[Federal Register Volume 76, Number 188 (Wednesday, September 28, 2011)]
[Proposed Rules]
[Pages 59927-59950]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-24619]


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DEPARTMENT OF HOMELAND SECURITY

8 CFR Parts 216 and 245

[CIS No. 2484-09; DHS Docket No. DHS-2009-0029]
RIN 1615-AA90


Treatment of Aliens Whose Employment Creation Immigrant (EB-5) 
Petitions Were Approved After January 1, 1995 and Before August 31, 
1998

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

ACTION: Proposed rule.

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SUMMARY: The Department of Homeland Security (DHS) is proposing to 
amend its regulations governing the employment creation (EB-5) 
immigrant classification. This rule only proposes requirements and 
procedures for special determinations on the applications and petitions 
of qualifying aliens whose employment-creation immigrant petitions were 
approved by the former Immigration and Naturalization Service (INS) 
after January 1, 1995 and before August 31, 1998. This rule would 
implement provisions of the 21st Century Department of Justice 
Appropriations Authorization Act.

[[Page 59928]]


DATES: You must submit written comments on or before November 28, 2011.

ADDRESSES: You may submit comments, identified by DHS Docket No. DHS-
2009-0029, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Sunday Aigbe, Chief, Regulatory Products Division, 
Office of the Executive Secretariat, U.S. Citizenship and Immigration 
Services, Department of Homeland Security, 20 Massachusetts Avenue, 
NW., Washington, DC 20529-2020. To ensure proper handling, please 
reference DHS Docket No. DHS 2009-0029 on your correspondence. This 
mailing address may also be used for paper, disk, or CD-ROM 
submissions.
     Hand Delivery/Courier: Sunday Aigbe, Chief, Regulatory 
Products Division, Office of the Executive Secretariat, U.S. 
Citizenship and Immigration Services, Department of Homeland Security, 
20 Massachusetts Avenue, NW., Washington, DC 20529-2020. Contact 
Telephone Number (202) 272-8377.

FOR FURTHER INFORMATION CONTACT: Alexandra Haskell, Adjudications 
Officer, Business, Employment and Trade Services, Service Center 
Operations, U.S. Citizenship and Immigration Services, Department of 
Homeland Security, 20 Massachusetts Avenue, NW., Mailstop 2060, 
Washington, DC 20529-2060, telephone: (202) 272-8410.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Public Participation
II. Background
    A. Employment Creation Immigrant Classification
    B. Overview of the Public Law 107-273 Provisions
    C. Summary of the Adjudications Required by Public Law 107-273
III. Aliens Eligible To Receive Special Determinations on Their 
Petitions To Remove Conditions Under Section 11031 of Public Law 
107-273
    A. ``Eligible Alien'' Under Section 11031
    B. Proposed Regulations
IV. Determinations on Petitions To Remove Conditions Under Section 
11031 of Public Law 107-273
    A. Initial Determinations
    B. Second Stage Determinations
    C. Common Definitions Applicable to Removal of Conditions 
Determinations
    D. Treatment of Spouses and Children Where Eligible Alien Is 
Deceased
V. Adjustment of Status Under Section 11032(a) of Public Law 107-273
    A. Definitions
    B. Procedures for Requesting Consideration for Conditional 
Resident Status
    C. Determinations on Eligibility
    D. Decisions on Granting Conditional Resident Status
VI. Determinations on Petitions To Remove Conditions Under Section 
11032 of Public Law 107-273
VII. Treatment of Children
VIII. Regulatory Requirements
    A. Regulatory Flexibility Act
    B. Unfunded Mandates Reform Act of 1995
    C. Small Business Regulatory Enforcement Fairness Act of 1996
    D. Executive Order 12866
    E. Executive Order 13132
    F. Executive Order 13175
    G. Paperwork Reduction Act

List of Abbreviations

BIA Board of Immigration Appeals
DHS Department of Homeland Security
DOS Department of State
DOJ Department of Justice
ICE U.S. Immigration and Customs Enforcement
INA Immigration and Nationality Act
LPR Lawful Permanent Resident
NTA Notice to Appear
RA Rural Area
TEA Targeted Employment Area
Public Law 107-273 21st Century Department of Justice Appropriations 
Authorization Act, Public Law 107-273, 116 Stat. 1758 (2002)
USCIS U.S. Citizenship and Immigration Services

I. Public Participation

    Interested persons are invited to participate in this rulemaking by 
submitting written data, views, or arguments on all aspects of this 
proposed rule. The Department of Homeland Security (DHS) also invites 
comments that relate to the economic, environmental, or federalism 
effects that might result from this proposed rule. Comments that will 
provide the most assistance to DHS in developing these procedures will 
reference a specific portion of the proposed rule, explain the reason 
for any recommended change, and include data, information, or authority 
that support such recommended change.
    Instructions: All submissions should include the agency name and 
DHS Docket No. DHS-2009-0029. U.S. Citizenship and Immigration Services 
(USCIS) will post all comments received without change to http://www.regulations.gov, including any personal information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov.

II. Background

A. Employment Creation Immigrant Classification

    The employment creation immigrant classification is one of five 
employment-related bases for obtaining permanent residence in the 
United States. See Immigration and Nationality Act (INA) section 
203(b)(1)-(5), 8 U.S.C. 1153(b)(1)-(5). DHS and the affected community 
commonly refer to this category as the ``EB-5'' immigrant 
classification because it is the fifth employment-related basis listed 
in the INA. The EB-5 immigrant classification allows qualifying aliens, 
and any accompanying or following to join spouses and children, to 
obtain lawful permanent resident (LPR) status if the qualifying aliens 
have invested, or are actively in the process of investing, $1 million 
in a new commercial enterprise. See INA sections 203(b)(5)(A) and (C), 
8 U.S.C. 1153(b)(5)(A) and (C). To qualify, the alien's investment must 
benefit the U.S. economy and create full-time jobs for 10 or more 
qualifying employees. INA section 203(b)(5)(A)(ii), 8 U.S.C. 
1153(B)(5)(A)(ii). If the investment is in a Rural Area (RA) or an area 
that has experienced high unemployment (i.e., a Targeted Employment 
Area (TEA)), the required capital investment amount is $500,000 rather 
than $1 million. INA section 203(b)(5)(C)(ii), 8 U.S.C. 
1153(b)(5)(C)(ii); 8 CFR 204.6(f)(2). In addition, under a pilot 
program established by statute, qualifying aliens may meet the job 
creation requirement through the creation of 10 direct or indirect 
jobs. See Departments of Commerce, Justice, and State, the Judiciary, 
and Related Agencies Appropriations Act, 1993, section 610(c), Public 
Law 102-395, 106 Stat. 1828 (1992), 8 U.S.C. 1153 note. To get the 
benefit of the indirect job creation requirement, an alien must make a 
qualifying investment within a regional center (defined in 8 CFR 
204.6(e)) approved by USCIS for participation in the pilot program. 
This pilot program is set to expire on September 30, 2012. See 
Department of Homeland Security Appropriations Act, 2010, section 548, 
Public Law 111-83, 123 Stat. 2142, 2177 (2009), 8 U.S.C. 1153 note.
    Obtaining lawful permanent residence under the EB-5 immigrant 
classification is a multi-step process. First, the alien must file and 
obtain approval of an Immigrant Petition by Alien Entrepreneur, Form I-
526 (or successor form). See 8 CFR 204.6(a). Second, the alien must 
obtain conditional permanent resident status on the basis of the 
approved Form I-526 petition. If the alien resides in the United 
States, he

[[Page 59929]]

or she may apply to become a lawful permanent resident by submitting an 
Application to Register Permanent Residence or Adjust Status, Form I-
485 (or successor form). See 8 CFR 245.1(a). If the alien resides 
outside of the United States or is ineligible for lawful permanent 
residence through the filing of a Form I-485, then he or she must 
obtain a Department of State (DOS) issued immigrant visa to gain 
admission to the United States as a permanent resident on a conditional 
basis. See INA section 211(a)(1), 8 U.S.C. 1181(a)(1). Once an alien 
has obtained conditional resident status, the alien is called an 
``alien entrepreneur.'' INA section 216A(f)(1), 8 U.S.C. 1186b(f)(1).
    The last procedural step is triggered 90 days before the second 
anniversary of the alien entrepreneur's conditional resident status. 
INA section 216A(d)(2), 8 U.S.C. 1186b(d)(2). During this 90-day 
period, the alien entrepreneur must submit to USCIS a Petition by 
Entrepreneur to Remove Conditions, Form I-829 (or successor form). See 
8 CFR 216.6(a)(1). Failure to timely submit Form I-829, or to obtain a 
removal of conditions through the approval of a Form I-829, results in 
termination of conditional resident status and placement of the alien 
and any accompanying dependents in removal proceedings. See 8 CFR 
216.6(a)(5). Determinations by USCIS on Form I-829 are not appealable; 
however, an immigration judge may review the determinations in removal 
proceedings. See INA section 216A(c)(3)(D), 8 U.S.C. 1186b(c)(3)(D). 
The Board of Immigration Appeals (BIA) hears appeals from immigration 
judge decisions. See 8 CFR 1003.1(b).

B. Overview of the Public Law 107-273 EB-5 Provisions

    In 1998, the Immigration and Naturalization Service (INS), the 
predecessor agency to USCIS, issued four precedent decisions addressing 
the eligibility requirements for EB-5 petitions.\1\ The publication of 
these precedent decisions resulted in litigation over their 
applicability to cases at various stages of adjudication.\2\ Some of 
this litigation continues today.
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    \1\ Matter of Soffici, 22 I&N Dec. 158 (INS Assoc. Comm'r 1998); 
Matter of Izummi, 22 I&N Dec. 169 (INS Assoc. Comm'r 1998); Matter 
of Hsiung, 22 I&N Dec. 201 (INS Assoc. Comm'r 1998); Matter of Ho, 
22 I&N Dec. 206 (INS Assoc. Comm'r 1998).
    \2\ E.g., Am. Exp. Group Ltd. P'ship v. United States, No. 
02:06-02199 (D. S.C.); Chang v. United States, No. 02:99-cv-10518-
GHK-AJW (C.D. Cal.); Sang Geun An v. United States, No. C03-3184p 
(W.D. Wash.).
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    In 2002, Congress enacted special legislation to provide a small 
group of aliens whose EB-5-related petitions or applications were 
pending at the time of the precedent decisions with an opportunity to 
perfect their original investments or make additional business 
investments in the United States and create the requisite jobs so that 
they can remain in the United States as lawful permanent residents. See 
21st Century Department of Justice Appropriations Authorization Act, 
Public Law 107-273, div. C, tit. I, Sec. Sec.  11031-11034, 116 Stat. 
1758 (2002) (8 U.S.C. 1186b note) (Pub. L. 107-273). This special 
legislation only applies to ``eligible aliens'' for whom the INS 
approved a Form I-526 between January 1, 1995 and August 31, 1998, and 
who pursuant to such approval either: (1) Obtained permanent resident 
status on a conditional basis and filed a timely Form I-829 before 
November 2, 2002; or (2) filed an application for adjustment of status 
or an application for an immigrant visa before November 2, 2002. Public 
Law 107-273 does not apply to any other aliens who are admitted or have 
been admitted to the United States pursuant to the EB-5 visa program.
    Public Law 107-273 requires publication of implementing 
regulations. Until implementing regulations are effective, USCIS may 
not take adverse action against ``eligible aliens.'' See Public Law 
107-273 at section 11033. Accordingly, DHS is proposing implementing 
regulations, but only as applied to the adjudicatory and prosecutory 
functions of USCIS and U.S. Immigration and Customs Enforcement (ICE).

C. Summary of the Adjudications Required by Public Law 107-273

    Public Law 107-273 contains very detailed requirements for the 
review and adjudication of pending applications and petitions for 
eligible aliens. Section 11031 describes the procedures applicable to 
eligible aliens who obtained lawful permanent resident status on a 
conditional basis but who have not had their conditions removed. 
Section 11032 describes the procedures applicable to eligible aliens 
whose applications for permanent residence on a conditional basis had 
not been approved at the time of enactment of Public Law 107-273.
    For eligible aliens with pending I-829 petitions, section 11031 of 
Public Law 107-273 requires the Secretary of Homeland Security 
(Secretary) to make an initial determination whether the Form I-829 as 
filed by the eligible alien is approvable. If the petition is 
approvable, the conditions on the alien's permanent residence will be 
removed. If the petition is determined to be deficient following the 
initial determination, the eligible alien and the accompanying spouse 
and children of the alien will be granted a second two-year period of 
conditional residence unless the adverse determination is based on a 
finding of material misrepresentation. During this period of 
conditional residence, the eligible alien has an opportunity to remedy 
the deficiencies in his or her petition and make additional investments 
in the commercial enterprise listed on the pending Form I-829 and/or in 
other commercial enterprises to comply with the capital investment and 
job creation requirements of the EB-5 program. At the end of this two-
year period, the eligible alien must file a new Form I-829 petition 
with the Secretary of Homeland Security seeking to remove the 
conditions from his or her permanent residence. If the eligible alien's 
second petition is approvable, the conditional basis of the alien's 
permanent residence and that of the alien's accompanying spouse and 
children will be removed. If an eligible alien's second petition is 
determined to be deficient, the eligible alien's permanent resident 
status and that of the alien's accompanying spouse and children will be 
terminated. If, at any stage of the process, it is determined that an 
eligible alien has made a material misrepresentation on any of the 
petitions, the alien's status and that of the alien's accompanying 
spouse or children may be terminated. Finally, section 11031 provides 
for administrative and judicial review of each of the statutory 
determinations.
    Section 11032 of Public Law 107-273 provides for the approval of an 
eligible alien's application for adjustment of status or an immigrant 
visa and the grant of a two-year period of conditional residence. At 
the completion of the two-year period of conditional residence, 
eligible aliens must file Form I-829 to remove the conditions from 
their permanent residence and that of their accompanying spouse and 
children. Although the procedures used to adjudicate the petitions 
filed by eligible aliens under section 11032 of Public Law 107-273 are 
governed by INA section 216A, substantial compliance with the capital 
investment and job creation requirements need not be related to the 
commercial enterprise described in their Forms I-526. Rather, eligible 
aliens may submit evidence related to capital investment and job 
creation in any commercial enterprise in the United States. If an 
eligible alien is determined to have complied with the capital 
investment and job creation

[[Page 59930]]

requirements of the EB-5 program, the conditional basis of the alien's 
permanent residence and that of the alien's accompanying spouse and 
children will be removed. If it is determined that an eligible alien 
has made a material misrepresentation or has failed to satisfy the 
capital investment and/or job creation requirements of the EB-5 
program, the alien's status and that of his or her accompanying spouse 
and children will be terminated, subject to review in removal 
proceedings.
    The remainder of the Supplementary Information describes sections 
11031 and 11032 of Public Law 107-273 in more detail and explains the 
corresponding proposed amendments to DHS regulations.

