USCIS is revising 8 CFR 214.2(h)(2)(i)(A) to provide that USCIS may set alternate filing locations via notice in the Federal Register.

    USCIS is revising 8 CFR 214.2(h)(8)(ii) in its entirety to properly reflect that USCIS tracks petitions or applications subject to numerical limits, not by individual petition receipt numbers, but by monitoring the total number of petitions (including the number of beneficiaries when necessary) filed within a given fiscal year. This revision applies to all H nonimmigrant classifications subject to numerical limits. In calculating when the numerical limits have been or will likely be reached, USCIS will make projections of the number of petitions necessary to achieve the numerical limit of approvals, taking into account historical data related to approvals, denials, revocations, and other relevant factors. USCIS will continue to count H-1B petitions on a first-in, first-out basis and monitor the number of petitions received, approved, and pending adjudication to determine when USCIS is likely to reach or exceed the numerical limits in a given fiscal year.

    As discussed above in Section VI, USCIS also is amending 8 CFR 214.2(h)(8)(ii)(B) to authorize random selection of H-1B numbers in FY 2005, FY 2006 and future fiscal years when USCIS determines that the numerical limits in a particular category will be reached.

    USCIS recognizes that, given the period of time that has passed since cap-subject H-1B filings last were received, the anticipated high demand for immediate validity dates is substantial and may even exceed the 20,000 newly available numbers for FY 2005 on the first day. Therefore, any petitioner who desires an FY 2005 number must consider the importance of having the petition (or “upgrade” of an already filed FY 2006 petition) delivered on the first day on which filings will be accepted. Petitioners likely will send the petition or upgrade on the day before that date by overnight delivery to ensure arrival at the Vermont Service Center on the first day.

    In order to reduce petitioners' concern that even an overnight delivery service from a remote location might not actually deliver the package on the first day, USCIS has decided that, in the event that the final receipt date is the same as the first date on which petitions may be filed (i.e. if the cap is reached on the first day filings can be made for FY 2005), USCIS will randomly apply all of the numbers among the petitions filed on the final receipt date and the following day. In such cases, no advantag e will be gained by the particular time of day a filing is received. USCIS has concluded that such a commitment best ensures general fairness and orderly procedures for allocations of petitions subject to numerical limits.

X. Regulatory Requirements

A. Administrative Procedure Act (Good Cause Exception)

    Implementation of this rule without notice and the opportunity for public comment is warranted under the “good cause” exception found under the Administrative Procedure Act (APA) at 5 U.S.C. 553(b). USCIS has determined that delaying implementation of this rule to await public notice and comment is impracticable and contrary to the public interest. The H-1B Visa Reform Act of 2004 was enacted on December 8, 2004. The provisions related to the H-1B numerical limitations and new fraud prevention and detection fees became effective March 8, 2005.

    Immediate implementation of this rule is in the public interest, specifically that of U.S. employers, students and workers. While processing for the FY 2006 H-1B cap began on April 1, 2005, U.S. employers have been unable to hire new H-1B workers since October 1, 2004. A worker with an FY 2006 cap number cannot begin work until October 1, 2005, the date on which FY 2006 begins. In order to provide U.S. employers with the ability to address their employment needs as soon as possible and to alleviate the burd ens imposed on their ability to hire H-1B workers since October 1, 2004, USCIS must issue this interim rule to implement immediately these provisions and notify the public of the process by which the remaining H-1B numbers for FY 2005 will be made available. This interim rule is necessary to allocate fairly and equitably the new FY 2005 H-1B numbers in an expeditious manner. In addition, the new fees to be generated by the FY 2005 filings will be allocated to public purposes of low-income student education, job training, and fraud prevention and detection, and further delay of the FY 2005 filings would delay the funding of those purposes. It is therefore impracticable and contrary to the public interest to adopt this rule with the prior notice and comment period normally required under 5 U.S.C. 553(b).

    USCIS also finds that good cause exists under the Congressional Review Act, 5 U.S.C. 808, to implement this interim rule immediately upon publication in the Federal Register.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 605(b)), as amended by the Small Business Regulatory Enforcement and Fairness Act of 1996 (SBREFA), requires an agency to prepare and make available to the public a regulatory flexibility analysis that describes the effect of the rule on small entities (i.e., small businesses, small organizations, and small governmental jurisdictions). Because good cause exists for issuing this regulation as an interim rule, no regulatory flexibility analysis is required under the RFA.

C. Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538, requires Federal agencies to prepare a written assessment of the costs, benefits and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local or tribal governments, in the aggregate, or by the private sector of more than $100 million in any one year (adjusted for inflation with 1995 base year). Before promulgating a rule for which a written statement is neede d, section 205 of UMRA requires an agency to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome option that achieves the objective of the rule. Section 205 allows an agency to adopt an alternative, other than the least costly, most cost-effective, or least burdensome option if DHS publishes an explanation with the final rule.

    As discussed below under Executive Order 12866, this action will result in the expenditure by the private sector of $100 million or more in any one year, but these fees are mandated by statute and USCIS is obligated to implement the law as enacted by the OAA. Further, these costs do not accrue to the general public, but only those who choose to participate in the H-1B program, nor will they result in expenditures in excess of $100 million a year by State, local, or tribal governments.

D. Small Business Regulatory Enforcement Fairness Act of 1996

    This interim rule is a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996. This interim rule will result in an annual effect on the economy of more than $100 million.

E. Executive Order 12866

    This interim final rule is considered by DHS to be an economically “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review. The implementation of this interim rule will provide USCIS with an additional $36,200,000 in FY 2005 in annual fee revenue over the fee revenue that would be collected under the current fee structure, based on a projected annual fee-paying volume of 20,000 approved petitions. This interim rule would provide USCIS with $138,425,000 in FY 2006 annual fee revenue, based on a projected annual fee-paying volume of 85,000 approved petitions (20,000 new exemptions and 65,000 petitions). This increase in revenue pursuant to the OAA (and ACWIA as amended), will be used to fund grants for training in high-growth industries, job training services and related activities, and programs and activities to prevent and detect fraud with respect to H and L petitions. Accordingly, this rule has been submitted to the Office of Management and Budget (OMB) for clearance.

    USCIS is issuing this rule in order to provide for a fair and equitable allocation of additional H-1B numbers made available for FY 2005 by Congress.

    USCIS has assessed both the costs and benefits of this rule as required by Executive Order 12866, section 1(b)(6), and has made a reasoned determination that this rule will result in additional costs to petitioning employers. The additional costs to employers are due to the new statutory requirement that H-1B petitioners must now pay an additional fee of either $1,500 or $750 per petition, depending upon the size of the business, unless otherwise exempt. In addition to the $1,500 or $750 fee, as of March 8, 2005, H-1B petitioners must also pay a separate fee of $500 per petition to assist federal agencies in fraud prevention and detection.

    USCIS estimates that for FY 2005, all of the aforementioned new fees will cost H-1B petitioning employers an additional $36,200,000. DHS reached this conclusion by estimating that approximately half of the 20,000 new H-1B petitions that will be approved for FY 2005 employment will be for businesses with 25 or less full-time equivalent employees ($750 x 10,000 = $7,500,000), while the other half will be for businesses with 26 or more full-time equivalent employees ($1,500 x 10,000 = $15,000,000). USCIS has a lso included in this estimate the new $500 Fraud Prevention and Detection Fee applicable to the forthcoming 20,000 new H-1B petition approvals for FY 2005 employment ($500 x 20,000 = $10,000,000).

    There will also be an additional 20,000 I-129 petitions approved for new H-1B employment in FY 2005 at a base filing fee cost of $185 per Form I-129, which adds an additional cost to H-1B petitioners ($185 x 20,000 = $3,700,000). Therefore, the total additional cost to the public during FY 2005 is $36,200,000.

    In future fiscal years, the additional cost to H-1B petitioners is estimated to be $138,425,000 each fiscal year. USCIS reached this conclusion by estimating that approximately half of the 85,000 H-1B petitions approved per fiscal year will be for businesses with 25 or less full-time equivalent employees ($750 x 42,500 = $31,875,000), while the other half will be for businesses with 26 or more full-time equivalent employees ($1,500 x 42,500 = $63,750,000). USCIS includes in this estimate the fact that an ad ditional 20,000 petitions for H-1B classification will be filed each fiscal year at a base filing fee cost of $185 per I-129 petition ($185 x 20,000 = $3,700,000). USCIS has also included in this estimate the new $500 Fraud Prevention and Detection Fee applicable to 78,200 new H-1B petitions approved per fiscal year ($500 x 78,200 = $39,100,000). USCIS notes that the $500 Fraud Prevention and Detection Fee is not required for Chileans and Singaporeans entering the United States under the Free Trade Agreemen ts. Therefore, USCIS estimates that the total additional cost to the public in the future each fiscal year will be $138,425,000.

