# EB-5 Immigrant Investor Program Modernization > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2019-15000 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** July 24, 2019 - **Citation:** 84 FR 35750 ## Text 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 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 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. 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 investors to use the priority date of an immigrant petition approved for classification as an investor for a subsequently filed immigrant petition for the same classification. DHS will allow an EB-5 immigrant petitioner to use the priority date of an immigrant petition approved for classification as an investor for a subsequently filed immigrant petition for the same classification for which the petitioner qualifies, unless DHS revokes the petition's approval for fraud or willful misrepresentation by the petitioner, or revokes the petition for a material error. Benefits: • Makes visa allocation more predictable for investors with less possibility for large fluctuations in visa availability dates due to regional center termination. • Provides greater certainty and stability regarding the timing of eligibility for investors pursuing permanent residence in the U.S. and thus lessens the burden of unexpected changes in the underlying investment. • Provides more flexibility to investors to contribute to more viable investments, potentially reducing fraud and improving potential for job creation. Costs: • None anticipated. Increases to Investment Amounts The standard minimum investment amount has been $1 million since 1990 and has not kept pace with inflation—losing almost half its real value. Further, the statute authorizes a reduction in the minimum investment amount when such investment is made in a TEA by up to 50 percent of the standard minimum investment amount. Since 1991, DHS regulations have set the TEA investment threshold at 50 percent of the minimum investment amount. Similarly, DHS has not increased the minimum investment amount for investments made in a high employment area beyond the standard amount. DHS will account for inflation in the investment amount since the inception of the program. DHS will raise the minimum investment amount to $1.8 million to account for inflation through 2015, and includes a mechanism to automatically adjust the minimum investment amount based on the unadjusted CPI-U every 5 years. DHS will retain the TEA minimum investment amount at 50 percent of the standard amount. The minimum investment amount in a TEA will initially increase to $900,000. DHS is not changing the equivalency between the standard minimum investment amount and those made in high employment areas. As such, DHS will set the minimum investment amounts in high employment areas to be $1.8 million, and follow the same mechanism for future inflationary adjustments. Benefits: • Increases in investment amounts are necessary to keep pace with inflation and real value of investments; • Raising the investment amounts increases the amount invested by each investor and potentially increases the total amount invested under this program. • For regional centers, the higher investment amounts per investor will mean that fewer investors will have to be recruited to pool the requisite amount of capital for the project, 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 area or an area that has experienced high unemployment (of at least 150 percent of the national average rate). Currently, investors demonstrate that their investments are in a high unemployment area in two ways: (1) Providing evidence that the Metropolitan Statistical Area (MSA), the specific county within the MSA, or the county in which a city or town with a population of 20,000 or more is located, in which the new commercial enterprise is principally doing business, has experienced an average unemployment rate of at least 150 percent of the national average rate; or (2) submitting a letter from an authorized body of the government of the state in which the new commercial enterprise is located, which certifies that the geographic or political subdivision of the metropolitan statistical area or of the city or town with a population of 20,000 or more in which the enterprise is principally doing business has been designated a high unemployment area. DHS will eliminate state designation of high unemployment areas. DHS also amends the manner in which investors can demonstrate that their investments are in a high unemployment area. (1) DHS will add 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. (2) DHS will amend its regulations so that a TEA may consist of a census tract or contiguous census tracts in which the new commercial enterprise is principally doing business if • the new commercial enterprise is located in more than one census tract; and • the weighted average of the unemployment rate for the tract or tracts is at least 150 percent of the national average. (3) DHS will also amend its regulations so that a TEA may consist of an area comprising 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. Benefits: • Rules out TEA configurations that rely on a large number of census tracts indirectly linked to the actual project tract by numerous degrees of separation. • Potential to better stimulate