III. Aliens Eligible To Receive Special Determinations on Their 
Petitions To Remove Conditions Under Section 11031 of Public Law 107-
273

A. ``Eligible Alien'' Under Section 11031

    As summarized above, a conditional resident must fall within the 
statutory definition of ``eligible alien'' under sections 11031(b)(1) 
and (2) of Public Law 107-273 to receive the determinations on a 
previously denied or currently pending Form I-829 required by section 
11031(c) of Public Law 107-273. The determinations required by section 
11031(c) of Public Law 107-273 (hereinafter ``section 11031(c) 
determinations'') are comprised of an initial determination and a 
second determination. Public Law 107-273 at section 11031(c). An 
``eligible alien'' is an alien who obtained LPR status on a conditional 
basis as a result of filing a Form I-526 petition pursuant to section 
203(b)(5) of the INA, 8 U.S.C. 1153(b)(5), that was approved after 
January 1, 1995 and before August 31, 1998. See Public Law 107-273 at 
sections 11031(b)(1)(A)&(B). Such alien must also have timely filed a 
Form I-829 pursuant to section 216A of the INA prior to November 2, 
2002, the date of enactment of Public Law 107-273. See Public Law 107-
273 at section 11031(b)(1)(C). A ``timely-filed'' Form I-829 is one 
that an alien filed during the 90-day period before the second 
anniversary of the alien's lawful admission for permanent residence. 
See INA section 216A(d)(2)(A), 8 U.S.C. 1186b(d)(2)(A); 8 CFR 
216.6(a)(1).
    In the event that an otherwise eligible alien's timely filed Form 
I-829 was denied prior to November 2, 2002, the alien still may be 
deemed to be eligible if he or she filed a motion to reopen not later 
than January 1, 2003. Public Law 107-273 at section 11031(b)(2)(A). If 
such an eligible alien is no longer physically present in the United 
States, the Secretary of Homeland Security, if necessary, may parole 
the alien into the United States to obtain the section 11031(c) 
determinations. Public Law 107-273 at section 11031(b)(2)(B). The 
Secretary of Homeland Security, however, may not parole any alien into 
the United States who is inadmissible or deportable on any grounds, or 
if the alien's Form I-829 was denied due to a material 
misrepresentation of any of the facts and information described in INA 
section 216A(d)(1), 8 U.S.C. 1186b(d)(1), and alleged in the Form I-829 
petition with respect to a commercial enterprise. Public Law 107-273 at 
section 11031(b)(2)(B)(i)-(ii). Under these circumstances, USCIS does 
not consider such alien ``eligible'' for the section 11031(c) 
determinations. In making the material misrepresentation determination, 
the applicable ``facts and information'' include, but are not limited 
to:
    (A) Whether the alien established the commercial enterprise(s) 
under consideration; and
    (B) Whether the alien invested or was actively in the process of 
investing the requisite capital.
    (C) The alien sustained the actions described in (A) and (B) 
throughout the period of the alien's residence in the United States. 
See INA section 216A(d)(1), 8 U.S.C. 1186b(d)(1) (as in effect prior to 
the enactment of Public Law 107-273 on Nov. 2, 2002).
    A motion to reopen filed pursuant to Public Law 107-273 by 
otherwise eligible aliens who are in deportation or removal proceedings 
by reason of the denial of the I-829 petition also constitutes a motion 
to reopen proceedings. See Public Law 107-273 at section 
11031(b)(2)(C). The scope of deportation or removal proceedings 
reopened under Public Law 107-273 is limited to whether:
     Any order of deportation or removal should be vacated, and
     The alien should be granted the status of an alien 
lawfully admitted for permanent residence unconditionally or on a 
conditional basis, by reason of the section 11031(c) determinations 
made by the Secretary of Homeland Security.
    See Public Law 107-273 at section 1131(b)(2)(C).

B. Proposed Regulations

    The statutory provisions of Public Law 107-273 are detailed; 
therefore, this proposed rule does not restate them. This proposed rule 
focuses primarily on limitations on eligibility and eligibility of 
aliens with denied petitions.
1. Limitations on Eligibility
    Under this rulemaking, in accordance with section 11031(b)(2)(C) of 
Public Law 107-273, aliens who are in deportation or removal 
proceedings and who are deportable or removable on grounds other than 
the denied Form I-829 would be ineligible for special determinations on 
their Form I-829 applications under Public Law 107-273. Proposed 8 CFR 
216.7(a)(2)(i). Such aliens are statutorily barred from obtaining 
benefits under this law pursuant to section 11031(b)(2)(C) of Public 
Law 107-273.
    Since the enactment of Public Law 107-273, DHS has received and 
acknowledged requests from several aliens eligible to receive section 
11031(c) determinations to withdraw their Forms I-829. In other 
instances, some aliens have executed Abandonment of Lawful Permanent 
Residence Status, Form I-407 (or successor form). Either the withdrawal 
of the Form I-829 or the execution of the Form I-407 constitutes the 
voluntary abandonment of the alien's conditional lawful residence 
status. In addition, some aliens may have since acquired lawful 
permanent residence or another immigration status on a different basis. 
Public Law 107-273 does not address these scenarios. This rule proposes 
to exclude such aliens from ``eligibility'' for section 11031(c) 
determinations. Proposed 8 CFR 216.7(a)(2)(ii) and (iii). The actions 
of such aliens demonstrate that these aliens are no longer interested 
in pursuing LPR status based on the EB-5 immigrant classification under 
the provisions of Public Law 107-273. In order to be eligible to obtain 
status by another means, an eligible alien would have had to abandon 
status as an alien admitted for permanent residence on a conditional 
basis or have had such status terminated by USCIS. See INA section 
245(f), 8 U.S.C. 1255(f); 8 CFR 245.1(c)(5); see also Matter of 
Stockwell, 20 I&N Dec. 309, 311-12 (BIA 1991) (bar to adjustment of 
status applicable to marriage-based conditional residents inapplicable 
if conditional resident status has been terminated).
    For these reasons, DHS deems otherwise eligible aliens who have 
withdrawn their Forms I-829, executed Form I-407, or adjusted to LPR 
status on other grounds to have abandoned any claim to benefits under 
Public Law 107-273. DHS is proposing in this rule to exclude these 
aliens from the definition of eligible alien.

[[Page 59931]]

2. Aliens With Denied Petitions
    Aliens who timely filed a Form I-829 petition that was denied on 
the merits prior to November 2, 2002, may still be deemed an ``eligible 
alien.'' See Public Law 107-273 at section 11031(b)(2)(A) (referencing 
INA section 216A(c)(3)(C), 8 U.S.C. 1186b(c)(3)(C) (discussing adverse 
determinations on petitions to remove conditions)). DHS proposes to 
define a denied petition as the decision by an INS director to deny the 
petition on the merits, and not denials resulting from review of a 
director's decision in deportation or removal proceedings. See proposed 
8 CFR 216.7(a)(1). This interpretation is supported by section 
11031(b)(2)(C) of Public Law 107-273, which governs treatment of 
eligible aliens in deportation or removal proceedings. That provision 
refers to a denied petition as one that was made prior to the 
initiation of deportation or removal proceedings, which necessarily 
means a denial made by INS. See Public Law 107-273 at section 
11031(b)(2)(C).
    Note that an alien whose Form I-829 was denied on procedural 
grounds does not qualify as an ``eligible alien.'' See Public Law 107-
273 section 11031(b)(2)(A) (limiting qualifying denied petitions that 
are reopened to those denied on the merits). Procedural grounds for 
denying Form I-829 include failure to file Form I-829 timely and the 
failure of the alien to appear for an interview. See 8 CFR 216.6(a)(5) 
and (b)(3). If an alien's failure to timely file Form I-829 has been 
excused by INS or USCIS based on his or her showing that the failure 
was for good cause and due to extenuating circumstances or an alien's 
failure to appear for an interview has been excused by INS or USCIS 
based on his or her showing of good cause, then the limitations on 
eligibility will not apply. Once excused, the alien resumes status as a 
conditional resident with a pending Form I-829, and is an ``eligible 
alien'' under Public Law 107-273.
    Section 11031(b)(2)(A) of Public Law 107-273 required aliens with 
denied petitions to file a motion to reopen by January 1, 2003 to 
obtain the benefits offered by the statute. DHS has identified 31 such 
motions to reopen. DHS has granted such motions and the petitions are 
now considered to be pending. This rule does not further address 
motions to reopen since the statutory time period for filing such 
motions has expired.
    Of the 31 motions to reopen that DHS received, none appear to have 
been filed by aliens who were not physically present in the United 
States. Moreover, in its review of all Public Law 107-273 petitions, 
DHS has not found that physical presence of the alien is necessary in 
order for USCIS to make its initial determinations. Therefore, this 
rule does not propose provisions governing the parole of overseas 
aliens with denied Forms I-829.
    DHS considers a motion to reopen a denied Form I-829 pursuant to 
section 11031(b)(2)(A) of Public Law 107-273 to be the same as a motion 
to reopen deportation or removal proceedings. Public Law 107-273 at 
section 11031(b)(2)(C). Immigration courts have terminated or 
administratively closed deportation or removal proceedings in these 
cases to give USCIS the opportunity to make its section 11031(c) 
determinations After USCIS makes these determinations, section 
11031(b)(2)(C) of Public Law 107-273 requires that the Attorney General 
must make the decision to grant LPR status conditionally or 
unconditionally in proceedings. Therefore, after USCIS makes the 
initial 11031(c) determination, DHS must file a motion to re-calendar 
the proceedings. Proposed 8 CFR 216.7(a)(3). The immigration judge will 
take further action on the alien's status in deportation or removal 
proceedings, including, as appropriate:
     Removal of the conditions and termination of proceedings,
     Extension of conditional resident status pursuant to 
section 11031(c)(1)(F)(ii), and
     Administrative closure so that jurisdiction shifts back to 
DHS for the second 11031(c) determination.

IV. Determinations on Petitions To Remove Conditions Under Section 
11031 of Public Law 107-273

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

A. Initial Determinations

    Under section 11031(c)(1)(A) of Public Law 107-273, the Secretary 
of Homeland Security must make an initial determination on each 
eligible alien's Form I-829 regarding three issues. First, the 
Secretary must determine whether the Form I-829 contains any material 
misrepresentation in the facts and information described in INA section 
216A(d)(1), 8 U.S.C. 1186b(d)(1), and alleged in the Form I-829 with 
respect to a commercial enterprise. The facts and information described 
in INA section 216A(d)(1), 8 U.S.C. 1186b(d)(1), pertain to the 
establishment of an investment in the commercial enterprise for the 
duration of the conditional resident period. This determination 
regarding material misrepresentation must be made without regard to 
whether such enterprise is a limited partnership, or whether the alien 
entered the enterprise after its formation.
    Second, the Secretary must determine whether the commercial 
enterprise created full-time jobs for 10 or more qualifying employees. 
The jobs have to exist or existed on any of the following dates:
     The date on which the Form I-829 was filed;
     Six months after that date; or
     The date on which DHS makes the determination.
    The creation of 10 or more direct or indirect jobs will satisfy 
this requirement if the alien has made the required investment within 
an approved regional center. See Public Law 107-273 at section 
11031(c)(1)(B). If the new commercial enterprise is a troubled 
business, then the law provides that the Secretary of Homeland Security 
instead must determine whether, on any of the three dates described 
above, the number of employees of the business is no fewer than the 
number of employees that existed before the alien made his or her 
capital investment in the business. Id. at section 11031(c)(1)(C).
    Third, the Secretary must determine whether the eligible alien is 
in substantial compliance with the capital investment requirement 
described in INA section 216A(d)(1)(B), 8 U.S.C. 1186b(d)(1)(B), on any 
of the three dates listed above.
    If the Secretary determines that the alien has met the job creation 
and capital investment requirements outlined by Public Law 107-273, and 
there is no material misrepresentation with respect to Form I-829, the 
Secretary of Homeland Security must notify the alien and, if the alien 
is not in deportation or removal proceedings, remove the conditional 
basis of the alien's status as of the second anniversary of the alien's 
lawful admission for permanent residence. The Secretary of Homeland 
Security will also remove the conditional status of the alien's 
accompanying spouse and children as of that same date. See Public Law 
107-273 at section 11031(c)(1)(E); see also proposed 8 CFR 
216.7(a)(4)(i). For aliens in deportation or removal proceedings, 
further action will be taken in deportation or removal proceedings. See 
Public Law 107-273 at section 11031(b)(2)(C).

[[Page 59932]]

    If the Secretary of Homeland Security makes an adverse 
determination regarding material misrepresentation, job creation, or 
capital investment, the Secretary must provide the alien with notice of 
this adverse determination and an opportunity to submit evidence to 
rebut the adverse determination. Id. at section 11031(c)(1)(F)(i). If 
the Secretary reverses all adverse determinations, the Secretary will 
notify the alien and his or her accompanying spouse and children that 
the adverse determination has been reversed. The Secretary will then 
remove the conditions of the alien, accompanying spouse, and children, 
effective as of the second anniversary of the alien's lawful admission 
for permanent residence if the alien is not in removal proceedings. Id. 
at sections 11031(c)(1)(F)(i) and 11031(b)(2)(C); see also proposed 8 
CFR 216.7(a)(4)(i) and (iii). If the alien is in removal proceedings, 
DHS will move to recalendar the removal proceedings for appropriate 
action. Id.
    If no such reversal takes place, the Secretary of Homeland Security 
(or the Attorney General if the alien is in deportation or removal 
proceedings) must continue the conditional basis of the alien's 
permanent resident status and that of the alien's spouse and children 
for a two-year period, but only if the adverse determination is based 
upon the capital investment or job creation requirements and does not 
involve a finding of material misrepresentation. Public Law 107-273 at 
sections 11031(c)(1)(F)(ii) and 11031(b)(2)(C). When an adverse 
determination is based upon the existence of a material 
misrepresentation, and the alien's rebuttal does not lead to reversal 
of that determination, the alien's conditional resident status and that 
of the alien's spouse and children must be terminated, subject to 
review of the adverse determination in deportation or removal 
proceedings. Id. at sections 11031(c)(1)(F)(iii) and 11031(d); see also 
proposed 8 CFR 216.7(a)(4)(vi)(A).
    For any adverse determination, and prior to a subsequent decision 
regarding the alien's status, the alien may seek administrative review 
of the determination by the BIA. If the BIA denies the petition, the 
alien may seek judicial review. During any period of administrative or 
judicial review, the alien's conditional residence, along with the 
conditional residence of the alien's accompanying spouse and children, 
would continue. Public Law 107-273 at section 11031(c)(1)(F)(iv). The 
law provides that the procedures for judicial review are the same as 
the procedures for the judicial review of a final order of removal. See 
INA section 242(a)(1), 8 U.S.C. 1252(a)(1).
    In this rule, USCIS is proposing several steps leading up to its 
initial determination. USCIS would first make a determination on the 
initial Form I-829 pursuant to section 11031(c)(1) of Public Law 107-
273 based on the evidence previously submitted with Form I-829. USCIS 
would not request additional evidence or an interview. See proposed 8 
CFR 216.7(a)(4). While much time has passed since the passage of Public 
Law 107-273 in November of 2002, USCIS will be able to process these 
cases more efficiently if it first makes determinations on the evidence 
in the record rather than implementing a time-consuming request for 
evidence process before making a decision. Because Public Law 107-273 
requires a rebuttal process in case of an adverse determination, USCIS 
believes that this rebuttal process is the most efficient and 
appropriate means to allow for the updating of information in the 
record.
    If USCIS makes a favorable determination such that the conditions 
on permanent resident status should be removed, USCIS would provide 
written notice to the alien and, unless the alien is in removal or 
deportation proceedings, remove conditions. Proposed 8 CFR 
216.7(a)(4)(i). If USCIS makes an adverse determination, the alien will 
be afforded an opportunity for the alien to update the evidence in the 
record. Following is a discussion of USCIS's specific proposals in this 
rulemaking.
1. Favorable Initial Determinations
    Eligible aliens may receive removal of the conditions on their 
permanent resident status if the Secretary of Homeland Security 
determines that there was no material misrepresentation on the Form I-
829 and that the job creation and capital investment requirements have 
been met. Public Law 107-273 at section 11031(c)(1)(E). For eligible 
aliens who are in deportation or removal proceedings or who are 
overseas, additional steps may apply to effect the removal of 
conditions.
a. Aliens in Deportation or Removal Proceedings
    For aliens in deportation or removal proceedings, the decision to 
remove conditions must take place in those proceedings. Public Law 107-
273 at section 11031(b)(2)(C). Therefore, after the Secretary of 
Homeland Security makes a favorable determination on an eligible 
alien's Form I-829, jurisdiction shifts back to the immigration judge 
for a decision on whether the alien's conditions may be removed. To 
shift jurisdiction back to the immigration judge, this rule provides 
that DHS must file a motion to re-calendar proceedings with the 
immigration judge. Proposed 8 CFR 216.7(a)(4)(i). The motion to re-
calendar serves to reopen the proceedings, which previously were 
administratively closed. The immigration judge will issue an order 
terminating proceedings or vacating the order of deportation or removal 
and remove the conditions from an eligible alien's permanent resident 
status where the alien is not inadmissible or deportable on other 
grounds. Public Law 107-273 at section 11031(b)(2)(C). If the 
immigration judge determines that removal of conditions is not 
warranted, such as when the alien is found to be inadmissible, then 
deportation or removal proceedings will continue.
b. Overseas Aliens Who Were Not Paroled
    Public Law 107-273 is silent with respect to the procedures for 
removing the conditions on the permanent status of overseas aliens who 
were not paroled into the United States for the special determination 
process. DHS is not aware of any potential eligible aliens currently 
residing abroad and has not, therefore, included any procedures for 
parole in this rulemaking. Should such a case arise, USCIS will notify 
the overseas alien of the favorable determination and removal of 
conditions and direct such alien to the appropriate U.S. consular 
office for the procedures by which he or she can secure documentation 
for admission to the United States. Note that if an alien with 
conditional resident status has been absent from the United States for 
180 days or more or departed from the United States while in removal 
proceedings, he or she will be subject to inspection and, therefore, a 
determination of admissibility. INA section 101(a)(13)(C), 8 U.S.C. 
1101(a)(13)(C).
2. Adverse Initial Determinations
a. Opportunity To Provide Rebuttal Evidence
    USCIS is proposing in this rule a 12-week period within which an 
alien may submit evidence to disprove the adverse determination(s). 
Proposed 8 CFR 216.7(a)(4)(ii). In rebuttal, aliens would be able to 
submit evidence of investments in and job creation resulting from 
enterprises other than the commercial enterprise named in the initial 
Form I-829 and qualifying Form I-526. Id. USCIS would require such 
aliens to request consideration of investments in and job creation

