and cancel any outstanding notice to 
appear in accordance with 8 CFR 239.2. If the petition is not filed 
until after jurisdiction vests with the immigration judge, the 
immigration judge may terminate the matter upon joint motion by the 
investor and DHS.
    (6) Death of investor and effect on spouse and children. If an 
investor dies during the prescribed 2-year period of conditional 
permanent residence, the spouse and children of the investor will be 
eligible for removal of conditions if it can be demonstrated that the 
conditions set forth in paragraph (a)(4) of this section have been met.
    (b) Petition review--(1) Authority to waive interview. USCIS shall 
review the petition to remove conditions and the supporting documents 
to determine whether to waive the interview required by the Act. If 
satisfied that the requirements set forth in paragraph (c)(1) of this 
section have been met, USCIS may waive the interview and approve the 
petition. If not so satisfied, then USCIS may require that an interview 
of the investor be conducted.
    (2) Location of interview. Unless waived, an interview relating to 
the petition to remove conditions for investors shall be conducted by a 
USCIS immigration officer at the office that has jurisdiction over 
either the location of the investor's commercial enterprise in the 
United States, the investor's residence in the United States, or the 
location of the adjudication of the petition, at the agency's 
discretion.
    (3) Termination of status for failure to appear for interview. If 
the investor fails to appear for an interview in connection with the 
petition when requested by USCIS, the investor's permanent resident 
status will be automatically terminated as of the second anniversary of 
the date on which the investor obtained permanent residence. The 
investor will be provided with written notification of the termination 
and the reasons therefore, and a notice to appear shall be issued 
placing the investor in removal proceedings. The investor may seek 
review of the decision to terminate his or her status in such 
proceedings, but the burden shall be on the investor to establish by a 
preponderance of the evidence that he or she complied with the 
interview requirements. If the investor has failed to appear for a 
scheduled interview, he or she may submit a written request to USCIS 
asking that the interview be rescheduled or that the interview be 
waived. That request should explain his or her failure to appear for 
the scheduled interview, and if a request for waiver of the interview, 
the reasons such waiver should be granted. If USCIS determines that 
there is good cause for granting the request, the interview may be 
rescheduled or waived, as appropriate. If USCIS waives the interview, 
USCIS shall restore the investor's conditional permanent resident 
status, cancel any outstanding notice to appear in accordance with 8 
CFR 239.2, and proceed to adjudicate the investor's petition. If USCIS 
reschedules that investor's interview, USCIS shall restore the 
investor's conditional permanent resident status, and cancel any 
outstanding notice to appear in accordance with 8 CFR 239.2.
    (c) * * *
    (2) If derogatory information is determined regarding any of these 
issues or it becomes known to the government that the investor obtained 
his or her investment funds through other than legal means, USCIS shall 
offer the investor the opportunity to rebut such information. If the 
investor fails to overcome such derogatory information or evidence that 
the investment funds were obtained through other than legal means, 
USCIS may deny the petition, terminate the investor's permanent 
resident status, and issue a notice to appear. If derogatory 
information not relating to any of these issues is determined during 
the course of the interview, such information shall be forwarded to the 
investigations unit for appropriate action. If no unresolved derogatory 
information is determined relating to these issues, the petition shall 
be approved and the conditional basis of the investor's permanent 
resident status removed, regardless of any action taken or contemplated 
regarding other possible grounds for removal.
    (d) Decision--(1) Approval. If, after initial review or after the 
interview, USCIS approves the petition, USCIS will remove the 
conditional basis of the investor's permanent resident status as of the 
second anniversary of the date on which the investor acquired 
conditional permanent residence. USCIS shall provide written notice of 
the decision to the investor. USCIS may request the investor and 
derivative family members to appear for biometrics at a USCIS facility 
for processing for a new Permanent Resident Card.
    (2) Denial. If, after initial review or after the interview, USCIS 
denies the petition, USCIS will provide written notice to the investor 
of the decision and the reason(s) therefore, and shall issue a notice 
to appear. The investor's lawful permanent resident status and that of 
his or her spouse and any children shall be terminated as of the date 
of USCIS' written decision. The investor shall also be instructed to 
surrender any Permanent Resident Card previously issued by USCIS. No 
appeal shall lie from this decision; however, the investor may seek 
review of the decision in removal proceedings. In proceedings, the 
burden shall rest with USCIS to establish by a preponderance of the 
evidence that the facts and information in the investor's petition for 
removal of conditions are not true and that the petition was properly 
denied.

Kevin K. McAleenan,
Acting Secretary of Homeland Security.
[FR Doc. 2019-15000 Filed 7-23-19; 8:45 am]
 BILLING CODE 4410-10-P