job growth in areas where unemployment rates are the highest, consistent with congressional intent. Costs: • This TEA provision could cause some projects and investments to no longer qualify as being in high unemployment areas. DHS presents the potential number of projects and investments that could be affected in Table 5. Current technical issues: • The current regulation does not clearly define the process by which derivatives may file a Form I-829 petition when they are not included on the principal's petition. • Interviews for Form I-829 petitions are generally scheduled at the location of the new commercial enterprise. • The current regulations require an immigrant investor and his or her derivatives to report to a district office for processing of their permanent resident cards. DHS will amend its regulations to include the following technical changes: • Clarify the filing process for derivatives who are filing a Form I-829 petition separately from the immigrant investor. • Provide flexibility in determining the interview location related to the Form I-829 petition. • Amend the regulation by which the immigrant investor obtains the new permanent resident card after the approval of his or her Form I-829 petition because DHS captures biometric data at the time the immigrant investor and derivatives appear at an ASC for fingerprinting. • Add 8 CFR 204.6(n) to allow certain investors to remain eligible for the EB-5 classification if a project's offering is amended or supplemented based upon the final rule's effectiveness. Conditions of Filing: Benefits: • Adds clarity and eliminates confusion for the process of derivatives who file separately from the principal immigrant investor. Costs: • Total cost to applicants filing separately will be $91,023 annually. Conditions of Interview: Benefits: • Interviews may be scheduled at the USCIS office having jurisdiction over either the immigrant investor's commercial enterprise, the immigrant investor's residence, or the location where the 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: • 8 CFR 204.6(j)(2)(iii) refers to the former U.S. Customs Service. • Public Law 107-273 eliminated the requirement that alien entrepreneurs establish a new commercial enterprise from both INA section 203(b)(5) and INA section 216A. • 8 CFR 204.6(j)(5) introductory text and (j)(5)(iii) reference “management”; • Current regulation at 8 CFR 204.6(j)(5) has the phrase “as opposed to maintain a purely passive role in regard to the investment”; • Public Law 107-273 allows limited partnerships to serve as new commercial enterprises; • Current regulation references the former Associate Commissioner for Examinations. • 8 CFR 204.6(k) requires USCIS to specify in its Form I-526 decision whether the new commercial enterprise is principally doing business in a targeted employment area. DHS will amend its regulations to make the following miscellaneous changes: • DHS is updating references at 8 CFR 204.6(j)(2)(iii) from U.S. Customs Service to U.S. Customs and Border Protection. • Removing references to requirements that alien entrepreneurs establish a new commercial enterprise in 8 CFR 216.6. • Removing references to “management” at 8 CFR 204.6(j)(5) introductory text and (j)(5)(iii); • Removing the phrase “as opposed to maintain a purely passive role in regard to the investment” from 8 CFR 204.6(j)(5); • Clarifies that any type of entity can serve as a new commercial enterprise; • Replacing the reference to the former Associate Commission for Examinations with a reference to the USCIS AAO. • Amending 8 CFR 204.6(k) to specify how USCIS will issue a decision. These provisions are technical changes and will have no impact on investors or the government. • Sections 204.6 and 216.6 use the term “entrepreneur” and “deportation.” These sections also refer to Forms I-526 and I-829. • 8 CFR 204.6(i) and (j)(6)(ii)(B) use the phrase “geographic or political subdivision” in describing state designations of high unemployment areas for TEA purposes. • The priority date of a petition for classification as an investor is the date the petition is properly filed. • Revising sections 8 CFR 204.6 and 216.6 to use the term “investor” instead of “entrepreneur” and to use the term “removal” instead of “deportation.” • Removing references to “geographic or political subdivision” in 8 CFR 204.6(i) and (j)(6)(ii)(B). • Providing clarification in 8 CFR 204.6(d) that the petitioner of 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 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), 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 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 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. 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 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 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 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 £2,000,000 (approximately $2.7 million USD), and offers permanent residence to those who have invested at least £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 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 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 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 de [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2019-15000. Public record. Not legal advice.