    Although this interim rule will result in additional costs to H-1B petitioners that may deter some employers from seeking H-1B nonimmigrant workers, USCIS notes that these fees and the specific amounts of these fees are mandated by statute. USCIS is obligated to implement the law as enacted by the OAA.

    The benefit of this interim rule is that affected employers will be able to address inconveniences and difficulties caused by the reaching of the FY 2005 H-1B, and USCIS will be able to facilitate that process in a manner that is fair to all employers. This interim rule will also facilitate the hiring of H-1B nonimmigrant aliens by U.S. employers who have not been able to fill jobs due to the H-1B cap being reached early in recent fiscal years and who demonstrate that they are willing to offer the same prev ailing wage and working conditions as those of U.S. workers. The fees imposed will benefit congressional purposes of education for low-income students, job training for U.S. workers, and fraud detection and prevention in immigration programs.

    USCIS will receive a larger number of filings subject to the increased filing fees than the number of petitions that ultimately will be approved. Almost all of such filings, however, will be those received in excess of the applicable numerical limits, and USCIS will be rejecting or refunding fee payments for such petitions. Petitions that are exempt from the cap, because they are for beneficiaries who are already in H-1B status and were previously been counted against the cap, are also exempt from the ACWIA fees. Such petitions, the number of which is unpredictable, are not exempt from the $500 fraud prevention and detection fee. Also a somewhat unpredictable number of petitions subject to the new ACWIA and fraud detection and prevention fees will be filed for initial petitions that will be denied or withdrawn, and those will be in excess of the 85,000 set forth above. These petitions will impose costs on the employers that result from the OAA and this interim final rule, but funds will be applied to the cong ressionally required, publicly beneficial purposes of low-income student education, job training, and fraud detection and prevention. During fiscal years 2001, 2002 and 2003, an average of less than 2.5 percent of initial petitions were denied; thus, this cost factor is relatively insignificant.

    The additional fees mandated by the OAA are not being codified by USCIS within the context of this rulemaking. However, USCIS, in a future rulemaking, will amend 8 CFR 214.2(h)(19), which currently addresses the fees initially required pursuant to ACWIA, to reflect the enhanced ACWIA fees of $1,500 (or $750) and to codify the new fraud prevention and detection fees ($500) affecting all H and L petitioners. USCIS notes, however, that the Form I-129 has recently been revised to comport with the provisions of the OAA by adding a supplement titled H-1B Data Collection and Filing Fee Exemption. The inclusion of the H-1B Data Collection and Filing Fee Exemption supplement within the revised Form I-129 has rendered the previous Form I-129W moot, as it captures the required information previously obtained via the Form I-129W. Therefore, the Form I-129W has been removed from the USCIS forms inventory. OMB has approved the revised Form I-129 for official use by the public and USCIS has released the revised Form I-129 f or official use as of March 11, 2005. Petitioners are urged to consult and comply with the instructions on the revised I-129 and the H-1B Data Collection and Filing Fee Exemption supplement when filing their petitions for H-1B nonimmigrant workers.Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circ ), in Table 1, USCIS has prepared an accounting statement showing the classification of the expenditures associated with the Allocation of Additional H-1B Visas created by the H-1B Visa Reform Act of 2004. The table provides our best estimate of the dollar amount of these costs and benefits, expressed in 2005 dollars, at three percent and seven percent discount rates. We estimate that the cost of this interim rule will be approximately $125 million annualized (7 percent discount rate) and approximately $127 million annualized (3 percent discount rate). The non-quantified benefit is compliance with the OAA.

TABLE 1.--ACCOUNTING STATEMENT: CLASSIFICATION OF EXPENDITURES, FY 2005 THROUGH FY 2014

[2005 dollars]

-----------------------------------------------------------
Three Percent Annual Discount Rate

BENEFITS

Annualized monetized benefits

(Un-quantified) benefits: compliance with the law; funding of congressionally mandated programs; acquisition of needed professional workers

COSTS

Annualized monetized costs: $127 million

Annualized quantified, but un-monetized costs

Qualitative (un-quantified) costs

Seven Percent Annual Discount Rate

BENEFITS

Annualized monetized benefits

(Un-quantified) benefits: compliance with the law; funding of congressionally mandated programs; acquisition of needed professional workers

COSTS

Annualized monetized costs: $125 million

Annualized quantified, but un-monetized costs

Qualitative (un-quantified) costs

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

    In accordance with the provisions of E.O. 12866, this regulation was reviewed by the Office of Management and Budget.