[[Page 59933]]

resulting from additional commercial enterprises by filing a new 
Supplement to the Petition to Remove Conditions. Id.
    Public Law 107-273 represents a significant departure from the 
strict rules normally applicable to the removal of conditions from an 
alien entrepreneur's permanent resident status. This legislation 
applies to a very limited group of individuals whose Form I-829 
petitions were either pending at the time of the enactment of Public 
Law 107-273 or were reopened pursuant to the terms of that law. It was 
intended to redefine the standards applicable to this limited group and 
provide these eligible aliens who had failed to comply with these 
strict requirements of the existing EB-5 statutes and regulations an 
opportunity to cure the deficiencies of their initial petitions. 
Section 11031(c)(1)(A) does not preclude the consideration of capital 
investment in or job creation from commercial enterprises not 
identified in the initial Form I-829. Accordingly, consistent with the 
unique provisions and ameliorative purpose of Public Law 107-273, DHS 
will consider evidence of additional, qualifying investments and 
resulting job creation at the initial determination stage under section 
11031(c)(1)(A), an option that ordinarily is not available to EB-5 
conditional resident aliens. Additional investments and resulting job 
creation must be documented by completing a new supplement to Form I-
829 and providing the evidence described in proposed 8 CFR 
216.7(a)(5)(i)(C). See proposed 8 CFR 216.7(a)(4)(ii).
    As more fully described below, permitting consideration of evidence 
of investment in commercial enterprises that are not listed in the 
initial Form I-829 could create instances where an eligible alien has 
made capital investments in commercial enterprises that are located 
within a targeted employment area (TEA), while also making capital 
investments in commercial enterprises not located in a TEA which 
require at least $1,000,000 in capital investment. Under these 
circumstances, the pro-rating process described at proposed 8 CFR 
216.7(a)(5)(iii) will be applied to determine the total amount of 
capital that must be invested in such instances.
    The 12-week period for submitting rebuttal evidence, including the 
Supplement for investments in additional commercial enterprises (if 
applicable), would run from the date of an adverse determination 
notice. Id. The proposed timeframe would provide a substantial amount 
of time in which eligible aliens may submit rebuttal evidence. It also 
is consistent with the timeframe for submitting additional evidence 
currently prescribed in 8 CFR 103.2(b)(8)(iv) and that is generally 
applicable to petitions and applications for immigration benefits.
    Whether or not the alien submits rebuttal evidence during the 12-
week period, USCIS would render a decision on whether to reverse its 
adverse determination(s). Proposed 8 CFR 216.7(a)(4)(ii). DHS is 
proposing this requirement given the age of the petitions and evidence 
that USCIS will be reviewing and because treatment of the alien's 
conditional resident status (if USCIS determines that it will not 
reverse the adverse determination(s)) depends on the basis of the 
adverse determination. If the adverse determination is based on 
material misrepresentation, Public Law 107-273 requires termination of 
conditional resident status. Public Law 107-273 at section 
11031(c)(1)(F)(iii). If the adverse determination(s) is based on 
failure to meet the job creation or capital investment requirements, 
Public Law 107-273 requires continuation of conditional resident 
status. Public Law 107-273 at section 11031(c)(1)(F)(ii). Given these 
considerations, DHS prefers to proceed with its initial determination 
cautiously.
    Public Law 107-273 requires that if all adverse determination(s) 
are reversed based on the rebuttal, then the alien must receive notice 
of this reversal. Public Law 107-273 at section 11031(c)(1)(F)(i). This 
rule proposes that USCIS must send written notice of its decision 
whether USCIS reverses the adverse determination or does not reverse 
the adverse determinations. Proposed 8 CFR 216.7(a)(4)(iii). The date 
of the notice would determine the period for administrative or judicial 
appeal of USCIS' adverse determinations, and when the continuation of 
conditional residence begins for purposes of a second determination.
    If USCIS determines that reversal of adverse determinations is 
appropriate, then the procedures proposed for favorable determinations 
at proposed 8 CFR 216.7(a)(4)(i) would apply. If USCIS determines that 
reversal of adverse determination is not appropriate, then the 
procedures that apply would depend on whether the alien is or is not in 
deportation or removal proceedings. Id. If the alien is in deportation 
or removal proceedings, the decision on the alien's conditional 
resident status must be made by the immigration judge in proceedings. 
Proposed 8 CFR 216.7(a)(4)(iv). Therefore, DHS would need to file a 
motion to re-calendar proceedings. Id. If the alien is not in 
deportation or removal proceedings, USCIS would extend the conditional 
residence of an eligible alien (and that of the alien's spouse and/or 
children if their status was obtained under section 216A of the Act) 
for a two-year period upon an adverse determination that is not based 
on a material misrepresentation. Proposed 8 CFR 216.7(a)(4)(v)(B).
    Regardless of whether the alien is in proceedings or not, DHS is 
proposing to require that the notice affirming the adverse 
determinations must contain the reasons for the decision, as well as 
USCIS's determination (if applicable) regarding the number of 
qualifying jobs created, amount of capital investment made, and the 
date described in section 11031(c)(1)(D) of Public Law 107-273 that 
USCIS applied to each determination. Proposed 8 CFR 216.7(a)(4)(iii). 
In the case of multiple investors, jobs would be allocated among the 
investors. Id.
b. Appellate Review of Adverse Determinations
    As required by section 11031(c)(1)(F)(iv) of Public Law 107-273, an 
alien may seek administrative review with the BIA of an adverse 
determination, and during the period in which the adverse 
determinations are pending with the BIA or circuit court, this rule 
provides that the conditional basis of the alien's permanent resident 
status and that of any accompanying spouse and/or children be continued 
automatically. See proposed 8 CFR 216.7(a)(4)(vi). This rule implements 
the authority of both DHS and the Department of Justice (DOJ) to 
continue status most efficiently by granting continued status 
automatically. To receive evidence of the continuation of status, 
however, aliens would need to appear at a USCIS office as they do now 
in keeping with current USCIS policies applicable to conditional 
residents. See Chapter 25.2(c) of the Adjudicator's Field Manual.\3\
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    \3\ The USCIS Adjudicator's Field Manual is available at http://www.uscis.gov/portal/site/uscis/menuitem.f6da51a2342135be7e9d7a10e0dc91a0/?vgnextoid=fa7e539dc4bed010VgnVCM1000000ecd190aRCRD&vgnextchannel=fa7e539dc4bed010VgnVCM1000000ecd190aRCRD&CH=afm.
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c. Continuation of Conditional Residence
    Section 11031(c)(1)(F)(ii) of Public Law 107-273 provides for the 
continuation of conditional resident status for an additional two-year 
period after an adverse determination based on failure of the alien to 
meet the job

[[Page 59934]]

creation and capital investment requirements if rebuttal evidence does 
not result in reversal of the adverse determination. Reversal may also 
occur following review by the BIA or the federal courts. See Public Law 
107-243 section 11031(c)(1)(F)(iv).
    Consistent with removal of conditions following favorable 
determinations, this rule proposes that either USCIS or an immigration 
judge (if the alien is in deportation or removal proceedings) may 
continue conditional residence for a new two-year period. See proposed 
8 CFR 216.7(a)(4)(v). For aliens who are not in deportation or removal 
proceedings, this rule proposes that USCIS would continue conditional 
resident status and send notice of the continuation of status. See 
proposed 8 CFR 216.7(a)(4)(v)(B). For aliens in deportation or removal 
proceedings, proceedings would have been administratively closed 
pursuant to proposed 8 CFR 216.7(a)(3) in order for USCIS to have 
jurisdiction to render its determinations. Therefore, to shift 
jurisdiction from USCIS back to the immigration judge for a decision on 
whether continuation of conditional residence is appropriate, the rule 
proposes that DHS (USCIS or ICE) file a motion to re-calendar 
proceedings with the immigration judge. Proposed 8 CFR 216.7(a)(4)(iv).
    The starting date for the new two-year period of conditional 
residence will vary, depending upon several factors. This rule proposes 
that if the alien is not in deportation or removal proceedings, the 
date of USCIS's decision following receipt of rebuttal evidence, or, if 
no evidence is submitted, the date of the close of the rebuttal period, 
would trigger the new two-year period. Proposed 8 CFR 
216.7(a)(4)(v)(C). However, if the alien seeks review of the adverse 
USCIS determinations by the BIA or the federal courts, DHS does not 
believe the two-year period should begin until after there is a final 
decision by the highest appellate body. Therefore, this rule proposes 
that the two-year period should begin after the alien has exhausted the 
avenues for appellate review by the BIA or the federal courts. See 
proposed 8 CFR 216.7(a)(4)(v)(C).
d. Termination of Status
    Section 11031(c)(1)(F)(iii) of Public Law 107-273 provides for the 
termination of conditional resident status upon an adverse 
determination based on material misrepresentation if rebuttal evidence 
does not result in reversal of the adverse determination. After 
termination of status, the underlying adverse determination is subject 
to review in removal proceedings. Public Law 107-273 at section 
11031(d). Since, in addition to the rebuttal review process following 
an adverse determination, section 11031(c)(1)(F)(iv) of Public Law 107-
273 also provides for a review process by the BIA and the federal 
courts, this proposed rule provides that termination of conditional 
resident status is appropriate after completion of both the rebuttal 
process and any BIA or judicial review, if such review is sought. See 
proposed 8 CFR 216.7(a)(4)(v)(A).
    This proposed rule maintains the same distinction made in section 
11031(b)(2)(C) of Public Law 107-273 regarding the division of 
authority to terminate conditional resident status for aliens who are 
in deportation or removal proceedings and those who are not. Only the 
Attorney General has authority to terminate status for aliens who are 
in deportation or removal proceedings. For aliens who are not in such 
proceedings, this rule is consistent with the procedures for 
terminating status under the normal process described in 8 CFR 
216.6(d)(2). This rule proposes that if the alien is not in deportation 
or removal proceedings and receives an adverse determination based upon 
material misrepresentation, status will be terminated automatically, 
effective on the date of the notice of decision following the rebuttal 
period. See proposed 8 CFR 216.7(a)(4)(v)(A). If the adverse 
determination is appealed to the BIA or federal courts pursuant to 
proposed 8 CFR 216.7(a)(4)(vi), then termination is effective the date 
of the highest appellate body's decision. Id. The effective dates 
provided in this rule ensure that termination of status does not occur 
before a final decision on the adverse determination is made.
    Following automatic termination, DHS (USCIS or ICE) will issue a 
Notice to Appear (NTA) to commence removal proceedings. An alien can 
seek review of the adverse determinations in those proceedings. Since 
status has been terminated, the rule requires the alien and the 
accompanying spouse and/or children to surrender their evidence of 
conditional resident status (Form I-551, Permanent Resident Card, 
formerly known as an Alien Registration Receipt Card) to DHS. While 
there is no appeal following automatic termination of status, aliens 
whose status has been terminated may seek review of the adverse USCIS 
determination in removal proceedings. Id.; see also Public Law 107-273 
at section 11031(d).
    For aliens who are already in deportation or removal proceedings, 
termination of status under section 11031(c)(1)(F)(iii) of Public Law 
107-273 is not automatic since section 11031(b)(2)(C) of Public Law 
107-273 requires such decisions to be made in proceedings. So that 
jurisdiction over such aliens rests with the immigration judge 
following the USCIS adverse determination process, this rule provides 
that DHS file a motion to re-calendar proceedings. Id.

B. Second Stage Determinations

    For eligible aliens whose conditional residence was continued for a 
new two-year period due to an adverse determination relating to the job 
creation or capital investment requirements, section 11031(c)(2) of 
Public Law 107-273 provides a process for removing those conditions. To 
remove conditions, the eligible immigrant investor must file a petition 
within the 90-day period before the second anniversary of the 
continuation of conditional resident status. Public Law 107-273 at 
section 11031(c)(2)(B) and (C). If a petition is filed after the 90-day 
period, the law provides that, with good cause and extenuating 
circumstances, this late filing may be excused by the Secretary of 
Homeland Security. Id. at section 11031(c)(2)(C)(ii). Where a petition 
is timely filed, Public Law 107-273 requires the following 
determinations to be made by the Secretary of Homeland Security:
     Whether the petition contains any material 
misrepresentation in the facts and information alleged in the petition 
with respect to the commercial enterprises included in the petition.
     If the initial determination was adverse with respect to 
the job creation requirement, whether all the enterprises considered 
together, including the number of jobs found to have been created at 
the initial determination stage, created 10 or more full-time jobs for 
qualifying individuals, and whether those jobs exist on the date of the 
determination. See Public Law 107-273 at section 11031(c)(2)(E)(ii).
     If the initial determination was adverse with respect to 
the capital investment requirement, whether the eligible alien is in 
substantial compliance with the capital investment requirement 
described in INA section 216A(d)(1)(B), 8 U.S.C. 1186b(d)(1)(B), on the 
date that the determination is made. Any capital amount that was 
determined to have been invested in the initial determination must be 
subtracted from the required capital amount at the time of the second 
determination. See Public Law 107-273 at section 
11031(c)(2)(E)(iii)(II). In addition, the determinations must include 
consideration of any capital investment made by the alien in a 
commercial

[[Page 59935]]

enterprise, regardless of whether the enterprise is a limited 
partnership, the alien entered the enterprise after its formation, the 
investment was made before or after the initial determination was made, 
or the commercial enterprise is the same one considered in the initial 
determination, so long as such facts and information are included in 
the petition. Id. at section 11031(c)(2)(A).
    Consistent with the initial determination process, a favorable 
determination at the second stage of review results in the removal of 
the conditions on permanent resident status for the alien and any 
accompanying spouse and child. Id. at section 11031(c)(2)(F). The 
removal of conditions is effective on the second anniversary of the 
continuation of conditional resident status. Id. at section 
11031(c)(2)(F). If the Secretary of Homeland Security renders an 
adverse determination, the alien must be so notified and provided an 
opportunity to submit rebuttal evidence. Id. at section 
11031(c)(2)(G)(i). Reversal of an adverse determination based upon the 
rebuttal evidence results in the removal of conditions. Id. If the 
adverse determination is not reversed, conditional resident status of 
the alien and any accompanying spouse and children is terminated, 
subject to review of the determination in removal proceedings. Id. at 
section 11031(c)(2)(G)(ii).
    This rule proposes to implement section 11031(c)(2) of Public Law 
107-273 by:
     Establishing procedures for filing the second petition to 
remove conditions;
     Describing supporting evidence;
     Defining the scope of the determination; and
     Describing DHS favorable and adverse determinations.
    These proposals are discussed below and are proposed in 8 CFR 
216.7(a)(5).
1. Filing the Petition to Remove Conditions From Second Period of 
Conditional Residence
    This rule proposes that the alien's petition to remove conditions 
from the second period of conditional residence must be filed on Form 
I-829 in accordance with the form instructions and with appropriate fee 
as stated in those instructions. Proposed 8 CFR 216.7(a)(5)(i). DHS has 
determined that the Form I-829 remains an appropriate form to remove 
conditions at the end of the second two-year period because the same 
action--removal of conditions--is being requested by the alien. DHS 
also is proposing that the alien file a supplement to Form I-829 with 
the second Form I-829. The purpose of the supplement to Form I-829 
would be to provide a means within the petition for the eligible alien 
to state the facts and information described in sections 216A(d)(1)(A) 
and (B) of the INA with respect to any commercial enterprise which the 
alien wants to have considered, regardless of whether the enterprise is 
a limited partnership, the alien entered the enterprise after its 
formation, or the enterprise was created before or after the initial 
determination was made. This is the same supplement proposed for the 
initial determination stage.
2. Failure To File the Petition To Remove Conditions
    Failure to timely file the second Form I-829 results in termination 
of conditional resident status and the institution of removal 
proceedings. See Public Law 107-273 at section 11031(c)(2)(D). However, 
a late filing can be deemed timely if the alien establishes good cause 
and extenuating circumstances. Id. at section 11031(c)(2)(C)(ii). This 
exception is the same exception that is applicable to aliens seeking 
removal of conditions under normal procedures. See INA section 
216A(d)(2)(B), 8 U.S.C. 1186b(d)(2)(B). To maintain consistency, this 
rule parallels the regulations applicable to aliens seeking removal of 
conditions under normal procedures. See 8 CFR 216.6(a)(5).
    This rule proposes that failure to timely file the Form I-829 
results in the automatic termination of conditional resident status. 
Proposed 8 CFR 216.7(a)(5)(ii). DHS will provide the alien with notice 
of termination and issue and serve an NTA to aliens to institute 
removal proceedings or DHS will move to re-calendar administratively 
closed deportation or removal proceedings for aliens already in 
deportation or removal proceedings. Id. USCIS could accept a late 
filing, but only if USCIS is satisfied in its discretion that the alien 
has established good cause and extenuating circumstances. Id. If USCIS 
accepts a late filing before the immigration judge has jurisdiction 
over the case, this rule proposes that USCIS must restore conditional 
resident status and adjudicate the petition on the merits. Id. If USCIS 
accepts a late filed Form I-829 after the immigration judge has 
jurisdiction, this rule proposes that DHS and the alien file a joint 
motion to terminate proceedings with the immigration judge and that 
conditional resident status will be restored after proceedings are 
administratively closed or terminated and the petition is adjudicated 
on the merits. Id.
3. Evidence Supporting the Second Form I-829
    In order for DHS to be equipped to make determinations on the 
second Form I-829, USCIS must examine the evidence supporting the 
petition as it does for Forms I-829 filed by aliens under the normal 
(non-Pub. L. 107-273) process. This rule proposes to require the alien 
to submit any documentation in support of the second Form I-829 that is 
necessary for meeting the requirements of section 11031(c)(2) of Public 
Law 107-273 and the implementing regulations. The proposed rule also 
specifies particular documentary evidence that the alien must submit 
with the petition. Proposed 8 CFR 216.7(a)(5)(i)(A)-(D). DHS bases the 
proposed list of required evidence on the evidence that EB-5 aliens are 
required to submit with their petitions to remove conditions under the 
normal (non-Pub. L. 107-273) process. This evidence includes:
     Evidence that the alien invested or was actively in the 
process of investing the requisite capital, such as an audited 
financial statement or other probative evidence; and
     Evidence that the alien created, or can be expected to 
create within a reasonable time, ten full-time jobs for qualifying 
employees.
See 8 CFR 216.6(a)(4).
    In the case of a ``troubled business'' as defined in 8 CFR 
204.6(j)(4)(ii), the alien entrepreneur would be required to submit 
evidence that the commercial enterprise maintained the number of 
existing employees at no fewer than the pre-investment level for the 
period of conditional permanent residence commencing on the effective 
date of the initial determination. Such evidence could include payroll 
records, relevant tax documents, and Employment Eligibility 
Verification forms (Form I-9 or successor form).
    To make determinations on the second Form I-829, USCIS must 
consider in particular: The scope of the second determination, as 
authorized by Public Laws 107-273; the commercial enterprises and 
investments that the alien wants USCIS to consider; qualifying jobs; 
and substantial compliance with the capital investment requirement.
a. Limited Scope of the Second Determination
    At the second determination stage, Public Law 107-273 requires 
consideration of material misrepresentation in the petition and

[[Page 59936]]

limits consideration of the job creation and capital investment 
requirements to the requirement or requirements that formed the basis 
for the initial adverse determination. Public Law 107-273 at section 
11031(c)(2)(E). Public Law 107-273 further requires the Secretary of 
Homeland Security to credit the alien for the number of jobs determined 
to be created or the amount of capital determined to be invested at the 
initial determination stage by subtracting this amount from the number 
or amount needed to satisfy the overall EB-5 job creation and capital 
investment requirements. Id. at section 11031(c)(2)(E)(ii)(III) and 
(iii)(II); proposed 8 CFR 216.7(a)(5)(iv).
    With respect to the types of evidence DHS is proposing for the 
second determination stage, if the adverse determination at the initial 
stage was based on failure to meet the job creation requirement, the 
rule proposes to require the alien to submit evidence of the number of 
qualifying jobs created since conditional resident status was continued 
and the beginning and ending dates of when the jobs existed. Proposed 8 
CFR 216.7(a)(5)(i)(A). For example, the alien may include with the 
petition payroll records, tax documents, and Forms I-9 to evidence the 
additional qualifying jobs that were created.
    Note that if the eligible alien has invested in a troubled 
business, documentation would be necessary to accompany the Form I-829 
demonstrating that the level of employment on the date of the second 
determination was maintained at no less than the pre-employment level. 
Public Law 107-273 at section 11031(c)(2)(E)(ii)(II) (cross referencing 
section 11031(c)(1)(C)). If the eligible alien's qualifying investment 
is within an approved regional center, the eligible alien would need to 
submit evidence of indirect job creation if the alien is relying on 
indirect jobs to demonstrate that he or she has met the job creation 
requirement. Id. (cross-referencing section 11031(c)(1)(B)). Because 
section 11031(c)(2)(E)(ii)(II) of Public Law 107-273 sufficiently 
covers the requirements with respect to investments in troubled 
business and within an approved regional center, DHS has determined 
that it is not necessary to repeat the requirements in this proposed 
rule.
    If the adverse determination at the initial stage was based on 
failure to meet the capital investment requirement, this rule proposes 
to require the alien to provide evidence of his or her capital 
investment in one or more commercial enterprises since conditional 
resident status was continued. Proposed 8 CFR 216.7(a)(5)(i)(B). Such 
evidence could include audited financial statements, federal tax 
returns, bank statements, bank wire transfers, or escrow agreements.
    b. Additional commercial enterprises and investments.
    Regardless of whether the initial adverse determinations were based 
on only the job creation or capital investment requirements, Public Law 
107-273 requires the Secretary of Homeland Security to consider for the 
second determination any capital investments in commercial enterprises 
in the United States. Public Law 107-273 at section 11031(c)(2)(A) and 
(B). Such investments include those that were made before or after the 
initial adverse determination and in commercial enterprises other than 
the one considered for the initial determination that were created at 
any time before or after the initial adverse determination and 
regardless of whether the alien entered the enterprise after its 
formation. Id. at section 11031(c)(2)(A) and (B).
    To implement section 11031(c)(2)(A) and (B) of Public Law 107-273, 
DHS is proposing to require the alien to provide evidence of the 
capital investments and corresponding commercial enterprises that he or 
she wants USCIS to consider for its second determination. See proposed 
8 CFR 216.7(a)(5)(i)(C). Evidence of the capital investment made in the 
commercial enterprise and considered at the initial determination would 
not be required. Id. DHS has determined that to require aliens to 
present such documentation would be duplicative and, therefore, 
unnecessary.
    The type of evidence of the alien's capital investments that DHS is 
proposing to require is based on the type of evidence that was required 
to be submitted with the initial Form I-829 pursuant to 8 CFR 
216.6(a)(4). The evidence that this proposed rule would require for 
each commercial enterprise which the alien desires to have considered 
includes:
     Audited financial statements, or other probative evidence 
of the alien's capital investment for each commercial enterprise to be 
considered; and
     Evidence of each commercial enterprise's formation and 
current ownership structure including, but not limited to: Articles of 
incorporation, certificate of merger or consolidation, partnership 
agreement, joint venture agreement, business trust agreement, or other 
similar organizational document for the commercial enterprise; and a 
certificate evidencing authority to do business in a state or 
municipality or, if the form of the business does not require such a 
certificate, a statement to that effect. See proposed 8 CFR 
216.7(a)(5)(i)(C).
c. Treatment of Capital Investments in Different Types of Commercial 
Enterprises
    There may be instances where an eligible alien has made capital 
investments in commercial enterprises that are located within a 
targeted employment area (TEA) which require at least $500,000 in 
capital investment, while also making capital investments in commercial 
enterprises not located in a TEA which require at least $1,000,000 in 
capital investment. Section 203(b)(5)(C) of the INA, 8 U.S.C. 
1153(b)(5)(C), and 8 CFR 204.6(f) define and describe the amount of 
investment capital required in both targeted (TEA) and non-targeted 
locations within the United States. These provisions, however, 
contemplate the consideration of capital investments in only one 
commercial enterprise. Sections 11031(c)(2)(A) & (B) of Public Law 107-
273 do not discuss how capital investments in commercial enterprises 
located both within and without a TEA must be evaluated in total at the 
time of the second determination to meet the capital investment 
requirements. This rule describes at 8 CFR 216.7(a)(5)(iii) the 
prorating approach that DHS proposes to use to determine the total 
amount of capital that must be invested in such instances. DHS proposes 
to utilize a multi-step process as follows to make such determinations:
     The creditable amount of an eligible alien's capital 
investments in all of the commercial enterprises located within a TEA 
would be determined by USCIS. If the eligible alien has complied with 
the $500,000 capital investment requirement, then the capital 
investment requirement under Public Law 107-273 will be met. If the 
eligible alien has not complied with the $500,000 capital investment 
requirement, then the amount of the eligible alien's creditable capital 
investment in all commercial enterprises located within a TEA would be 
divided by 500,000 to determine the prorated percentage of the eligible 
alien's capital investment based on capital investments in commercial 
enterprises located in a TEA.
     The creditable amount of an eligible alien's capital 
investments in all of the commercial enterprises that are not located 
within a TEA would be determined by USCIS. If the eligible alien has 
complied with the $1,000,000 capital investment requirement, then the 
capital investment requirement under Public Law 107-273 will be met. If 
the eligible alien has not complied

[[Page 59937]]

with the $1,000,000 capital investment requirement, then the amount of 
the eligible alien's creditable capital investment in all commercial 
enterprises not located in a TEA would be divided by 1,000,000 to 
determine the prorated percentage of the eligible alien's capital 
investment based on capital investments in commercial enterprises that 
are not located in a TEA.
     The prorated percentage of the eligible alien's capital 
investment in commercial enterprises located in a TEA would be combined 
with the prorated percentage of the eligible alien's capital investment 
in commercial enterprises that are not located within a TEA to arrive 
at the eligible alien's total creditable capital investment. This total 
creditable capital investment will be represented as a percentage, and 
the percentage must equal or exceed 100% in order for the alien to meet 
the statutory capital investment requirement.
    As an example, if an eligible alien's creditable capital investment 
in a commercial enterprise located within a TEA was $300,000, then the 
prorated percentage of the eligible alien's capital investment in the 
commercial enterprise would be 60% ($300,000/500,000 x 100 = 60%). In 
order for that eligible alien to meet the statutory capital investment 
requirements based upon an additional capital investment in a 
commercial enterprise that is not located within a TEA, he or she would 
have to be credited with an additional capital investment of $400,000 
($400,000/1,000,000 x 100 = 40%). In this example, the $300,000 capital 
investment and the additional $400,000 capital investment would 
constitute 100% of the capital investment requirement by utilizing a 
combination of capital investments in commercial enterprises located 
both within and without a TEA.
d. Substantial Compliance With the Capital Investment Requirement
    If the failure to meet the capital investment requirement was the 
basis for the initial adverse determination, eligible aliens must 
demonstrate that, on the date of the second determination, they are in 
substantial compliance with the capital investment requirement for the 
second determination. See Public Law 107-273 at section 
11031(c)(2)(E)(iii). This rule proposes to utilize the same definition 
of substantial compliance for the initial and second determinations, 
discussed in detail later in this SUPPLEMENTARY INFORMATION. See 
proposed 8 CFR 216.7(c)(2).
4. Favorable Determinations on the Second Form I-829
    Favorable determinations on the second Form I-829 result in the 
removal of conditions for the alien and accompanying spouse and 
children as of the second anniversary of the continuation of 
conditional resident status. Public Law 107-273 at section 
11031(c)(2)(F). This rule proposes that upon a favorable determination 
by USCIS warranting removal of conditions, USCIS will remove the 
conditions on the alien's permanent resident status if the alien is not 
in deportation or removal proceedings, and will send the alien written 
notice of these decisions. Proposed 8 CFR 216.7(a)(5)(v). Removal of 
conditions would be effective on the second anniversary of the 
continuation of conditional residence. Id. Because Public Law 107-273 
requires status determinations for aliens in deportation or removal 
proceedings to take place within those proceedings, this rule would 
require USCIS to provide written notice of the favorable determinations 
to those aliens in proceedings and to take no action on removing 
conditions. Id. DHS also would be required to file a motion to re-
calendar proceedings so that the status determinations can take place 
within proceedings. Id. These procedures parallel those applied to 
favorable determinations made at the initial determination stage of the 
process.
5. Adverse Determinations on the Second Form I-829
    An adverse determination on the alien's second Form I-829 leads to 
termination of conditional resident status. Public Law 107-273 at 
section 11031(c)(2)(G)(ii). However, prior to termination, the alien 
may submit evidence to rebut the adverse determinations so that the 
adverse determinations are reversed. Id. at section 11031(c)(2)(G)(i). 
This rule proposes a process for rebutting adverse determinations made 
by USCIS and terminating conditional residence status if no rebuttal is 
submitted or the rebuttal evidence does not result in a reversal of the 
adverse determinations.
    Similar to the process for rebutting initial adverse 
determinations, this rule proposes a 12-week period within which the 
alien may submit a written rebuttal to USCIS after receiving written 
notice from USCIS of the adverse determinations. Proposed 8 CFR 
216.7(a)(5)(vi)(A). USCIS would render a decision on the rebuttal 
evidence after receiving the rebuttal evidence. If USCIS determines 
that the rebuttal evidence is not sufficient to reverse its adverse 
determinations, USCIS would terminate the alien's conditional status 
and that of his or her accompanying spouse and/or children. If the 
alien is not already in deportation or removal proceedings, USCIS would 
issue an NTA to commence removal proceedings regardless of the ground 
on which the adverse determinations were based. Proposed 8 CFR 
216.7(a)(5)(vi)(B)(2). If the alien is in deportation or removal 
proceedings, USCIS would notify the alien of the adverse determination 
and file a motion to re-calendar with EOIR so that the termination of 
the alien's conditional resident status would be made in proceedings. 
On the other hand, if USCIS determines that the rebuttal evidence is 
sufficient to reverse the adverse determinations, removal of conditions 
would result, either by USCIS or the immigration judge (or the BIA) as 
appropriate. Proposed 8 CFR 216.7(a)(5)(vi)(A).
    If USCIS does not receive rebuttal evidence during the 12-week 
period, this rule proposes that the alien's conditional resident status 
and that of his or her accompanying spouse and/or children will be 
automatically terminated, even if the alien is in deportation or 
removal proceedings. Proposed 8 CFR 216.7(a)(5)(vi)(B)(1). This 
procedure contrasts with the procedure DHS is proposing for the 
rebuttal period following the initial determination. As discussed 
previously, if USCIS does not receive rebuttal evidence during the 12-
week period following notice of adverse determinations at the initial 
determination stage, no automatic consequences result. See proposed 8 
CFR 216.7(a)(4)(ii). DHS is proposing differing procedures following 
the rebuttal period for initial determinations and second 
determinations because, unlike at the second determination stage, 
USCIS's consideration of the alien's petition at the initial 
determination is complicated by two additional considerations: (1) 
Public Law 107-273 requires differing treatment of an alien's status 
depending on the basis for the adverse determination; and (2) USCIS's 
determinations at the initial determination stage would be based on 
facts and evidence that are dated.
    At the initial determination stage, Public Law 107-273 requires 
termination of conditional resident status only if the adverse 
determination is based on material misrepresentation. Public Law 107-
273 at section 11031(c)(1)(F)(iii). Public Law 107-273 requires 
continuation of conditional resident status if the adverse

[[Page 59938]]

determination is based on a failure to meet the job creation or capital 
investment requirements. Public Law 107-273 at section 
11031(c)(1)(F)(ii). By contrast, at the second determination stage, 
Public Law 107-273 provides for termination of conditional resident 
status regardless of the basis for the adverse determination. Public 
Law 107-273 at section 11031(c)(2)(G)(ii). An additional complication 
at the initial determination stage is that the petitions and supporting 
documentation reviewed by USCIS for its initial determination date from 
the late 1990s and, therefore, may no longer provide USCIS with a 
complete picture of the alien's eligibility. DHS has determined that 
USCIS should approach these cases cautiously, and provide every 
opportunity in the decision-making process for USCIS to revisit the 
evidence before it. At the second determination stage, on the other 
hand, the petition will be based on contemporary information and 
evidence. Therefore, USCIS should be able to proceed with its second 
determination as it would a non-Public Law 107-273 EB-5 petition.
    The termination of conditional resident status under proposed 8 CFR 
216.7(a)(5)(vi)(B)(1) or (2) would not be subject to appeal but would 
be reviewable in subsequent removal proceedings. Public Law 107-273 at 
section 11031(d); proposed 8 CFR 216.7(a)(5)(vi)(B)(1) or (2). If the 
alien's status (and that of his or her spouse and children) is 
terminated under proposed 8 CFR 216.7(a)(5)(vi)(B)(1) or (2), the alien 
and spouse and children would be required to surrender any Form I-551 
previously issued.

C. Common Definitions Applicable to Removal of Condition Determinations

    The rule proposes to define several statutory terms, in some cases 
for ease of reference and, in other cases, to better explain the 
statutory terms. The rule proposes to define the following terms for 
ease of reference and it relieves the regulations from cumbersome 
descriptions or cross-references to Public Law 107-273 each time the 
regulations refer to these terms:
     Denied initial Form I-829: an initial Form I-829 that was 
denied by an INS director on the merits of the petition.
     Initial Form I-829: a Form I-829 that was timely filed 
before November 2, 2002 by an eligible alien.
     Qualifying Form I-526: a Form I-526 that was approved 
after January 1, 1995 and before August 31, 1998.
     Second petition to remove conditions: a petition to remove 
conditions (Form I-829 or successor form) timely filed by an eligible 
alien following an initial adverse determination.

See proposed 8 CFR 216.7(a)(1).
    DHS also is proposing to define the following substantive terms 
relating to petitions to remove conditions (either under section 11031 
or 11032(e) of Pub. L. 107-273):
1. Material Misrepresentation
    An adverse determination made on a petition to remove conditions 
based on ``material misrepresentation'' leads to termination of 
conditional resident status. Public Law 107-273 sections 
11031(c)(1)(F)(iii), 11031(c)(2)(G)(2), and 11032(e). DHS is proposing 
in this rule to define material misrepresentation to mean a statement 
or representation in a petition to remove conditions, as originally 
filed or supplemented, or in any accompanying documentation, which, as 
a matter of discretion, is determined to be both false and one to which 
importance would reasonably be attached for determining whether to 
grant the petition, without regard to the petitioner's or any other 
person's intent or to whether or not there was detrimental reliance 
upon the statement or representation. Proposed 8 CFR 216.7(c)(1); see 
Kungys v. United States, 485 U.S. 759, 771-772 (1988) (holding that the 
materiality test is whether the concealments or misrepresentations had 
a natural tendency to influence the decision of the immigration 
agency). Material misrepresentation also includes an omission that has 
the effect of making any material representation in the Form I-829 or 
accompanying documentation false. For example, if the alien failed to 
mention in the initial Form I-829 that he or she received his or her 
capital investment back since becoming a conditional resident, then 
this omission would constitute a material misrepresentation.
2. Substantial Compliance With the Capital Investment Requirement
    Public Law 107-273 requires DHS to consider whether the eligible 
alien is in ``substantial compliance'' with the capital investment 
requirement. Public Law 107-273 sections 11031(c)(1)(A)(iii), 
11031(c)(2)(E)(iii), and 11032(e)(2)(C). By contrast, removing the 
conditions from permanent resident status of an alien entrepreneur 
typically requires aliens to demonstrate that they invested, or were 
actively in the process of investing, the requisite amount of capital. 
See INA section 216A(d)(1)(A)(i), 8 U.S.C. 1186b(d)(1)(A)(i). The 
requirement to be ``actively in the process of investing'' capital has 
no quantitative aspect with respect to the amount of the investment. 
Instead, it focuses on the process of investing the required capital, 
and could be satisfied by showing that the process of investing the 
capital has been commenced and is continuing. Substantial compliance 
suggests that the substance of the capital investment has in fact been 
made.
    Accordingly, this rule defines substantial compliance as meaning 
that that the alien has invested nearly all the requisite amount (i.e., 
$1 million or $500,000). 8 CFR 216.7(c)(2). If the remaining amount has 
not been invested, the alien must provide evidence that the balance is 
legally obligated for final disbursement within a reasonable period of 
time after any one of the three dates specified in sections 
11031(c)(1)(D) and 11032(e)(3) of Public Law 107-273, as applicable:
    (1) The date on which the Form I-829 was filed (not applicable to 
petitions to remove conditions considered under section 11031(c)(2) of 
Public Law 107-273, relating to the second determination;
    (2) Six months after that date (limited to petitions to remove 
conditions considered under section 11031(c)(1) of Pub. L. 107-273); or
    (3) The date upon which the determinations are made (applicable to 
petitions to remove conditions considered under sections 11031(c)(1) 
and (2) and 11032).
    DHS has determined that assigning a rigid numerical standard to 
define ``substantial compliance'' would not fairly take into account 
the unique circumstances of each investment. Because several years have 
passed since the enactment of Public Law 107-273 and the law's deadline 
for completing the initial determinations, DHS believes that requiring 
eligible aliens to demonstrate that they have made ``nearly all'' the 
required capital investment is reasonable.
    This rule proposes to exclude from consideration any funds returned 
to the alien or required to be returned to the alien (provided by 
legally enforceable documents or contracts relating to the enterprise) 
in the form of guaranteed interest payments or as redemption for his or 
her capital investment interest, or otherwise diverted. Returned funds 
would not have been made available to the commercial enterprise for the 
purposes of creating qualifying jobs.
3. Full-time Employment
    In making its initial and second determinations on petitions to 
remove conditions under section 11031(c) of Public Law 107-273, the 
Secretary of

[[Page 59939]]

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

D. Treatment of Spouses and Children Where Eligible Alien Is Deceased

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

V. Adjustment of Status Applications Under Section 11032 of Public Law 
107-273

    In addition to providing special treatment for certain aliens who 
previously attained conditional resident status, Public Law 107-273 
also provides for the special treatment of ``eligible aliens'' who have 
not yet become conditional residents. Specifically, section 11032(a) of 
Public Law 107-273 requires DHS or the Secretary of State to grant 
conditional residence status to eligible aliens meeting the following 
criteria:
     The alien filed a Form I-526 that was approved after 
January 1, 1995 and before August 31, 1998;
     Pursuant to this approval, the alien timely filed a Form 
I-485 or an application for an immigrant visa (DS-230) prior to the 
date of enactment of Public Law 107-273, November 2, 2002; and
     The alien is not inadmissible or deportable.

See Public Law 107-273 at section 11032(b).
    If the qualifying Form I-526 was revoked following approval, the 
alien may still be eligible for conditional resident status if the 
basis for the revocation was failure to meet the job creation 
requirement in INA section 203(b)(5)(A)(ii), 8 U.S.C. 
1153(b)(5)(A)(ii). See Public Law 107-273 at section 11032(c)(1). If 
the qualifying Form I-485 or application for immigrant visa was denied 
or terminated on or before November 2, 2002, the alien may still be 
eligible for conditional resident status if the basis for the denial or 
termination was the alien's failure to meet the job creation 
requirement or the alien's departure from the United States without 
permission (``advance parole''). See id. at section 11032(c)(2)(A). If 
an eligible alien is no longer in the United States, such alien may be 
paroled into the United States if necessary to obtain adjustment of 
status to that of a conditional resident. See id. at section 
11032(c)(2)(B).
    As the authority of DHS only extends to the adjudication of Form I-
485 adjustment applications filed by aliens physically present in the 
United States, this rule only discusses the applicability of section 
11032(c) of Public Law 107-273 to eligible aliens who filed such 
applications. This rule does not extend to applications for immigrant 
visas, since such applications are processed by the Department of 
State.
    In this rule, DHS is proposing procedures eligible aliens must 
follow to request USCIS to consider them for conditional residence 
under Public Law 107-273. DHS also is proposing to describe how USCIS 
will make eligibility determinations, including determinations for 
special cases involving overseas aliens. Finally, DHS is proposing the 
approval and denial processes.

A. Definitions

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

B. Procedures for Requesting Consideration for Conditional Resident 
Status

1. Filing a New Application for Adjustment of Status
    DHS is proposing in this rule that aliens seeking to qualify for 
conditional resident status under section 11032 of Public Law 107-273 
must, in accordance with the form instructions, file with USCIS a newly 
completed Form I-485 or succeeding form, without fee, and with any 
documentary evidence of continued eligibility that is signed and dated 
after the date that a final rule is effective and on or before the date 
that is 180 days from date of such effective date. Proposed 8 CFR 
245.25(b). The alien would be required to subsequently appear when 
requested by USCIS to submit certain biometric information (with fee) 
and for an interview as part of the determination process if USCIS 
determines that an interview is necessary. Proposed 8 CFR 
245.25(b)(1)(iii).
    DHS is also proposing the submission of additional documentation 
with the new Form I-485 in cases where:
     The alien's qualifying Form I-485 is no longer pending or

[[Page 59940]]

     The alien's qualifying Form I-526 was revoked.
    Without this information, USCIS would not be equipped to make a 
determination on whether a revoked petition should be disregarded or a 
denied or terminated application for adjustment of status should be 
reopened.
a. Forms I-485 That Are No Longer Pending
    If the alien's Form I-485 was no longer pending as of November 2, 
2003, DHS is proposing to require the alien to submit evidence to show 
the reasons why the Form I-485 is no longer pending. To qualify for 
benefits under section 11032 of Public Law 107-273, the alien must 
demonstrate that his or her I-485 is no longer pending due to a 
determination by INS that the alien either failed to satisfy the job 
creation requirement or departed the United States without advance 
parole while the Form I-485 was pending. Proposed 8 CFR 245.25(b)(3). 
The primary evidence would be a decision from INS denying or 
terminating the Form I-485. However, USCIS would accept secondary 
evidence, including a sworn statement from the alien regarding the 
basis for the denial, termination, withdrawal, or abandonment.
b. Forms I-526 That Have Been Revoked
    Otherwise eligible aliens whose qualifying Forms I-526 were revoked 
may still be able to receive the benefits of Public Law 107-273 and 
obtain conditional resident status. See Public Law 107-273 at section 
11032(c)(1). USCIS may not grant a request for adjustment of status on 
Form I-485 based on a revoked Form I-526 because of INA section 
245(a)(3), 8 U.S.C. 1255(a)(3), requires that an alien must have an 
immigrant visa immediately available in order to adjust status. A 
petition that USCIS revokes based on a finding of ineligibility 
nullifies the previous USCIS decision to approve the petition. However, 
under Public Law 107-273, if INS or USCIS revoked the approval of the 
alien's Form I-526 petition based on a determination that the alien 
failed to meet the job creation requirement, USCIS must disregard the 
revocation for purposes of approving the alien's Form I-485. See Public 
Law 107-273 at section 11032(c)(1). If USCIS revoked the Form I-526 due 
to other grounds of ineligibility, then USCIS will not disregard the 
revocation since Public Law 107-273 only authorizes the one basis for 
disregarding revocations. This rule proposes that in cases where 
revocation is not authorized, USCIS will deny the Form I-485 if it is 
still pending. Proposed 8 CFR 245.25(f). Aliens whose Forms I-526 were 
revoked on other grounds of ineligibility would not be able to 
establish eligibility for adjustment of status under section 11032 of 
Public Law 107-273 to file the new Form I-485.
    In order for USCIS to be equipped to make determinations regarding 
the revoked petition, USCIS would need information regarding the 
revocation. Therefore, if the alien is seeking consideration for 
conditional residence under section 11032 of Public Law 107-273 
notwithstanding the revocation of his or her qualifying Form I-526, DHS 
is proposing to require the alien to submit evidence demonstrating that 
USCIS should disregard the revocation. Proposed 8 CFR 245.25(b)(4). The 
primary evidence would be a copy of the revocation decision where the 
sole stated reason for the decision is failure of the alien to meet the 
job creation requirement. However, if the alien lost the decision or no 
longer has the decision for some other reason, USCIS would accept 
secondary evidence including a sworn statement of the alien regarding 
the reasons for the revocation and additional supporting evidence. 
Using the information submitted by the alien, USCIS would be able to 
confirm the information contained in its own records.
c. Reasons for Requiring Additional Submissions
    The procedures and requirements in proposed 8 CFR 245.25(b)(1) 
would provide USCIS with up-to-date information regarding the alien so 
that USCIS can make a determination on whether such aliens are 
currently inadmissible or deportable and, in turn, ineligible for 
conditional resident status under section 11032(b)(3) of Public Law 
107-273. Therefore, failure to follow these requirements would result 
in denial of the alien's qualifying Form I-485 because USCIS would not 
be able to determine whether the alien qualifies for conditional 
residence under Public Law 107-273. Proposed 8 CFR 245.25(b). The 
requirements would also provide USCIS with information regarding which 
aliens with qualifying EB-5 petitions are still interested in pursuing 
conditional residence through the EB-5 program on the basis of such 
petitions.
2. Aliens Not Physically Present in the United States
    Under this rule, aliens who are not physically present in the 
United States may still qualify for conditional residence under section 
11032(c)(2)(B) of Public Law 107-273. Proposed 8 CFR 245.25(b)(2). DHS 
is proposing that such aliens follow the procedures in proposed 8 CFR 
245.25 and timely file a new Form I-485 and any supporting 
documentation in order for USCIS to consider their cases. However, with 
respect to the requirement to appear for biometric information capture 
and an interview, DHS is proposing that USCIS would notify aliens who 
are not physically present in the United States following receipt of 
the new Form I-485 to make any required appearances at the DHS office 
located outside the United States having jurisdiction over the alien's 
foreign residence. Proposed 8 CFR 245.25(b)(2). After considering the 
new Form I-485 and information obtained through the biometric capture 
and interview at the DHS office overseas, USCIS would be better able to 
make a determination as to whether it is necessary to parole the alien 
for adjustment of status pursuant to section 11032(c)(2)(B).
3. Spouses and Children
    At proposed 8 CFR 245.25(b)(5), DHS is proposing to require spouses 
and children accompanying or following to join principal EB-5 aliens 
pursuant to section 203(d) of the INA, 8 U.S.C. 1153(d), as permitted 
under Public Law 107-273, to each file an application for adjustment of 
status. Applications should be filed with the principal EB-5 alien's 
application for adjustment of status. However, in case circumstances 
change between the time that the principal alien files his or her own 
application for adjustment of status and the date USCIS makes a 
decision on the principal's application, this rule would permit 
applications for accompanying and following to join spouses and 
children to be filed up until the date of decision. Applications filed 
for accompanying or following to join spouses and children would be 
required to include evidence of eligibility and, in particular, 
evidence of the qualifying relationship, such as marriage and birth 
certificates. For spouses and children who are overseas and seeking to 
join the principal EB-5 alien after such alien has received conditional 
resident status (i.e., ``following to join'' the principal alien), 
USCIS cannot grant the adjustment of status application while they are 
overseas. Therefore, following a determination of eligibility, DHS is 
proposing to require that these dependents appear at a DHS office 
abroad to request parole by filing an Application for Travel Document, 
Form I-131 or successor form, in accordance with the instructions to 
the form to return to the United States for

[[Page 59941]]

adjustment of status. Proposed 8 CFR 245.25(c)(3).

C. Determinations on Eligibility

    DHS is proposing that prior to approving or denying the qualifying 
Form I-485 under section 11032 of Public Law 107-273, USCIS would make 
determinations on whether the alien qualifies as an eligible alien. 
Proposed 8 CFR 245.25(c). DHS is further proposing to create an 
intermediate step, described more fully below, to accommodate eligible 
aliens and their spouses and children who are overseas and may need to 
be paroled into the United States to be granted conditional resident 
status.
    To determine whether an alien qualifies for conditional resident 
status, USCIS would review the qualifying Form I-485, the new Form I-
485, and any information based on the recent collection of biometric 
information, interview, any Form I-526 revocation proceedings, and any 
previous denial of Form I-485 if no longer pending. At this stage, 
USCIS would determine whether all of the requirements in section 
11032(a), (b), and (c) are met, such as:
     Whether the revocation of the alien's qualifying Form I-
526 was based on failure of the alien to meet the job creation 
requirement and, therefore, should be disregarded;
     Whether a ground of inadmissibility or deportability 
applies to the alien; and
     Whether the alien's denied or terminated Form I-485 should 
be reopened because the denial was based on failure to meet the job 
creation requirement.
    An additional consideration would be whether the alien obtained 
permanent residence on other grounds. In such a case, there would be no 
need for USCIS to apply section 11032 of Public Law 107-273 and grant 
conditional residence. Proposed 8 CFR 245.25(c)(1). Another 
consideration would be whether the eligible alien departed the United 
States while his or her qualifying Form I-485 was pending. An alien 
would not qualify for conditional residence under section 11032 of 
Public Law 107-273 if he or she departed without advance parole. 
Proposed 8 CFR 245.25(c)(2). This consequence applies to adjustment of 
status applicants under regular procedures applicable to Forms I-485. 
DHS does not believe that a different rule should apply to adjustment 
applicants seeking benefits under section 11032 of Public Law 107-273.
    Finally, for principal aliens and their spouses and children who 
are not physically present in the United States, DHS is proposing that 
following a determination of eligibility, USCIS would send such aliens 
a notice requiring them, by a specific date, to apply for parole to 
return to the United States at a DHS office located in the jurisdiction 
of their overseas residence. Proposed 8 CFR 245.25(c)(3). Applicants 
can learn which DHS office services their residence by viewing the 
USCIS Office and Service Locator at https://egov.uscis.gov/crisgwi/go?action=offices.type&OfficeLocator.office_type=OS. Applicants may be 
requested to appear at the overseas DHS office for capture of biometric 
information and/or an interview in connection with the parole 
application. DHS proposes to make physical presence in the United 
States a requirement for adjudication of the I-485 application because 
its jurisdiction to grant conditional residence based on adjustment of 
status is limited to the United States.
    If USCIS determines that an alien who is overseas does not qualify 
as an eligible alien or for conditional resident status under section 
11032 of Public Law 107-273, USCIS will terminate processing of the 
alien's Form I-485 and that of any accompanying spouse and children. 
Proposed 8 CFR 245.25(c) and (e). Likewise, if USCIS determines that an 
alien who is overseas does qualify as an eligible alien for conditional 
residence under section 11032 of Public Law 107-273, but that a spouse 
or child does not qualify for conditional resident status, USCIS will 
terminate processing of the respective spouse's or child's Form I-485. 
Proposed 8 CFR 245.25(c) and (e). There is no administrative appeal of 
a decision to terminate processing of any application of an alien who 
is overseas. See INA section 245(a), 8 U.S.C. 1255(a). Therefore, under 
this proposed rule, if the alien fails to obtain parole into the United 
States, USCIS will deny the alien's Form I-485. In such a case, the 
alien would not have met the requirements of sections 11032(b)(3) or 
(c)(2)(B) of Public Law 107-273.

D. Decisions on Granting Conditional Resident Status

1. Approvals
    After USCIS makes a determination of eligibility, USCIS would make 
a decision on the Form I-485. Upon approval of the new Form I-485, 
USCIS would grant the alien conditional residence under section 216A of 
the INA, 8 U.S.C. 1186b, as of the date of the approval. USCIS would 
also approve Forms I-485 filed for the principal alien's accompanying 
spouse and children, if their Form I-485 is properly filed in 
accordance with proposed 8 CFR 245.25(b)(5) and the spouse or child is 
eligible to receive a visa under section 203(d) of the INA, 8 U.S.C. 
1153(d). Proposed 8 CFR 245.25(d). USCIS will send written notice of 
the approval to the eligible alien(s). Note that prior to approval, 
USCIS must ensure that a visa number is available for each eligible 
alien from the Department of State under sections 201(d) and 203(b)(5) 
of the INA. 8 U.S.C. 1151(d) and 1153(b)(5).
2. Denials
    Under this proposed rule, USCIS would be required to deny 
qualifying applications for adjustment of status to conditional 
residence if it determines that the eligible alien did not meet the 
requirements in section 11032 of Public Law 107-273 and the regulatory 
requirements in proposed 8 CFR 245.25. Proposed 8 CFR 245.25(e). In 
particular, USCIS would deny conditional residence:
     When USCIS cannot disregard the revocation of the eligible 
alien's qualifying Form I-526;
     When USCIS cannot reopen the eligible alien's Form I-485 
that is no longer pending;
     If USCIS determines that the eligible alien is 
inadmissible or deportable on any ground; or
     If the eligible alien is no longer physically present in 
the United States and is not timely paroled into the United States if 
DHS requires such parole.

USCIS would provide the alien with written notice of the denial. It 
would also initiate removal proceedings if the alien is physically 
present in the United States. At that time, an immigration judge would 
have jurisdiction to review USCIS's decision. Proposed 8 CFR 245.25(e).

VI. Determinations on Petitions To Remove Conditions Under Section 
11032 of Public Law 107-273

    Section 216A of the INA, 8 U.S.C. 1186b, governs the entire removal 
of condition process for EB-5 aliens who do not fall within the scope 
of Public Law 107-273. Section 11032(e) of Public Law 107-273 modifies 
part of the regular process for removing conditions after USCIS grants 
conditional residence pursuant to Public Law 102-273.
    Just as under the regular process, an alien granted conditional 
resident status under section 11032(a) of Public Law 107-273 must file 
a petition to remove conditions within 90 days prior to the second 
anniversary of becoming a conditional resident. Public Law 107-273 at 
section 11032(e)(1). The petition must demonstrate that:

[[Page 59942]]

     The alien invested or is actively in the process of 
investing the requisite capital of $1 million or $500,000,
     He or she has sustained the investment during the period 
of residence in the United States, and
     He or she is otherwise conforming to the requirements of 
the EB-5 visa classification. See id.; INA sections 203(b)(5), 
216A(d)(1); 8 U.S.C. 1153(b)(5), 1186b(d)(1).
    Unlike the regular process, however, section 11032(e) of Public Law 
107-273 provides that the petition can be based on any commercial 
enterprise in the United States in which the alien has made a capital 
investment at any time. Public Law 107-273 at section 11032(e)(1). In 
making a determination on the petition to remove conditions, section 
11032(e) of Public Law 107-273 requires that three determinations be 
made. These are similar to the determinations required for eligible 
aliens seeking removal of conditions under section 11031 of Public Law 
107-273:
    1. A determination must be made as to whether the petition contains 
any material misrepresentation in the facts and information alleged in 
the petition with respect to the commercial enterprises included in the 
petition. Public Law 107-273 at section 11032(e)(2)(A).
    2. A determination must be made as to whether all commercial 
enterprises included in the petition together created full-time jobs 
for 10 or more qualifying individuals and that those jobs exist or 
existed on either of the following dates: The date on which the 
investor's initial application for adjustment of status or immigrant 
visa was filed, or the date on which the determination on the Form I-
829 is made. Id. at sections 11032(e)(2)(B) and (e)(3). If the 
investment was made within an approved regional center under the EB-5 
Pilot Program, then the indirect jobs that were created can be used to 
meet this requirement. Id. at section 11032(e)(2)(B). If the immigrant 
investor has made an investment in a troubled business, the number of 
employees of the business cannot be any less than the pre-investment 
level. Id.
    3. A determination must be made as to whether, considering the 
alien's investments in enterprises on either or both of the dates 
described above, the alien is or was in substantial compliance with the 
capital investment requirement. Id. at section 11032(e)(2)(C).
    Because the requirements in section 11032(e) of Public Law 107-273 
are based on the requirements applicable to the regular process for 
removing conditions in section 216A(c) and (d) of the INA, 8 U.S.C. 
1186b(c) and (d), DHS is proposing that the regulations governing the 
regular removal of condition process at 8 CFR 216.6 also apply to 
section 11032(e) cases, except where specifically covered by the 
provisions proposed by this rule. See proposed 8 CFR 216.7(b)(1). 
Referring to the current regulations at 8 CFR 216.6(a)(1), DHS is 
proposing that Form I-829 must be filed to remove conditions for aliens 
granted conditional residence under section 11032(a) of Public Law 107-
273. Proposed 8 CFR 216.7(b)(1). This rule also describes the 
documentary evidence that eligible aliens would be required to include 
with the Form I-829. Proposed 8 CFR 216.7(b)(2). This list is different 
from the list applicable to aliens who fall outside the scope of Public 
Law 107-273, since section 11032(e) of Public Law 107-273 requires that 
a different inquiry be made on the petitions to remove conditions of 
eligible aliens. In particular, this rule requires evidence to be 
presented regarding:
     The dates on which jobs created by the commercial 
enterprise existed;
     All commercial enterprises in which the eligible alien 
invested and upon which a determination will be made; and
     Whether the alien is or was in substantial compliance with 
the capital investment requirement described in section 216A(d)(1)(B) 
of the INA, 8 U.S.C. 1186b(d)(1)(B).

If the petition to remove conditions is based upon commercial 
enterprises located both within and outside of a TEA, the investment 
amount must comply with proposed 216.7(a)(5)(iii).
    The rule does not propose special provisions governing the 
processes for requiring appearances by the alien, issuing a decision on 
the petition, granting or terminating status, and providing avenues for 
review of adverse decisions since the current regulations adequately 
cover these areas. See 8 CFR 216.6.

VII. Treatment of Children

    The special benefits of Public Law 107-273 extend to the spouses 
and children of eligible aliens. In addition, section 11031(e) of 
Public Law 107-273 provides that an alien who obtained conditional 
resident status before November 2, 2002 by virtue of being a child of 
an eligible alien will be considered to be a child for purposes of this 
section notwithstanding any subsequent change in age or marital status. 
Likewise, under section 11032(f) of Public Law 107-273, an alien who 
was a child on the date that Form I-485 or application for an immigrant 
visa (DS-230) was filed will be considered to be a child for purposes 
of this section notwithstanding any subsequent change in age or marital 
status.
    DHS has determined that regulations implementing sections 11031(e) 
and 11032(f) of Public Law 107-273 are not necessary because the 
statutory provisions are sufficiently detailed. However, DHS invites 
comments from the public regarding whether there are issues that should 
be addressed in the regulations.

VIII. Regulatory Requirements

A. Regulatory Flexibility Act

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

B. Unfunded Mandates Reform Act of 1995

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

C. Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by section 804 of the 
Small Business Regulatory Enforcement Act of 1996. This rule will not 
result in an annual effect on the economy of $100 million or more; a 
major increase in costs or prices; or significant adverse effects on 
competition, employment, investment, productivity, innovation, or on 
the ability of United States-based

[[Page 59943]]

companies to compete with foreign-based companies in domestic and 
export markets.

D. Executive Order 12866

    This proposed rule is not a ``significant regulatory action'' under 
section 3(f) of Executive Order 12866, Regulatory Planning and Review. 
Accordingly, this rule has not been submitted to the Office of 
Management and Budget for review. DHS has considered the benefits and 
costs associated with the changes proposed in this rule and has 
determined that the benefits justify the costs.
    The majority of changes being proposed describe how USCIS would 
apply adjudication practices to the alien investor population covered 
by Public Law 107-273. The alien investor population covered by Public 
Law 107-273 filed petitions with USCIS during the period January 1, 
1995 thru August 31, 1998. There are two distinct groups of aliens to 
which this rule applies: Those who have already obtained permanent 
resident status on a conditional basis are covered by section 11031 of 
Public Law 107-273, and those who have never obtained permanent 
resident status are covered by section 11032 of Public Law 107-273.
    Pursuant to section 11031, DHS is proposing to reconsider alien 
investor petitions for removal of conditions filed during the 
applicable timeframe that meet the statutory eligibility requirements 
specified in section 11031 Public Law 107-273. Generally, DHS would 
apply adjudication standards that are similar to current practices in 
alien investor adjudication, while offering a few flexibilities. DHS 
estimates that 581 principal alien investors would be covered under 
this provision. Under the proposed rule, these covered alien investors 
would have further opportunity to satisfy their investment criteria in 
order to qualify for the removal of conditions on their lawful 
permanent residence. Most significantly, these principal alien 
investors would have the ability to count investment activities beyond 
the scope of their original investment. These enhanced flexibilities 
would represent significant qualitative benefits to the alien investor 
and their qualifying family members.
    Principal alien investors seeking to benefit under section 11031 of 
Public Law 107-273 would be permitted to complete a Supplement to Form 
I-829 Petition by Entrepreneurs to Remove Conditions. Currently, there 
is no fee for the Supplement; thus the compliance cost to alien 
investors is directly attributable to the opportunity cost of 
completing the Supplement. According to the form instructions, the 
Supplement takes approximately 22 minutes to complete. Given the 
importance of the proposed accommodations, DHS assumes that investors 
will choose to have the form completed by an attorney. The Bureau of 
Labor Statistics 2009 Occupational Employment Statistics, reports the 
average hourly wage of an attorney at $62.03.\4\ To account for the 
additional cost of non-wage benefits such as health insurance, vacation 
time, etc., we use a factor of 1.43 to burden the wage, resulting in a 
fully burdened average hourly wage rate for attorneys of $88.70.\5\ 
Using the fully burdened wage rate for attorneys and the form 
completion time, DHS calculates the opportunity cost of completing the 
Supplement at $32.82.\6\ If all 581 principal alien investors to which 
the proposed rule applies were to file a Supplement, the total cost 
imposed by this rule would be $19,068.\7\
---------------------------------------------------------------------------

    \4\ See http://www.bls.gov/oes/2009/may/oes231011.htm.
    \5\ The calculation to burden the wage rate: $62.03 x 1.43 = 
$88.70. U.S. Department of Labor, Bureau of Labor Statistics, 
Economic News Release, Table 1. Employer costs per hour worked for 
employee compensation and costs as a percent of total compensation: 
Civilian workers, by major occupational and industry group, March 
2009, viewed online at: http://www.bls.gov/news.release/ecec.t01.htm.
    \6\ 22 minutes/60 minutes = 0.37 hours. 0.37 hours x $88.70 = 
$32.82.
    \7\ 581 investors x $32.82 = $19,068.
---------------------------------------------------------------------------

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

    \8\ According to the form instructions, Form I-829 takes 
approximately 1 hour and 5 minutes to complete.
    \9\ 1.45 hours x $88.70 = $128.62.
---------------------------------------------------------------------------

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

    \10\ See United States Department of Labor, Bureau of Labor 
Statistics, Occupational Employment Statistics, May 2009 National 
Occupational Employment and Wage Estimates. Viewed online at: http://www.bls.gov/news.release/pdf/ocwage.pdf.
    \11\ The opportunity cost for the second determination is 
calculated as follows: $128.62 for forms + $59.78 for biometrics = 
$188.40 total opportunity cost per alien investor. $188.40 x 581 = 
$109,460 in total maximum opportunity cost for second determination.
    \12\ $3,835 total fees x 581 = $2,228,135.
---------------------------------------------------------------------------

    Under the highest-cost scenario, where all 581 investors covered 
under section 11031 would have to undergo both the initial and 
secondary determination to have their conditions on permanent residence 
removed, the total opportunity cost imposed by this rule is $128,528. 
Additionally, the rule would impose over $2.2 million in fees, under 
the highest-cost scenario.
    Section 11032 of Public Law 107-273 also provides benefits for 
certain individuals and their qualifying family members who applied for 
admission or adjustment of status on an EB-5 visa prior to the 
enactment of the legislation.

[[Page 59944]]

Principal alien investors and qualifying family members seeking to 
benefit under section 11032 would be required to complete a new 
Application to Register Permanent Residence or Adjust Status, Form I-
485, even though many of these aliens will have previously completed a 
Form I-485. Additionally, these covered principal aliens and family 
members would be required to submit biometric information.\13\ DHS 
estimates 109 aliens would be covered under this provision; 31 
principal aliens and approximately 78 dependent family members.\14\
---------------------------------------------------------------------------

    \13\ Note: Biometric collection is only required for family 
members who are 14 years of age or older.
    \14\ DHS assumes average dependents of 2.5 per principal alien 
based on historical employment-based immigrant petitions. 
Calculation: 31 principal aliens x 2.5 = 77.50.
---------------------------------------------------------------------------

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

    \15\ The calculation to burden the wage rate: $20.90 x 1.43 = 
$29.887 per hour. The calculation of opportunity cost: $29.89 x 8.25 
= $246.59.
    \16\ $246.59 x 109 covered aliens = $26,878.31.
    \17\ $32.82 x 31 investors = $1,017.
    \18\ $85 x 109 covered aliens = $9,265.
---------------------------------------------------------------------------

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

E. Executive Order 13132

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

F. Executive Order 12988 Civil Justice Reform

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

G. Paperwork Reduction Act

    The information collection requirements (Form I-526, I-829, Form I-
485, and Form I-131) contained in this rule have been previously 
approved for use by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act. The OMB control numbers for these information 
collections are: 1615-0026, 1615-0045, 1615-0023, and 1615-0013, 
respectively.
    USCIS will be creating a supplement to the Form I-829 to 
accommodate special information that eligible aliens under Public Law 
107-273 must provide to establish eligibility. The supplement will 
require the conditional resident to provide information regarding all 
commercial enterprises in the United States in which he or she has 
invested, the number of jobs created with respect to each commercial 
enterprise, and, where applicable, credits for previous investments 
that were made and jobs that were created.
    Accordingly, the Form I-829 is being revised to include the new 
supplement. This revision is subject to review by the OMB under the 
Paperwork Reduction Act of 1995. Written comments are encouraged and 
will be accepted until November 28, 2011. When submitting comments on 
the information collection, your comments should address one or more of 
the following four points.
    (1) Evaluate whether the collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the collection of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of the information on 
those who are to respond, including through the use of any and all 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology, e.g., 
permitting electronic submission of responses.
Overview of Information Collection
    (1) Type of information collection: Revision of currently approved 
information collection.
    (2) Title of form/collection: Petition by Entrepreneur to Remove 
Conditions.
    (3) Agency form number, if any, and the applicable component of the 
Department of Homeland Security sponsoring the collection: Form I-829 
and Supplement, U.S. Citizenship and Immigration Services.
    (4) Affected public who will be asked or required to respond, as 
well as a brief abstract: Individuals and households. This form 
provides a uniform petition that enables alien entrepreneurs to request 
the removal of the conditional basis of their lawful permanent resident 
status.
    (5) An estimate of the total number of respondents and the amount 
of time estimated for an average respondent to respond: 1931 
respondents for Form I-829 at 1 hour and 5 minutes, and 602 respondents 
filing the supplement at 22 minutes per response.
    (6) An estimate of the total of public burden (in hours) associated 
with the collection: Total reporting burden hours is 2312.

[[Page 59945]]

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

List of Subjects

8 CFR Part 216

    Administrative practice and procedure, Aliens.

8 CFR Part 245

    Aliens, Immigration, Reporting and recordkeeping requirements.

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

PART 216--CONDITIONAL BASIS OF LAWFUL PERMANENT RESIDENCE STATUS

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

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

    2. Section 216.7 is added to read as follows:


Sec.  216.7  Removal of conditions pursuant to sections 11031 to 11034 
of Public Law 107-273.

    (a) Removal of conditional basis of permanent resident status for 
certain aliens pursuant to section 11031 of Public Law 107-273.
    (1) Definitions. As used in paragraph (a) of this section, the 
term:
    Denied initial Form I-829 means an initial Petition by Entrepreneur 
to Remove Conditions (Form I-829), that the INS or Service director 
denied on the merits of the petition.
    Initial Form I-829 means a Form I-829 that an eligible alien timely 
filed before November 2, 2002.
    Qualifying Form I-526 means an Immigrant Petition by Alien 
Entrepreneur (Form I-526), that INS approved after January 1, 1995 and 
before August 31, 1998.
    Second petition to remove conditions means a petition to remove 
conditions (Form I-829 or successor form) and any supporting 
documentation that an alien must file following an initial adverse 
determination.
    (2) Eligible Aliens. Eligible aliens are those aliens described in 
section 11031(b) of Public Law 107-273 except:
    (i) Any otherwise eligible alien who has been placed into 
deportation or removal proceedings and who is deportable or removable 
on grounds other than the denial of Form I-829;
    (ii) An eligible alien who has obtained lawful permanent resident 
status (whether subject to conditions or not) on a basis unrelated to 
the conditional resident status at issue in the initial Form I-829. 
Such alien's dependent spouse and children will also no longer be 
deemed eligible aliens;
    (iii) An eligible alien who makes or has previously made a written 
request to withdraw his or her initial Form I-829 will no longer be 
deemed an eligible alien upon the written notice by USCIS acknowledging 
the withdrawal request. Such alien's dependent spouse and children will 
also no longer be deemed eligible aliens. The conditional resident 
status of such alien(s) will terminate as of the date of the notice; or
    (iv) Any alien who has abandoned his or her conditional residence 
by filing the Abandonment by Alien of Status as Lawful Permanent 
Resident form (Form I-407 or successor form) or an attestation in 
writing asserting the alien's abandonment of his or her status, 
regardless of whether he or she withdrew the petition to remove 
conditions on lawful permanent resident status or obtained lawful 
permanent resident status by any other means.
    (3) Treatment of pending deportation or removal proceedings. DHS 
has agreed to the administrative closure of any pending deportation or 
removal proceedings, including proceedings reopened pursuant to section 
11031(b)(2) of Public Law 107-273, in order to make the determinations 
required under this paragraph. DHS will file a motion to re-calendar 
the proceedings with the Executive Office for Immigration Review after 
USCIS has issued an initial determination on the eligible alien's 
denied initial Form I-829 and, if applicable, after USCIS has issued a 
second determination on the eligible alien's second petition to remove 
conditions.
    (4) Initial determination. USCIS will make determinations on the 
initial Form I-829 pursuant to section 11031(c)(1) of Public Law 107-
273 based on the evidence previously submitted with Form I-829 and 
without requesting additional evidence or an interview.
    (i) Favorable determination. Upon a favorable determination on the 
initial Form I-829, USCIS will remove the conditional basis of his or 
her status (and that of the alien's spouse and/or children if their 
status was obtained under section 216A of the Act) effective on the 
second anniversary of the alien's admission for permanent residence, if 
the alien is not in deportation or removal proceedings. If the alien is 
in deportation or removal proceedings, regardless of whether he or she 
is physically present in the United States, DHS must file a motion to 
recalendar proceedings with the immigration judge. A favorable 
determination is one in which USCIS has determined that the alien has 
met the job creation and capital investment requirements, and the 
initial Form I-829 did not contain material misrepresentations.
    (ii) Notice and opportunity for rebuttal of adverse determinations. 
If USCIS makes an adverse determination on the initial Form I-829, 
USCIS will provide the alien with written notice of the determination 
pursuant to section 11031(c)(1)(F) of Public Law 107-273. The notice 
will provide the alien with 12 weeks from the date of the notice to 
submit evidence in writing to rebut any adverse determination. If the 
adverse determination is based upon failure to satisfy the capital 
investment or the job creation requirements, the notice of adverse 
determination must include a statement notifying the alien of the 
opportunity to submit information relating to capital investment and/or 
job creation in commercial enterprises not identified in the initial 
Form I-829. To request consideration of job creation and capital 
investments based on additional commercial enterprises, the alien must 
file a supplement to the petition to remove conditions with the alien's 
written rebuttal. The alien must also submit supporting evidence with 
the supplement, as described in 8 CFR 216.7(a)(5)(i)(C). If an eligible 
alien seeks to submit evidence of a commercial enterprise not 
identified in the initial Form I-829, the amount of the required 
investment shall be calculated as provided in proposed 8 CFR 
216.7(a)(5)(iii). During the 12 week rebuttal period, the alien (and 
the alien's spouse and/or children) remains a conditional resident. 
USCIS will determine whether to reverse the adverse determination at 
the conclusion of the 12 week rebuttal period whether or not a rebuttal 
response is received.
    (iii) Notice following opportunity to rebut. If USCIS reverses the 
adverse determinations following the opportunity to rebut, USCIS must 
send the alien written notice stating the decision to reverse the 
adverse determinations. In addition, the procedures in 8 CFR 
216.7(a)(4)(i) applicable to favorable determinations apply. If USCIS 
does not reverse the adverse determinations, the procedures in 8 CFR 
216.7(a)(4)(iv) and (v) apply. In the case of multiple investors, jobs 
will be allocated among the investors in accordance with 8 CFR 
204.6(g).
    (iv) Notice following rebuttal period affirming adverse 
determinations for

[[Page 59946]]

aliens with pending deportation or removal proceedings. Following the 
alien's opportunity to submit rebuttal evidence, if USCIS does not 
reverse the adverse determinations with respect to an alien who is in 
deportation or removal proceedings, USCIS will send written notice to 
such alien with this decision, the reasons therefor, and the 
determinations regarding the number of qualifying jobs created and 
amount of capital investment made as provided by paragraph (a)(4)(v)(D) 
of this section and the date described in section 11031(c)(1)(D) of 
Public Law 107-273 that USCIS applied to each determination (if 
applicable). Subject to paragraph (a)(4)(vi) of this section, DHS will 
move to recalendar deportation or removal proceedings.
    (v) Notice following rebuttal period affirming adverse 
determinations and termination or continuation of status for eligible 
aliens not in removal proceedings. Following the alien's opportunity to 
submit rebuttal evidence, if USCIS does not reverse the adverse 
determinations with respect to an alien who is not in removal 
proceedings, USCIS will send written notice to such alien with this 
decision, the reasons therefor, and a statement of USCIS's 
determination regarding the number of qualifying jobs created and 
capital investment made, as provided by paragraph (a)(4)(v)(D) of this 
section, and the date described in section 11031(c)(1)(D) of Public Law 
107-273 that USCIS applied to each determination (if applicable).
    (A) Termination if adverse determination based on material 
misrepresentation. Subject to paragraph (a)(4)(vi) of this section, if 
the adverse determination is based, in whole or in part, on material 
misrepresentation as defined in 8 CFR 216.7(c)(1), the alien's lawful 
permanent resident status and that of his or her spouse and/or any 
children (if such status was obtained on a conditional basis under 
section 216A of the Act) will be terminated effective on the date of 
the notice required by 8 CFR 216.7(a)(4)(ii). If the alien appeals the 
adverse determination to the BIA or federal courts pursuant to 8 CFR 
216.7(a)(4)(vi), then termination is effective on the date of the 
highest appellate body's decision. DHS will notify the alien to 
surrender his or her Form I-551. The alien may seek review of the 
decision to terminate in deportation or removal proceedings.
    (B) Adverse determination based on failure to establish capital 
investment and/or job creation. Subject to paragraph (a)(4)(vi) of this 
section, USCIS will extend the conditional residence of an eligible 
alien (and that of the alien's spouse and/or children if their status 
was obtained under section 216A of the Act) for a two-year period upon 
an adverse determination that is not based on a material 
misrepresentation. The notice provided under 8 CFR 216.7(a)(4)(v) will 
include notification of the extension of conditional residence.
    (C) Start date for continuation of conditional residence. The 
extension of an alien's permanent resident status on a conditional 
basis and that of the alien's spouse and any children (if such status 
was obtained under section 216A of the Act) will begin on the date of 
the decision following the opportunity for rebuttal or the last day of 
the rebuttal period if the alien does not submit rebuttal evidence. If 
the alien seeks administrative or judicial review of the adverse 
determination pursuant to 8 CFR 216.6(a)(vi), the two-year extension 
will commence on the date of the highest appellate body's decision. If 
the alien is in deportation or removal proceedings, then the date of 
the immigration judge's decision to continue conditional residence will 
mark the starting point for the new two-year period. Such decision 
cannot be made before the alien exhausts all avenues of administrative 
or judicial review.
    (D) Determination and crediting of qualifying jobs created and 
capital investment made. The number of qualifying jobs created and 
capital investment made as determined by USCIS in the initial 
determination will be credited for purposes of the second determination 
under 8 CFR 216.7(a)(5).
    (vi) Administrative and judicial review. An alien may seek 
administrative review with the BIA of an adverse determination. While 
the appeal to the BIA and judicial review of such appeal, if any, is 
pending, the alien's conditional permanent resident status and that of 
his or her spouse and/or children (if such status was obtained under 
section 216A of the Act) will continue.
    (5) Second determination. (i) Filing petition to remove conditions. 
To remove the conditional basis of the permanent resident status of an 
eligible alien whose conditional resident status was continued for a 
new two-year period, the alien must meet the requirements for removal 
of conditions in section 11031(c)(2) of Public Law 107-273 and in this 
section. The alien must file a second petition to remove conditions, 
with the supplement to request consideration of additional commercial 
enterprises (if applicable), and in accordance with the form 
instructions, within the 90-day period before the second anniversary of 
the continuation of the conditional basis. The second petition to 
remove conditions must be accompanied by the required fee and any 
supporting documentary evidence necessary to establish that the alien 
meets the requirements in section 11031(c)(2) of Public Law 107-273 for 
removal of conditions and in this section, including, but not limited 
to the following:
    (A) If an adverse determination was based on failure to meet the 
job creation requirement of section 11031(c)(1)(A)(ii) of Public Law 
107-273, evidence of the number of qualifying jobs created since 
conditional resident status was continued and the beginning and ending 
dates of the jobs. Evidence may include, but is not limited to, payroll 
records, tax documents, and Employment Eligibility Verification (Forms 
I-9 or any successor forms).
    (B) If the adverse determination was based on failure to meet the 
capital investment requirement of section 11031(c)(1)(A)(iii) of Public 
Law 107-273, evidence of the alien's capital investment in one or more 
commercial enterprises since conditional resident status was continued 
establishing that the alien is in substantial compliance with the 
capital investment requirement described in section 216A(d)(1)(B) of 
the Act as of the date of USCIS' second determination. Such evidence 
may include, but is not limited to, audited financial statements, 
federal tax returns, bank statements, bank wire transfers, or escrow 
agreements, or other probative evidence.
    (C) Regardless of the bases for the adverse determination, evidence 
of any commercial enterprise that the alien wants USCIS to consider 
(except any evidence previously submitted in connection with the 
initial Form I-829 or initial determination), including, but not 
limited to, its formation and current ownership and such other evidence 
as:
    (1) Audited financial statements, or other probative evidence of 
the alien's capital investment in the commercial enterprises to be 
considered;
    (2) Articles of incorporation, certificate of merger or 
consolidation, partnership agreement, joint venture agreement, business 
trust agreement, or other similar organizational document for the 
commercial enterprise; and
    (3) Certificate evidencing authority to do business in a state or 
municipality or, if the form of the business does not require such a 
certificate, a statement to that effect.
    (D) In the case of a ``troubled business'' as defined in 8 CFR 
204.6(j)(4)(ii), evidence that the

[[Page 59947]]

commercial enterprise maintained the number of existing employees at no 
fewer than the pre-investment level for the period following admission 
as a conditional permanent resident. Such evidence may include payroll 
records, relevant tax documents, and Employment Eligibility 
Verification forms (Form I-9 or any successor form).
    (ii) Termination of permanent resident status for failure to file 
petition.
    (A) Failure to properly file the second petition to remove 
conditions within the 90-day period before the second anniversary of 
the continuation of the conditional basis will result in the automatic 
termination of the alien's permanent resident status and the initiation 
of removal proceedings unless such late filing is excused under 
paragraph (a)(5)(ii)(B) of this section. No appeal will lie from this 
decision. USCIS will send a written notice of termination and, as 
appropriate, issue an NTA or file a motion to re-calendar proceedings 
with the immigration judge pursuant to 8 CFR 216.7(a)(4)(iv). The alien 
may request a review of the determination in proceedings.
    (B) The second petition to remove conditions may be considered, at 
USCIS's discretion, to be filed prior to the second anniversary of the 
continuation of the alien's conditional resident status and accepted as 
a late petition if USCIS determines that failure to timely file was for 
good cause and due to extenuating circumstances. If the late petition 
is filed prior to jurisdiction vesting with the immigration judge 
(whether by issuance of an NTA or motion to re-calendar) in removal 
proceedings and USCIS excuses the late filing, USCIS will restore the 
alien's conditional permanent resident status and adjudicate the 
petition on the merits pursuant to this paragraph. If the second 
petition to remove conditions is not filed until after jurisdiction 
vests with the immigration judge and USCIS excuses the late filing, DHS 
and the alien may file a joint motion with the immigration judge to 
administratively close or terminate proceedings as appropriate. USCIS 
will then restore the alien's conditional permanent resident status and 
adjudicate the petition on the merits pursuant to this paragraph.
    (iii) Consideration of capital investments that are both in and out 
of targeted employment areas when making determinations on the 
petition. If an eligible alien requests consideration of capital 
investments in commercial enterprises that are both located within a 
targeted employment area, and not located in a targeted employment area 
as defined by 8 CFR 204.6(f), USCIS will calculate the prorated 
percentage of the alien's capital investment in commercial enterprises 
located in a targeted employment area and the prorated percentage of 
the eligible alien's capital investment based on capital investments in 
commercial enterprises that are not located in a targeted employment 
area. USCIS will combine the prorated percentages when making a 
determination as to whether the alien substantially complies with the 
capital investment requirement.
    (iv) Crediting of jobs previously created and prior capital 
investments. USCIS must credit the number of jobs created and prior 
capital investments made as determined at the initial determination.
    (v) Favorable determination and removal of conditions. Where the 
alien is not subject to deportation or removal proceedings, USCIS will 
remove the conditional basis of an eligible alien's status and that of 
his or her spouse and/or children (if such status was obtained under 
section 216A of the Act) effective on the second anniversary of the 
continuation of conditional residence and notify such alien(s) in 
writing upon a favorable determination on the petition to remove 
conditions. Where the alien is subject to deportation or removal 
proceedings, USCIS will notify the alien in writing of the favorable 
determination and DHS will file a motion to re-calendar proceedings.
    (vi) Adverse determinations.
    (A) Notice and opportunity for rebuttal of adverse determination. 
If USCIS makes an adverse determination on the petition to remove 
conditions, USCIS will provide the alien with written notice of the 
determination and allow 12 weeks from the date of the notice for the 
alien to submit evidence in writing to rebut. If the alien submits 
evidence sufficient to rebut the adverse determination, USCIS will 
notify the alien in writing and the case will be treated as a favorable 
determination as provided in paragraph (a)(5)(v) of this section.
    (B) Termination if adverse determination.
    (1) Failure to submit rebuttal evidence. If the alien does not 
submit rebuttal evidence within the 12-week period, the alien's 
conditional resident status, and that of his spouse and children (if 
such status was obtained on conditional basis under section 216A of the 
Act) will be automatically terminated after the expiration of the 12-
week period. USCIS will provide written notice to the alien(s) of the 
automatic termination and require the alien(s) to surrender any Form(s) 
I-551 to USCIS. DHS will, as appropriate, issue a Notice to Appear, or 
file a motion to re-calendar proceedings with EOIR. There is no appeal 
of the decision to terminate conditional resident status, but the alien 
may request a review of the adverse determination in deportation or 
removal proceedings.
    (2) Insufficient rebuttal evidence. If the alien timely submits 
rebuttal evidence, but USCIS determines that the evidence is not 
sufficient to rebut the adverse determination, USCIS will terminate the 
conditional resident status of the alien and that of his or her spouse 
and/or children (if such status was obtained on a conditional basis 
under section 216A of the Act) if the alien is not in deportation or 
removal proceedings. If the alien is in deportation or removal 
proceedings, USCIS will provide written notice to the alien(s) of the 
decision, and the reason(s) therefore. The alien and the alien's spouse 
and children (as appropriate) will be required to surrender any Forms 
I-551 to USCIS. DHS will, as appropriate, issue an NTA or file a motion 
to re-calendar proceedings with the immigration judge. There is no 
appeal of this decision, but the alien may request a review of the 
adverse determination in deportation or removal proceedings.
    (6) Death of eligible alien and effect on spouse and children. If 
the principal eligible alien dies during his or her period of 
conditional residence, the spouse and/or children of such alien will be 
eligible for removal of conditions if it can be demonstrated that the 
conditions for removal of conditions have been met, regardless of 
whether the alien, spouse, or children individually or collectively met 
such conditions.
    (b) Removal of conditions for aliens granted adjustment of status 
pursuant to 8 CFR 245.25 or admitted as a conditional resident based 
upon an immigrant visa granted pursuant to section 11032 of Public Law 
107-273.
    (1) Applicability of 8 CFR 216.6. Unless otherwise provided in 
paragraphs (b)(2) and (b)(3) of this section, 8 CFR 216.6(a) through 
(d) apply to aliens whose conditional resident status was obtained on 
the basis of an adjustment of status application approved pursuant to 8 
CFR 245.25 or an immigrant visa approved on the basis of section 11032 
of Public Law 107-273.
    (2) Petition. An alien who was granted the status of an alien 
lawfully admitted for permanent residence on a conditional basis 
pursuant to section 11032 of Public Law 107-273, must file a petition 
to remove conditions (Form I-829 or any successor form) in accordance 
with 8 CFR 216.6(a) and the

[[Page 59948]]

form instructions and, if appropriate, the supplement to the form and 
its instructions. In lieu of 8 CFR 216.6(a)(4), such an alien must 
include the following documentary evidence with the petition to remove 
conditions and supplement:
    (i) Evidence that all eligible enterprises, considered together, in 
which the alien invested created full-time jobs for not fewer than 10 
qualifying employees, and that such jobs exist or existed on either of 
the dates described in section 11032(e)(3) of Public Law 107-273. Such 
evidence may include payroll records, relevant tax documents, and 
Employment Eligibility Verification forms (Forms I-9 or any successor 
forms);
    (ii) In the case of a ``troubled business'' as defined in 8 CFR 
204.6(e), evidence that the number of existing employees is at no fewer 
than the pre-investment level for the conditional resident period. Such 
evidence may include payroll records, relevant tax documents, and 
Employment Eligibility Verification forms (Forms I-9 or any successor 
forms);
    (iii) In the case of an investment within an approved regional 
center, evidence that the alien's investment created full-time jobs, 
either directly or indirectly, for not fewer than 10 qualifying 
employees. Such evidence may include payroll records, relevant tax 
documents, and Employment Eligibility Verification forms (Forms I-9 or 
any successor forms);
    (iv) Evidence of the dates on which the jobs existed;
    (v) Considering the alien's investment in all enterprises on either 
of the dates cited in section 11032(e)(3) of Public Law 107-273 or on 
both such dates, evidence that the alien is or was in substantial 
compliance with the requirement to invest or is actively in the process 
of investing the requisite capital. If the petition to remove 
conditions is based upon commercial enterprises located both within and 
outside of a TEA, the investment amount must comply with proposed 8 CFR 
216.7(a)(5)(iii). Such evidence may include, but is not limited to, 
audited financial statements, federal tax returns, bank statements, 
bank wire transfers, escrow agreements, or other material evidence;
    (vi) Evidence of any commercial enterprise in the United States in 
which the eligible alien made a capital investment and the formation 
and current ownership structure of such commercial enterprise 
including, but not limited to:
    (A) Articles of incorporation, certificate of merger or 
consolidation, partnership agreement, joint venture agreement, business 
trust agreement, or other similar organizational document for the 
commercial enterprise; and
    (B) Certificate evidencing authority to do business in a state or 
municipality or, if the form of the business does not require such a 
certificate, a statement to that effect.
    (C) Determination on petition. USCIS will make a determination on 
the petition to remove conditions in accordance with section 
11032(e)(2) of Public Law 107-273, in lieu of section 216A(c)(3) of the 
Act and 8 CFR 216.6(c)(1).
    (c) Definitions. (1) Material misrepresentation. Under this 
section, a material misrepresentation includes a statement or 
representation in an eligible alien's petition to remove conditions, as 
originally filed or supplemented, or any accompanying documentation 
which is determined, as a matter of discretion, to be both false and a 
statement or representation to which importance would reasonably be 
attached for determining whether to grant the petition, without regard 
to the petitioner's or any other person's intent or to whether or not 
there was detrimental reliance upon the statement or representation. 
Material misrepresentation also includes any omission of fact that has 
the effect of making any material representation in the petition to 
remove conditions or accompanying documentation false.
    (2) Substantial compliance with the capital investment. For 
purposes of paragraphs (a) and (b) of this section, substantial 
compliance with the capital investment requirement means that the alien 
has invested nearly all of the requisite amount, with evidence that any 
balance is legally obligated for final disbursement within a reasonable 
period of time of the date on which the initial petition to remove 
conditions (Form I-829 or successor form) was filed (not applicable to 
petitions to remove conditions under paragraph (a)(6) of this section); 
6 months after that date in the case of petitions to remove conditions 
under paragraph (a)(5) of this section only; or the date upon which the 
determinations are made. Funds that cannot be counted toward compliance 
with the capital investment requirement include funds returned to the 
alien in the form of guaranteed interest payments or as redemption for 
his or her interest, or otherwise diverted, as these funds would not 
have been made available to the commercial enterprise for the purposes 
of creating qualifying jobs.
    (3) Full-time. The term ``full-time'' means a position that 
requires at least 35 hours of service per week at any time, regardless 
of who fills the position. Such a position must be required by the 
commercial enterprise at all times and filled by one or more qualifying 
employees as defined by 8 CFR 204.6(e).

PART 245--ADJUSTMENT OF STATUS TO THAT OF PERSON ADMITTED FOR 
PERMANENT RESIDENCE

    3. The authority citation for part 245 continues to read as 
follows:

    Authority: 8 U.S.C. 1101, 1103, 1182, 1255; sec. 202, Pub. L. 
105-100, 111 Stat. 2160, 2193; sec. 902, Pub. L. 105-277, 112 Stat. 
2681; Title VII of Pub. L. 110-229; 8 CFR part 2.
    4. Section 245.25 is added to read as follows:


Sec.  245.25  Adjustment of status of certain alien entrepreneurs under 
section 11032 of Public Law 107-273.

    (a) Definitions. As used in this section, the term:
    Application for adjustment of status means a Form I-485, 
Application to Register Permanent Residence or Adjust Status (or 
successor form) and any supporting documentation.
    Eligible alien in this section means an eligible alien as described 
in section 11032 of Public Law 107-273.
    Form I-485 that is no longer pending means that the qualifying Form 
I-485 was subsequently terminated for abandonment or denied by the 
Immigration and Naturalization Service on or before November 2, 2002.
    Qualifying Form I-485 means a Form I-485 filed before November 2, 
2002.
    Qualifying Form I-526 means a Form I-526, Immigrant Petition by 
Alien Entrepreneur, that INS approved after January 1, 1995 and before 
August 31, 1998.
    (b) Procedures for eligible aliens and their spouses and children.
    (1) Requesting consideration for eligibility determinations. An 
eligible alien must request USCIS to consider his or her qualifying 
Form I-485 for approval under section 11032 of Public Law 107-273 and 
must demonstrate that he or she meets the requirements in section 11032 
of Public Law 107-273 and this section. Failure to follow the 
procedures in paragraph (b) of this section or to demonstrate 
eligibility will result in denial of the qualifying Form I-485 in 
accordance with paragraph (e) of this section. An eligible alien must:
    (i) In accordance with the form instructions, file (without fee) a 
newly completed application for adjustment of status (Form I-485 or 
succeeding form) with supporting documentation signed and dated after 
the effective date when

[[Page 59949]]

this rule is published as a final rule and on or before 180 days from 
the effective date when this rule is published as a final rule;
    (ii) Include payment of a biometrics fee with each application for 
adjustment of status; and
    (iii) Appear as requested by USCIS for the capture of biometric 
information and, if USCIS determines it to be necessary, an interview.
    (2) Overseas aliens. Aliens who are not physically present in the 
United States may submit an application for adjustment of status from 
outside the United States to facilitate a determination whether they 
are eligible aliens. Such aliens, upon request, must appear for the 
submission of certain biometric information at the DHS office located 
outside the United States having jurisdiction over the alien's foreign 
residence.
    (3) Forms I-485 that are no longer pending. An alien whose Form I-
485 is no longer pending must include with his or her submission in 
paragraph (b) of this section written evidence demonstrating that the 
reason an Application to Register Permanent Resident or Adjust Status 
(Form I-485) is no longer pending is either because he or she failed to 
satisfy the job creation requirement in section 203(b)(5)(A)(ii) of the 
Act or departed the United States without advance parole. A copy of a 
decision denying a Application to Register Permanent Resident or Adjust 
Status (Form I-485) on either of these bases satisfies this 
requirement. Acceptable secondary evidence includes, but is not limited 
to an alien's sworn statement together with: travel records; payroll 
records; alien's request for withdrawal of the Application to Register 
Permanent Resident or Adjust Status (Form I-485).
    (4) Revoked qualifying Immigrant Petitions by Alien Entrepreneur. 
An alien whose qualifying Immigrant Petition by Alien Entrepreneur 
(Form I-526) was revoked must include with his or her submission, as 
described in paragraph (b) of this section, evidence demonstrating that 
the reason for the revocation was that such alien failed to satisfy the 
job creation requirement in section 203(b)(5)(A)(ii) of the Act. A copy 
of a decision revoking an Immigrant Petition by Alien Entrepreneur 
satisfies this requirement. Acceptable secondary evidence includes, but 
is not limited to the alien's sworn statement accompanied by additional 
documentation, such as a letter to INS responding to a notice of intent 
to revoke and documents filed by the alien related to an appeal of the 
revocation of the Immigrant Petition by Alien Entrepreneur.
    (5) Spouse and children. Applications for adjustment of status by 
an alien's accompanying spouse and children must be filed with the 
alien's application for adjustment of status. If the spouse and 
children are following to join the alien, then their applications for 
adjustment of status must be filed no later than USCIS's determination 
of the alien's eligibility. The applications must contain supporting 
documentation of eligibility, including but not limited to evidence of 
the current relationship between the alien and spouse and children such 
as a marriage certificate and birth certificates.
    (c) USCIS determinations. Following receipt of the required 
documentation and information in paragraph (b) of this section, USCIS 
will make a determination on whether an alien is an eligible alien, and 
whether the alien and any spouse and children, as applicable, qualify 
for adjustment of status to that of a conditional resident in 
accordance with section 11032 of Public Law 107-273 and this section. 
If USCIS determines that the alien does not qualify for conditional 
residence, it will deny Form I-485 for aliens in the United States and 
terminate processing of the request for benefits under this section for 
aliens who are residing outside the United States in accordance with 
paragraph (e) of this section.
    (1) Permanent residence on other grounds. USCIS will make a 
determination that an alien does not qualify for conditional residence 
under section 11032 of Public Law 107-273 if he or she obtained 
permanent resident status on other grounds.
    (2) Departing the United States while qualifying Applications to 
Register Permanent Resident or Adjust Status are pending. If an 
eligible alien with a pending, qualifying Application to Register 
Permanent Resident or Adjust Status (Form I-485 or any successor form) 
departed the United States after November 2, 2002 without advanced 
parole, USCIS will make a determination that the alien does not qualify 
for conditional resident status under section 11032 of Public Law 107-
273 and will deny the Application to Register Permanent Resident or 
Adjust Status.
    (3) Eligible aliens and accompanying spouse and children who are 
not physically present in the United States. Following receipt of a new 
Application to Register Permanent Resident or Adjust Status (Form I-485 
or any successor form) (including medical examination in accordance 
with 8 CFR 245.5 and the instructions to the Application to Register 
Permanent Resident or Adjust Status) and biometric fee in accordance 
with paragraph (b) of this section, USCIS will send written notice to 
the eligible alien requiring an appearance by the alien and any 
accompanying or following to join spouse and children for biometric 
capture and an interview at the USCIS office located outside the United 
States having jurisdiction over the alien's foreign residence. If USCIS 
determines that the alien qualifies as an eligible alien and for 
conditional resident status under section 11032 of Public Law 107-273, 
USCIS will send the eligible alien written notice of USCIS' 
determination and require the alien and accompanying or following to 
join spouse and children to return to the United States by obtaining 
parole, described in 8 CFR 212.5, and, if granted parole, arrive in the 
United States by the date stated in the parole document. To request 
parole, the alien must file, by mail and with fee, a signed and 
completed application for parole on an Application for Travel Document, 
Form I-131 or successor form, in accordance with the form instructions. 
The alien and accompanying or following to join spouse and children may 
be requested to appear at such office for biometric capture or an 
interview in connection with the parole request. If the eligible alien, 
or his or her spouse and children, is not granted parole by USCIS or is 
not paroled upon his or her arrival to the United States, USCIS will 
deny his or her Application to Register Permanent Resident or Adjust 
Status in accordance with paragraph (e) of this section.
    (d) Approval. Upon a determination by USCIS that the alien 
qualifies for conditional resident status under section 11032 of Public 
Law 107-273, USCIS will approve the eligible alien's qualifying 
Application to Register Permanent Resident or Adjust Status (Form I-485 
or any successor form) and that of his or her spouse and children 
physically present in the United States, provided that USCIS has not 
revoked the alien's approved Immigrant Petition by Alien Entrepreneur 
(Form I-526 or any successor form), and all qualifying Applications to 
Register Permanent Resident or Adjust Status are pending or have been 
reopened. USCIS may not approve such Applications to Register Permanent 
Resident or Adjust Status until the Department of State allocates an 
immigrant visa number. Upon approval of the qualifying Application to 
Register Permanent Resident or Adjust Status, USCIS will grant the 
alien and his or her spouse and children, the status of an alien 
lawfully

[[Page 59950]]

admitted for permanent residence on a conditional basis under section 
216A of the Act as of the date of such approval. USCIS will send 
written notice of the decision to the eligible alien.
    (e) Denials and terminations. (1) If USCIS determines that the 
eligible alien does not qualify for conditional resident status under 
section 11032 of Public Law 107-273, USCIS will deny the eligible 
alien's qualifying Application to Register Permanent Resident or Adjust 
Status (Form I-485 or any successor form) and any Applications to 
Register Permanent Resident or Adjust Status of his or her spouse and 
children considered under this section. USCIS will send the eligible 
alien written notice of the denial and reasons for the denial. A denial 
of the qualifying Application to Register Permanent Resident or Adjust 
Status is not subject to appeal, but can be reviewed by an immigration 
judge in removal proceedings.
    (2) If USCIS determines that an alien who is not physically present 
in the United States is not an eligible alien, USCIS will terminate 
processing of the request for benefits pursuant to this section. If 
USCIS determines that an alien who is overseas does qualify as an 
eligible alien, but that the spouse or child of the eligible alien does 
not qualify for benefits pursuant to this section, USCIS will terminate 
processing of the request for benefits. There is no administrative 
appeal of this decision.
    (f) Petitions revoked on a basis other than failure to meet job 
creation requirement. If USCIS revoked the Immigrant Petition by Alien 
Entrepreneur (Form I-526 or any successor form) due to grounds of 
ineligibility other than failure to meet the job creation requirement, 
USCIS will not disregard the revocation under Public Law 107-273 and 
will deny the application for adjustment of status if it is pending.

Janet Napolitano,
Secretary.
[FR Doc. 2011-24619 Filed 9-26-11; 8:45 am]
BILLING CODE 9111-97-P